Recruitment isn't cheap, and it's getting more expensive. By the time you add up the agency fee, the time your team spends interviewing, the onboarding hours, and the productivity cost of a role sitting empty, a single hire can cost SMEs somewhere between $30,000 and $50,000.
Gallup research has found around 48% of employees are actively looking for a new job at any given time. That's not a market where you can afford to run recruitment on autopilot.
The instinct most business owners have is to frame this as a single decision: do we use an agency, or do we do it ourselves? That's the wrong question. The right question is how to split your recruitment spend across internal hiring, agencies and sponsoring overseas talent, so you're getting the best return on each dollar.
When internal recruitment earns its keep
If your business hires regularly, say more than ten people a year, there's usually a case for building an internal recruitment function. Not a full talent acquisition team. A person in your HR function who lives and breathes your culture, knows the roles, and owns the candidate experience end to end.
The advantage isn't only cost. Internal recruiters build pipelines over time. They know which hires stuck and which didn't, they remember the candidate who wasn't right last year but might be perfect for the next opening, and they protect the candidate experience in a way agencies can't. They also kill the quiet drain of agency fees creeping up on roles that didn't really need agency help.
When agencies earn their fee
Two scenarios where a good recruitment agency pays for itself.
- Niche roles. If you're hiring a specialist whose skillset doesn't turn up on SEEK or LinkedIn, you're paying for the agency's network, not their ad posting.
- Senior hires. Executives and senior leaders often want to be approached through a third party. It's partly about due diligence, partly about confidentiality, and partly about signal. If you refuse to use agencies for senior searches, you're cutting yourself off from a large slice of the candidate pool before you've even started.
Get more out of the recruitment agencies you do use
A few things worth doing if agencies are part of your mix.
Negotiate your fees.
Good agencies want to partner with you. If you're sending them regular work, push on the percentage. They'll usually move.
Set clear parameters upfront.
Which roles, which seniority, what the process looks like, what the guarantees are. Ambiguity at the start is where the fee disputes and the bad placements come from.
Enforce the guarantees.
If a placement doesn't stick, hold the agency to their terms. Most will honour them, but only if you ask.
Have the honest conversation before you fire them. If an agency isn't delivering, tell them. The good ones will course-correct. The ones that don't will filter themselves out. Firing an agency cold, especially one you've worked with for years, usually costs you more than the conversation would have.
Sponsored talent changes the maths
Most SME owners treat overseas sponsorship as a last resort. It shouldn't be. If you've got a role that's been open for six months, or a specialist you simply can't find locally, sponsorship is often faster and cheaper than another round of agency fees.
The Skills in Demand visa (Subclass 482) now has nomination turnarounds as quick as seven to eleven days for specialist and certain priority occupations. And the retention effect is real: an overseas employee sponsored onto a pathway toward permanent residency has a powerful reason to stay with you for at least two years. More on that in our articles on sponsoring overseas workers and the skills shortage list.
The point here is that sponsorship isn't a separate budget line. It's part of the same recruitment spend conversation. Every dollar you save by running smart internal recruitment and tighter agency use is a dollar you can redirect toward sponsored talent, retention initiatives or employee share plans that keep the people you've already hired.
Measure what's actually happening
Most SMEs have no idea which parts of their recruitment spend are working. A few simple measures change that.
First-year turnover.
If people are leaving within 12 months, something in your hiring process is broken. Track the reasons. If the same reason keeps coming up, fix it.
Recruitment funnel drop-off.
Where are candidates falling out? If your process has seven interview rounds, you're losing good people at round four. If your job ads don't reflect the role, you're losing them before they apply.
One-month check-ins.
Every new starter gets a structured conversation at one month. You'll learn more about your recruitment process from that one meeting than from any survey.
LinkedIn and employee advocacy.
Your people are your brand. Candidates do their homework. If your team is active on LinkedIn, you're generating top-of-funnel interest you don't have to pay for.
Work with a business advisory team on your build, buy and sponsor recruitment strategy
Recruitment is one of the most expensive things an SME does and often one of the least strategic. BlueRock's business advisory team helps SME owners map their build, buy and sponsor strategy against the actual shape of their hiring needs, so you stop paying agency premiums for roles you could have hired directly and start reinvesting the savings into the things that keep your people.
If your recruitment agency spend feels like it's blowing out, get in touch.
