Recruitment Service and Recruitment Fee in Malaysia

Overview

Recruitment fees are an essential expense for companies looking to hire new talent. In Malaysia, various options are available for companies seeking recruitment services, including recruitment agencies and headhunters, each offering different services and fee structures.

Recruitment fees in Malaysia are generally calculated as a percentage of the hired candidate’s first-year salary, total compensation package, or a flat fee. Typically, recruiting agencies in Malaysia charge certain percentage of the candidate’s gross annual salary. Fees can increase based on factors such as the complexity of the role, level of expertise required, urgency, and volume of positions.

What is The Difference between Recruitment Agency and Headhunter?

Recruitment Agencies: A recruitment agency is a company that helps employers find suitable candidates to fill their job vacancies. Popular in Malaysia, these recruitment agencies act as intermediaries, handling job advertising, resume screening, and candidate matching. They typically charge a fee based on a percentage of the hired candidate’s first-year salary, offering significant time and resource savings.

Headhunters: These professionals specialize in filling high-level or specialized positions by actively seeking out candidates who are not actively looking for new job opportunities. They often charge higher recruitment fees, typically a percentage of the candidate’s total compensation package, leveraging their network and expertise.

Recruitment Industry in Malaysia


The recruitment industry in Malaysia is dynamic and crucial to the country’s economy. With a diverse workforce and growing demand for skilled talent, the industry includes various services such as job advertising, resume screening, and background checks. Recruitment agencies must be registered with the Ministry of Human Resources, ensuring ethical practices. With the rise of digital technology, the recruitment industry in Malaysia is likely to become increasingly digitized, with more recruitment agencies and job boards moving online to reach a wider audience.

How Do Recruitment Agencies in Malaysia Compare to Those in Other Countries? Recruitment agencies in Malaysia function similarly to those in other countries, with the main objective of connecting job seekers with job opportunities. However, several key differences distinguish recruitment agencies in Malaysia from their counterparts abroad.

  • Diversity and Inclusion: Many Malaysian recruitment agencies emphasize diversity in hiring practices.
  • Local Expertise: Recruitment agencies provide insights into local job markets, aiding informed hiring decisions.
  • Specialized Services: Some recruitment agencies cater to specific industries or assist with local employment laws.

For instance, some agencies may focus on recruiting for specific industries like healthcare or technology, while others provide services to help companies navigate local employment laws and regulations.

Overall, although recruitment agencies in Malaysia share many similarities with those in other countries, their emphasis on diversity and inclusion, local expertise, and specialized services sets them apart and offers valuable support to businesses in the region.

Calculating Recruitment Fees

In a competitive labor market, engaging a recruitment partner is an effective way to find the best-fit candidate for your organization. Utilizing recruitment services allows companies to save significant time and resources in sourcing suitable candidates for their job openings.

Without the assistance of an agency, the hiring process can take your team at least 2 to 3 months for screening and identifying the best-fit candidates. Recruitment agencies, headhunters, and recruiters each offer different services and charge varying fees, so it's crucial for companies to understand the costs and benefits of each option.

Factors that can influence recruitment fees include the required level of expertise, the urgency of the position, and current job market conditions. Overall, recruitment fees are a key consideration for companies aiming to hire new talent. By comprehending the cost of recruitment fees and the available options, companies can make informed decisions about their hiring needs and select the right recruitment service provider to suit their needs and budget.

The calculation of fees can vary based on the recruitment service provider and the type of service offered. However, there are several common methods for calculating recruitment fees:

  1. Percentage of the hired candidate’s first-year salary:
    This is one of the most common methods. The fee is typically a percentage of the candidate’s first-year salary, ranging from 10% to 25% depending on the service provider and the complexity of the position.

    For example, if the hired candidate has a first-year salary of RM 72,000 and the recruitment fee is 20%, the fee charged by the recruitment agency would be RM 72,000 x 20% = RM 14,400.

    Alternatively, some agencies use a multiplier on the hired candidate’s first month’s salary. For instance, if the first month’s salary is RM 6,000 and the agency charges two months as its service fee, the recruitment fee would be RN 6,000 x 2 = RM 12,000.

  2. Percentage of the candidate’s total compensation package:
    In some cases, fees are based on the candidate’s total compensation package, including base salary, bonuses, and other benefits. For example, if the basic salary is RM 6,000, with a 13th-month bonus, and an annual mobile allowance of RM 500, and the agency fee is 20%, the calculation would be:

    [(RM 6,000 x 12) + (RM6,000) + (RM 500 x 12)] x 20% = RM 16,800

  3. Flat fee:
    Some providers charge a flat fee, negotiated upfront with the hiring company. The flat fee varies based on the provider and the position’s complexity. For example, an agency might charge a flat fee of RM 10,000 per successful hire.
It’s important for companies to understand the calculation method used and to negotiate fees accordingly. Factors such as the level of expertise required, urgency of the position, and current job market conditions can impact the cost.

Additionally, companies should clarify whether fees are payable only if the candidate is successfully placed or if they are payable regardless of placement (retainer model). Typically, fees are one-time and paid upon a hiring event.

Factors Influencing Recruitment Fees

Recruitment fees can vary based on several factors, including:

  • Complexity of the Position: Positions that require specialized skills or experience tend to be more difficult to fill and may necessitate a more extensive search process, leading to higher fees. For example, tech developer roles might incur an additional 5 to 10% fee.
  • Level of Expertise Required: The required level of expertise also impacts recruitment fees. Positions needing higher expertise, such as C-level executives, can cost up to 30% of the gross annual salary, compared to interns, which might cost 10% of gross annual compensation.
  • Urgency of the Position: If a position needs to be filled quickly, the recruitment process may need to be expedited, resulting in higher fees.
  • Location of the Position: Positions in remote or hard-to-reach locations may require a more extensive search process, which can increase fees.
  • Volume of Positions: Companies looking to fill multiple positions may be able to negotiate lower recruitment fees with the recruitment service provider.
  • Type of Service Provided: The type of recruitment service can affect costs. Executive search or headhunting services are typically more expensive than standard recruitment services.
  • Current Job Market Conditions: In a competitive job market, recruitment fees may be higher due to greater competition for skilled candidates.


Understanding these factors is crucial when negotiating fees with recruitmentservice providers. By comprehending what influences recruitment fees, companies can negotiate fair and appropriate fees that align with their hiring needs.

Conclusion

Recruitment fees are a significant but necessary cost for hiring in Malaysia. By understanding the fee structure and influencing factors, companies can make informed decisions and select the right recruitment service provider, ensuring effective and efficient hiring processes.

Corford Asia offers competitive rates and comprehensive headhunting and recruitment services in Malaysia. We are one of the leading recruitment companies in Malaysia. For more details, visit our website at www.corfordasia.com.

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