If you're an HR leader or founder trying to figure out how to staff your manufacturing or automation company, you've probably felt paralyzed by the recruiting model decision. Should you hire a full-time internal recruiter? Work with external agencies? Try some hybrid embedded approach? Each option has vocal advocates and horror stories, and the wrong choice can cost you six figures while your critical positions sit empty.

Here's what makes this decision so difficult: there's no universally right answer. The best recruiting model for your company depends on your hiring volume, the complexity of your roles, your budget, your timeline, and your internal capabilities. But there are clear frameworks for making this decision well.

This article will give you decision clarity by breaking down the real pros and cons of each model, explaining when each makes sense, highlighting the common mistakes companies make, and showing you how to right-size your investment in hiring.

Understanding the Three Core Models

Internal recruiters are full-time employees dedicated to your hiring needs. They learn your culture deeply, build long-term relationships with candidates, and develop institutional knowledge about what works in your organization. The investment is typically $70,000-$100,000+ annually in salary, benefits, and recruiting tools. They work exclusively for you and handle everything from sourcing to offer negotiation.

External agencies work on contingency (paid only when you hire their candidate, typically 20-25% of first-year salary) or retained basis (paid upfront regardless of outcome, typically 30-33% of first-year salary). They bring established networks, specialized industry expertise, and the ability to handle surges without adding headcount. You pay per placement rather than ongoing salary, but the per-hire cost is significantly higher.

Embedded or fractional support is the hybrid model where an external recruiter works as an extension of your team, typically for a monthly retainer. They act like an internal recruiter but serve multiple clients. You get dedicated attention and cultural integration without full-time salary commitments. Monthly costs typically range from $5,000-$12,000 depending on scope and hiring volume.

When Each Model Makes Sense

Choose an internal recruiter when:

• You're hiring 15-20+ people per year consistently
• Your roles are diverse enough that specialization isn't critical
• You value cultural knowledge and long-term relationship building
• You have the infrastructure (ATS, budget for tools, job boards) to support them
• You can keep them busy with meaningful work during slower hiring periods
• The math is straightforward: if you're hiring 20 people annually through agencies at 20% fees with an average salary of $80,000, you're spending $320,000 in recruiting fees. An internal recruiter at $90,000 fully loaded who successfully fills 15-18 of those positions pays for themselves easily.

Choose external agencies when:

• Your hiring is sporadic or seasonal (3-8 hires per year)
• You need highly specialized talent (controls engineers, IIoT architects, senior automation leaders)
• You're entering new markets or geographies where you lack networks
• You need to fill positions quickly and don't have internal capacity
• The opportunity cost of unfilled positions is extremely high
• Agencies excel when speed and specialization matter more than cost per hire. If leaving a controls engineering position open for six months costs you $100,000 in lost productivity and delayed projects, paying a $25,000 agency fee to fill it in 30 days is excellent ROI.

Choose embedded/fractional support when:

• You're hiring 8-15 people annually—too much for agencies, not quite enough for full-time
• Your hiring comes in waves (project-based, seasonal ramp-ups)
• You want dedicated attention but can't justify full-time salary
• You value cultural integration but need specialized industry expertise
• You're testing recruiting capability before committing to full-time headcount
• This model is increasingly popular with mid-sized manufacturers and automation companies because it offers the best of both worlds: the cultural knowledge and dedication of internal recruiting with the specialized expertise and flexibility of external support.

The Most Common Mistakes Companies Make

Mistake #1: Choosing based on cost per hire alone. The CFO sees that agencies charge 20-25% and internal recruiters cost "only" $90,000 and mandates internal. But if that internal recruiter can only fill 8 positions annually because they lack specialized networks, while agencies would have filled 12, you've optimized the wrong metric. Focus on total cost of hiring plus opportunity cost of vacancies, not just cost per hire.

Mistake #2: Hiring an internal recruiter without the infrastructure to support them. You hire someone and expect them to work magic, but you don't provide an ATS, you won't pay for LinkedIn Recruiter, you don't have employer branding, and you expect them to also handle onboarding and HR admin. They fail because you've set them up to fail. Internal recruiters need tools, budget, and focus to succeed.

Mistake #3: Using agencies as a crutch for undefined requirements. You don't really know what you need, so you engage three agencies hoping one will figure it out. You waste everyone's time with vague briefs and rejected candidates. Agencies work best when you've done the hard work of defining requirements clearly. They're talent finders, not strategy consultants.

Mistake #4: Treating embedded support like transactional agencies. You engage fractional support but don't integrate them into your team, don't give them access to hiring managers, and treat them like vendors rather than partners. Then you wonder why they're not delivering internal-recruiter-level results. Embedded models only work when you actually embed them.

Mistake #5: Making permanent decisions based on temporary needs. You're opening a new plant and need to hire 40 people this year, so you hire two internal recruiters. Next year, hiring drops to 10 people and you're stuck with overhead you don't need. Or conversely, you use agencies because you've only hired 5 people historically, but you're about to scale and the per-hire costs become unsustainable. Match your model to your forward-looking needs, not just current state.

Mistake #6: Not measuring what matters. You don't track time-to-fill, quality of hire, source of hire, or first-year retention by recruiting source. Without data, you can't evaluate whether your model is working. Maybe your internal recruiter is fast but hires don't stick. Maybe agencies cost more but deliver better long-term quality. Measure outcomes, not just activity.

How to Avoid Over- or Under-Investing

The right investment level in recruiting should be proportional to the strategic importance of talent and your hiring volume. Here's a framework:

You're under-investing if:

• Critical positions stay open for 4+ months consistently
• You're losing top candidates to competitors because your process is too slow
• Your hiring managers are spending 10+ hours per week on recruiting activities
• You're making bad hires out of desperation because you can't find good candidates
• Your team is burned out from covering for unfilled positions

Under-investment shows up as false economy—you're "saving" on recruiting costs but losing far more in productivity, turnover, and opportunity cost.

You're over-investing if:

• Your internal recruiting team has significant idle time during normal periods
• You're paying premium agency fees for roles that aren't hard to fill
• You're duplicating efforts with multiple recruiters working the same positions
• Your cost-per-hire is 2x industry benchmarks without better quality or speed to show for it

The right-sized investment should feel slightly uncomfortable—you're investing enough that talent acquisition is effective but lean enough that there's healthy pressure to perform.

A practical framework: Calculate your annual hiring needs realistically (not just current openings, but expected growth and attrition). Multiply by average salary. Budget 7-10% of that total for recruiting investment (internal salary, agency fees, or embedded costs). A company hiring 15 people at $90,000 average should expect to invest $95,000-$135,000 annually in recruiting. How you deploy that budget—internal, external, or hybrid—depends on the factors above.

Making Your Decision

Start by honestly assessing your situation:

• How many hires per year, realistically?
• How specialized are the roles?
• Do you have existing recruiting infrastructure?
• What's your budget ceiling?
• What's the opportunity cost of unfilled positions?

For most manufacturing and automation companies with 10-20 annual hires in specialized roles, the sweet spot is often a hybrid: embedded/fractional support for volume recruiting and specialized agencies for the hardest-to-fill positions. This gives you consistent recruiting capability without full-time overhead, plus specialized help when you need it.

For larger manufacturers (50+ employees annually), internal recruitment with agency support for specialized or senior roles makes sense. For smaller operations (fewer than 10 hires annually), agencies or fractional support prevent over-investment in infrastructure you don't need.

The key is matching the model to your actual needs, measuring what matters, and being willing to evolve as your company grows. The recruiting model that works today might not work in two years—and that's fine. Build in regular evaluation points and be willing to adjust.

The bottom line: There's no perfect recruiting model, but there is a right model for your specific situation. Choose based on hiring volume, role specialization, budget, and strategic importance. Avoid the common mistakes of optimizing for the wrong metrics or making permanent decisions based on temporary needs. And most importantly, remember that under-investment in recruiting is far more expensive than over-investment. The cost of empty chairs almost always exceeds the cost of filling them effectively.