There is some confusion out there as to how recruiters get paid for their contracted job placement services. Furthermore, there seems to be even more confusion about how a recruiter’s contract with an employer may affect job seekers.
External Recruiters are contracted by companies to find them the best candidate for an open position. The contract between an employer and the recruiter is usually done in one of three ways: on a retained basis, a contingency basis or a contained basis. Below you’ll find a breakdown of these methods and what they mean for you as a job seeker.
When recruiters work on a retained basis it means that they are charging the employer an upfront fee to conduct a search. It also means that they are working on an exclusive basis. In other words the job will only be filled by using that particular recruitment company.
Working with a retained recruiter is usually a slow process because they work very closely with their client. They will even use an agreed methodology to screen and interview candidates. The service doesn’t come cheap as recruiters may charge up to 50% of the candidate’s salary.
As a job seeker this means that interviewing with a retained recruiter is almost equivalent to interviewing with the actual company. It also means that you’d better bring your A-game to make yourself worthy of a high fee.
Since the stakes are high for the employer, chances are that only a select few candidates will be chosen to meet with them. However, if you are chosen to interview with the employer retained recruiters will have all the information you need to know about the job.
Contingency recruiters get paid once they find the right candidate for the job (usually 25% of a candidate’s salary). Recruiters working on this basis are often times competing with the client’s internal HR department which will also be conducting a search for the same job. They may also be in competition with other recruitment companies.
Since the pressure is on for contingency recruiters, the process is usually a bit faster. They will also be delivering more candidates, meaning job seekers may be in competition with other candidates represented by the same firm.
While you may not get the same amount of attention as you would with a retained recruiter, it is worth noting that recruiters being paid on a contingency basis have excellent sales skills that will come in handy when presenting you to a company.
Contained recruiters are a hybrid of the previously mentioned payment methods. They collect a portion of the fee up front and the rest is paid upon the placement of a candidate.
Some would say you’re getting the best of both worlds: a recruiter working very closely with the employer (possibly with less competition) with the ability to get hired quickly.
Finding out how a recruiter gets paid
When speaking with a recruiter about a potential job simply ask them how they came across the vacancy. This should give you clues as to how they are being paid by the employer. It will also clue you in on how the entire hiring process may go down.
There are pros and cons to working with different kinds of recruiters. At the end of the day no one method is better than the other. As a result you should always keep your doors open with recruiters, no matter how they are being paid.
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