How Headhunters Make Money
I have been asked by several candidates in the past how headhunters or agency recruiters make money. There are two basic models for search firms to earn revenue, retained search and contingent search.Retained Search - In a retained search, a client company will retain the services of a recruiting firm to fill a specific position. The recruiting agency will be paid a fee that is between 30 and 45% of the newly hired employee's total annual compensation package. They are paid this amount whether or not they find the candidate that is ultimately hired. These types of searches are typically reserved for executive level hires, and there are executive search firms that will only work in this model.
Contingent Search - Contingent search firms will take several requisitions on contingency. This means that the agency has the right to search for candidate's on the client's behalf and submit those candidates to the client for review. The agency is typically paid a fee of between 20 and 30% of the new hire's annual compensation package, and they are only paid if a candidate that they find is hired. There are often several agencies working on the same requisition in this model.
Notice that in both of these models, the client is the hiring company, not the candidate. This means:
- The agency is always looking out for the client company's best interests.
- If you see a search firm that wants to charge you a fee for being a candidate, run the other way!!!
What have your experiences with search firms (headhunters) been?
posted by Jason Roberts @ 6:46 PM
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