Can anyone in the industry give me an idea of what the commission for a headhunter/recruiter is? We’re talking small potato job here, under 50k.
What is the structure for something like this; is it fairly consistent across the industry? For a permanent position, does the hiring company pay a onetime fee equal to a percentage of the hiree’s salary? Or do they continue to receive commission for as long as the hiree works at the company? What is a typical percentage? Do they get the money when the hiree beings working, or after a specified amount of time? Any further enlightenment you could give would be appreciated.
From what I’ve heard, it is a one-time percentage of the starting salary paid by the hiring company, as long as the hiree stays for a given period of time (6 mos to a year). This was in the corrugated industry, at the $40K - $60K salary range. I am not a headhunter, but have talked to many.
IANA headhunter or recruiter, but have worked with a number of them in getting additional staff members. Usually programmers.
It tends to vary from firm to firm. Usually if its a straight hire its usually 25% they want the hiring firm to pay. I’ve also done contracts to hire, if I use them as a contractor (at very high rates) for 6 months I can then hire them with no fee. Gives me a chance to see their work performance and decide if I want them or not. I’ve also done 2 and 3 month contract to hire. With a smaller percentage after the time period.
That’s a big percentage! Can anyone else chime in to confirm that 25% is typical? And just to clarify, that would be 25% of the new hiree’s annual salary?
Well, I am a hiring manager and have used recruiters quite heavily at previous companies to fill roles in Software QA in the Boston MA area.
Here’s my experience:
In general, the commission/fee paid to a recruiter was 20-25% of the annual salary of the new hire, payable pretty much as soon as the person started work.
If the new hire left before 3 months, then most reputable agencies/recruiters would give you a discounted refund on the fee.
Of course, this was a couple of years ago during the height of the dot-com bubble, when there were more jobs than people and you had to aggressively recruit to fill positions. Now I’m not sure whether the fee is still 20%; I bet you could talk a hungry recruiter into 10-15%, or a two-for-one special.
I can confirm that it is about 25% of the hires first year salary at least in the Boston area. Some headhunters have told me that some hard to fill positions brought in commisions in excess of 30% during the height of the dot-com bubble.
Headhunting can be very lucrative during good times if you work hard and have an established client base of both companies and quality recruits. However, during job markets like these, they are lucky to have a job at all. The great majority of the ones that I know have been laid off in the last two years and have to find other lines of work.
Follow-up question, to those who have hired with recruiters:
When determining the salary to be offered to a new hire arranged by a recruiter, did you offer a fair market price, which you then paid a fee on top of, or did you reduce the offer to compensate for the fact that you were paying a fee? If the latter, did you increase the hiree’s salary the following year to something close to the original salary + recruiter’s fee (assuming good work, etc.)?
I suppose my motives here are pretty transparent, but I am essentially just curious.
In my experience, you offer a fair market salary to the candidate.
First, because it is fair to the candidate and to the recruiter.
Second, because most of us who have been around for a while are very dubious about accepting a low salary now against the promise of a “suitable adjustment” at some time in the future. Been there (in different circumstances), done that. I was impressed at the list of reasons presented the following year as to why the alleged promised salary increment never showed up.
Look, if you can’t afford to use a recruiter then don’t. Use one of the job sites (monster or careerbuilder or hotjobs or whatever).
Or try to negotiate a flat fee which you can afford against the promise of future work. As shagnasty says, there’s a lot of out-of-work recruiters right now, so you might be in a good negotiating position.
Sorry, I guess my motives were not as transparent as I thought. I am on the other end of the scenario; “new hiree” just curious about the money changing hands that I can’t see.
One thing I can add to this is that during bad economic times, the headhunting firms can lower the commission rate to be more competetive. Especially if they know they have a candidate competing for a position with another non-headhunter person.
Back when jobs were plentiful and making a placement was as simple as matching up a job posting with a candidate on Monster, there were recruiters who were starting to work for a flat fee. Of course, at this time, there wasn’t a whole lot of real work involved.
Offer the candidate what the candidate is worth. If you don’t, you insult the candidate and could get your offer refused. If you think the fee is too high, you can try to negotiate a lower fee with the recruiter, or you can try to fill the job on your own, but don’t shortchange the candidate.
I worked for a company that worked with recruiters in what I guess would be called a support role and spoke to hundreds of them in that job. Some recruiters will be very firm in their fees. Some will be willing to discount their rates if they don’t have to go through a lot of effort to find the candidate. Sometimes you might have a case where one recruiter is splitting fees with another recruiter who may have put them in touch with the candidate.
I’ve also been to several interviews arranged by recruiters and placed into a couple jobs by recruiters. As a candidate, that fact that an employer is using a recruiter isn’t of any real concern to me. I’m not about to discount my salary requirements because a company chooses to
use a recruiter to assist in their candidate search.
One final point, from what I know would be the point of view of a least some of the recruiters I used to work with… in a slow economy, I would be less likely to discount my rate than I would in a booming economy, assuming the candidate I have is a high-quality person. There are only so many jobs. I would have to make as much money on each placement as I could. There wouldn’t be much of an opportunity to give a discount with the hopes of making it up later.
Well, that’s a horse of a different color! Pay no attention to the man behind the curtain!
Seriously… make sure you know what you’re worth, and make sure you get a salary you’re happy with and let the recruiter worry about what he’s getting paid. What the employer pays the recruiter should be of no concern to you when you receive the offer. And if the employer tries to tell you he’s lowballing you now because of the recruiter and will make it up to you next year, get it in writing, and even then, don’t take the job unless you can be happy with it if he doesn’t come through, or you’re willing to walk next year to make sure he does come through. You should have given the recruiter an honest salary expectation when you first talked to him. If you get an offer lower than that, be suspicious. I one had a recruiter run me around for weeks for a job that when I got the offer was $5000 less than what I had told him was an absolute bare minimum, and found out he new what the offer would be all along. He was hoping I’d feel like I’d have to take it after everything I went through. I turned it down. He lost his chance at a commision, and I ended up with something better.
Unless… If it turns out to be a contract job. If it’s an hourly contract job, you want to try to find out what recruiter is charging the employers and get as much of that as possible. Six month contracts can quickly turn into 2 month contracts if the employer thinks he’s paying too much for you, and the bill rate to the recruiter will be what he thinks of when he sees you, not how much you get paid.
As an independent headhunter and one that worked for a firm. Over the years I acquired literally thousands of multi-disciplined contacts and/or resumes. This saved me money on advertising. I maintained contact with many of these over the years. I knew what a hiree wanted and the hiree knew that I was above board and we formed some good relationships. As an independent there are no in between partners, thus allowing me to be very flexible on fees that I would charge. Having good client references helps up the ante.
I would be worried about getting it in writing because it sure likes to me like you have a record of joining a conspiracy to defraud the recruiter.
As an aside 25% of the salary sounds like a lot of money and it is. But at the height of the tech boom I was told by people at the company where I work that our recruiting efforts were costing us about 10K to 15K per engineer hired. not quite 25% but it is not cheap to find good people.