How do job recruiters get paid?

In My Humble Opinion (IMHO)
#1

How exactly do 3rd party “head hunters” get paid? Do they get paid more if they find an employee that will agree to work for less money? The industry is real estate.

The reason I ask is because I’m working with 3rd party recruiters right now, and some of them are great, but some of them make me extremely suspicious. If I understand how they are compensated, it may shed some light on their behavior.

For example, there was a posting for a job on Monster.com (company confidential, through recruiting agency) that I’m not only qualified for, but meet the listed criteria EXACTLY, no exaggeration, including number of years of experience. The salary range posted matches what I’m making now. I sent my resume to the recruiter, who contacted me instantly and had me come in the next morning for a meeting. At this meeting, the first thing he does is tell me that I’m currently overpaid, that I’m “light” in experience, and tries to hammer me down on the minimum I’ll accept for the job. He qualifies that by saying “it’s my job to try and get you as much money as possible.” I don’t buy it. This guy has made a few misrepresentations already (told me I’d find out all about the company at the first meeting, but still kept it confidential until later). One of his associates covered for him while he was on vacation, and told me there was another opportunity, but when this guy came back he pretended not to know about it, even though I found the new job listing plain as day on Monster.com.

But, I did get an interview with the first company, and it went extremely well. The company seems like a perfect match. Also, the interview led me to believe that I’m more qualified than the people they currently have in that position based on the questions they were asking me.

So I want this job, but unfortunately I have to work with this recruiter who just totally rubs me wrong. I would rather not have him negotiate my salary on my behalf, because I don’t trust him at all. Yesterday I tried to bust him out on pretending not to know about the second job by sending him a link to the Monster.com job posting, to which he replied that it was below my listed salary requirements. It was on the border, but I decided not to press the issue, because I figured he’d use it as proof I’ll accept a lower wage at the first job. I just wanted to know the company.

I’d like to tell this guy to stick it where the sun don’t shine, but I really want this job. I hate recruiters. Interviewing with them is frustrating, because they don’t know anything about the particulars of the job, they only have a generic understanding but they act like they are experts. Do any of you know how they get paid?

#2

My understanding is that a recruiting firm gets paid any or all of the following ways:

  1. They get a finder’s fee from the employer for placing someone in a job.
  2. They get a cut of the employee’s pay from the employer.
  3. They get a temp-to-perm fee (similar to #1).

In my experience, though, when I was working with recruiters in 2005 and early 2006, none of them followed up with me past a first set of interviews with potential employers. Not a single one. As far as I could tell, even the recruiter that placed me in a temp-to-perm position (which, thank FSM, went perm) would not have followed up if that position had fallen through. Even with them I never felt like anything beyond a name on a list.

Which doesn’t make one bit of sense. If a recruiter gets paid by filling open positions for their client companies, why wouldn’t they work with as many people as they can to fill as many spots as they can? :confused:

So I’ve decided that should I ever go the job-board route again (FSM forbid!), I’ll clearly state in my posting and all communications: “Notice to third-party firms, recruiters, headhunters, etc. I charge $250 for a copy of my resume and $250 for an initial in-person or phone interview, paid in advance. This is not an advance to me on any salary from an employer, it is my fee for working with a third-party firm.” Which means, the moment I sit down with a recruiter they’ve already paid to see me, so they have a clear interest in recouping their costs. I expect this to knock out all recruiters who aren’t serious – by which I mean all recruiters.

In your specific case, Roboto, something smells bad about the recruiter rep you’re talking to. Good luck resolving it.

#3

Perhaps the company you are eager to work with is not one that pays him an awful lot of money, though I would figure that recruiters could name their price rather than getting it named for them.

Guy sounds rather skeevy to me, too.

#4

Take a look at Ask the Headhunter Nick is a headhunter who answers readers questions, and talks about the process often. I’ve never used him, and am not associated with him, but have had some email chats. He has quite a few columnns about less than savory recruiters and how to identify them.

I did get placed in a job with a headhunter, and he earned his money several times over. Headhunters work for the employer, not for you. They build lists of contacts, but some work on volume, not quality.

When headhunters call me, which happens reasonably often, I quiz them on what they think I do. Those who don’t have a clue I politely give the brushoff. Those who have done enough research to know what field I’m in I chat with for a while, even though I’m not interested in changing jobs. I found that is a good filter. I have recommended good people who were out of work to some of them.

But check out Ask the Headhunter for the real scoop.

#5

The firm that bills out my husband charges one rate while he makes another. For example, if he wanted $50/hr, they would bill him out at $75/hr (example numbers, by the way). His paychecks come from them. So it’s to their benefit to try to get him to take the lowest amount he’ll accept and keep him in the contract as long as possible. (They were actually pretty good about his asking amount, but they have been pressuring him to stay with the company longer.) A lot of his fellow consultants, when finding out how much they were billed out at versus what they were actually making, decided to be self-employed. We’re talking $30/hr vs. billing out at $125/hr.

#6

If you want the most likely model, headhunters get paid 20% - 35% of your starting salary after you have been with the company for some contracted amount of time (the percentage is usually skewed towards the higher amount of the range I gave; the waiting period is often 3 - 6 months). They want you to get as much money as possible because they more that way as well. I know some headhunters, I have worked with tons of them, and I have gotten jobs through 3 of them. It is a very high-pressure job and the good ones can make hundreds of thousands of dollars a year but most of them just churn through hundreds of leads a month and maybe place one or two people.

Don’t be afraid to drop them like a fiery gasoline soaked cat if you don’t like them. The worst ones are more sleazy than the worst used car salesman. The might send out vast amounts of people for jobs they have no hope of getting while lying about the process the whole time or they might have 5 people of their own going for the same position and never mention the other ones.

#7

I should add that my explanation above is for the headhunter places permanent employee model. Contracting agencies just bill for one rate and pay for another for skilled hourly employees.

#8

Flying Spaghetti Monster?

#9

You got it!

#10

Aha! Another convert…

#11

As already mentioned, the primary way headhunters get paid is a flat % of your salary with the client company. Industry average is around 25%. Example: If your starting salary is 60,000, they invoice the client company for $15,000.

Only reason I can envision as to why this recruiter would be trying to talk you into a lower salary is to increase your chance of getting the position. In other words, maybe multiple candidates have been submitted and are equal in terms of ability and experience, then the deciding factor may well be which one is willing to accept the position for a little less.

The above is all based on this being a perm placement instead of contract or contract to perm.