Recruiting Fees

Dear Janet,

I am starting a recruitment agency and would like to know where I can get information about current market rates. What percent do employers pay a recruiter? Is the fee paid after the employee stays for a set period such as 3 months or is it paid on hire date?

–JM

Dear JM,

Recruiters typically charge anywhere from 20 to 35 percent of the starting salary – and in today’s job market, employers are glad to pay it for good recruits. But if you’re just starting out in this business, don’t order your Mercedes too soon. It can take months to find clients, find likely candidates, set up interviews, and (if your candidates are hired), get paid. If your client companies work with more than one recruiter or are searching on their own, you also could go through all the motions (and the expense) of finding likely candidates and never make a dime. 

Fees are usually paid when a candidate is hired and agencies typically offer a three- to six-month guarantee. “This doesn’t mean the client gets their money back, but rather that the recruiting firm will find a new recruit at no charge,” says Human Resources consultant Michael Holzschu, of Holzschu, Jordan, Schiff & Associates (HRDoc1@aol.com). 

Other fee arrangements exist, too. “Some agencies will do a contract search for a company for specific positions at a set rate,” says Holzschu. Such contract searches are often for top level executives and command higher fees than run-of-the-mill recruiting. Yet another option: contract hiring. Typically here, a client company pays the recruiting firm a monthly fee to to fill a specific number of positions. 

If you are serious about this field, consider joining The National Association of Personnel Services. The organization has chapters in many states and publishes a variety of for-sale publications that can be useful to you. You can find them on the web at http://www.napsweb.org 

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