Is Your Recruiter Working For You?

One of the most convenient sayings for recruiters working in direct placement is the following:

"I make more when you make more."

Direct Hire recruiters are paid a percentage of the first year salary (somewhere between 20% and 30%), which means if you get paid $50,000, the recruiter makes $10,000.  If you get paid $60,000, the recruiter makes $12,000. 

The saying makes sense because it is true.  The more the candidate is payed by the company, the more the recruiter makes.  Thus, it makes sense that it is in the recruiter's best interest to work for the highest salary.  But is that always the case?

Most recruiters work on a contingent fee basis.  What that means is the recruiter is only paid a fee if the candidate takes the job.  If the candidate turns down the job, is not selected, or leaves before a grace period (usually 90 days), the recruiter makes nothing.

When everything is going well, the recruiter works hand in hand with the company to secure a higher salary.  But what happens when things aren't going so well?

• Some candidates are unruly, and view salary negotiation as something to do once a firm offer is in hand. Most employment columns tell you this is when you should best negotiate, but when a recruiter is involved, it was their responsibility to determine what you are looking for prior to submitting you.  If they go back to the manager and ask for more money, they may lose the offer (and the whole fee).  If they don't get more money, they may lose the candidate (and the whole fee).
  
• Sometimes candidates want to think about the offer, or wait until another offer is in hand.  In this case, the recruiter has to weigh whether it is in their best interests to wait for the candidate, or submit another before the hiring manager selects another candidate.
• Sometimes, a candidate's performance in an interview is poor, but the manager needs someone to fill the slot.  It's up to the recruiter to determine if the candidate is willing to negotiate down on their salary.
• Sometimes, the candidate finds out the job is more demanding than it was advertised, or has less benefits, or more travel, or some other kind of issue that can only be worked out with monetary compensation.  In this case, the recruiter has to determine how hard to fight the company for a pay raise.

In all of these cases, the recruiter has to balance the scenario of getting no fee, to getting a reduced fee.  The goal, in each case, is to maximize the amount of money the recruiter makes, which is why the only person who is in a position to fully comprehend the hiring picture, is the recruiter.

The hiring manager wants to minimize his budget without compromising quality.  He wants to pay the least to the candidate and the recruiter that he can for the maximum benefit.

The candidate wants to maximize their salary, knowing the best chance they have for a best raise is when they are first hired. They don't care about what the recruiter makes, because they probably won't be using the same recruiter for several years, if any.

The recruiter, who is payed for his skill in bringing together the candidate and the hiring manager, is responsible for balancing the demand of both of the other parties.  The other parties have no such financial demands, which is why recruiters are so big on loyalty and forming relationships.  Sometimes the only leverage they have is  their emotional connections to the candidate and hiring manager.

So where does that leave us?  Are recruiters really working for the best interests of the candidates?  No.  They are working for the best interest of all of the parties.

I don't know who came up with the phrase, but there is an old saying that if you try to please everybody, you'll end up pleasing nobody.  That person must have been a recruiter, because once the deal is struck, nobody wants to talk to the recruiter anymore.

And that's why recruiters charge so much.

Comments

[Jobmatchbox]

It is worth emphasizing that there are three major categories to consider here:
Search i.e. Permanent Placement with no contract period.
Temp to Perm i.e. Hourly with the option to be hired.
Contract i.e. Hourly with no intention to hire.

In this scenario we are talking about Search, not Temp to Perm, not Contract. There are major differences.

With search placements, it is so very important that you trust your recruiter and have a good sense that the recruiter is going to be someone who will be trusted by the hiring team. This makes all the difference.

If the recruiter is trustworthy and trusted by all parities then they will have fewer problems. If you don't trust the recruiter then you shouldn't be using them.

The recruiter should always frame the discussion and terms up front. They should get a written confirmation of the salary terms up front from the job candidate. If the candidate changes their salary requirements for less than a good reason after that then they should be reminded that they verified their salary requirement in writing.

What I would consider to be less than a good reason:
1. The job description taken by the recruiter or account manager was not accurate.
2. The hours or travel or some other expensive or life consuming aspect of the job were not properly accounted for in the description or account provided for by the recruiter.
3. The job candidate has multiple offers and a bidding war ensues. Note that if the recruiter finds themselves in a bidding war for the candidate they owe this fact to themselves 9 times out of 10 because they found the candidate on a Job Board somewhere. Candidates on job boards are usually there after they have left the passive candidate stage. Passive candidates are much better candidates for search scenarios anyway. Recruiters - don't blame the candidate for your taking a short cut.

Candidates should ALWAYS be up front and if the recruiter is gives them reason to be, by also ALWAYS being up front, then things will go well for everyone.