How do recruiters get paid?
Recruiters are paid by the employer, not by you. A contingency recruiter earns 20% to 25% of first-year cash pay, and only when the employer hires someone they presented. A retained search firm earns about a third of first-year pay in a retainer plus milestones, hire or not. Staffing firms bill the employer by the hour. The candidate pays nothing.
By the editors of The Handoff Updated First published
The short answer
- Contingency recruiters: 20% to 25% of first-year cash pay, paid only on a hire (SHRM).
- Retained search firms: about 33% of first-year pay, paid as a retainer plus milestones whether or not anyone is hired (SHRM, Heidrick & Struggles).
- Staffing firms: an hourly rate billed to the client for a contractor the firm employs (Robert Half).
- On a $150,000 role that is $30,000 to $37,500 on contingency and about $49,500 retained. The fee to you is $0.
How do contingency recruiters get paid?
Most agency recruiters work on contingency. SHRM describes them as paid only if they fill the position, usually 20% to 25% of first-year cash compensation SHRM. Heidrick & Struggles, a retained firm, describes contingency firms the same way in its annual filing: paid only on placing a recommended candidate Heidrick & Struggles SEC filing.
Contingency recruiters rarely have a search to themselves, so speed matters to them. Robert Half says its placement fees are a percentage of the new hire's annual pay, with a 90-day guarantee period on permanent placements Robert Half SEC filing.
How do retained search firms get paid?
For senior roles, employers hire a retained search firm. SHRM puts the standard retained fee at about 33% of the role's annual salary, bonus and signing bonus, paid whether or not the firm finds the winning candidate SHRM. Heidrick & Struggles states about one third of the hire's estimated first-year compensation Heidrick & Struggles SEC filing. AESC describes the payments as a retainer plus amounts due at set times or milestones AESC.
How much does a recruiter earn on a $150,000 hire?
| Fee model | Rate | Fee to the employer | When it is paid | Fee to you |
|---|---|---|---|---|
| Contingency, low end | 20% | $30,000 | Only if the hire happens | $0 |
| Contingency, high end | 25% | $37,500 | Only if the hire happens | $0 |
| Retained search | 33% | $49,500 | Retainer plus milestones, hire or not | $0 |
The fees are our arithmetic on SHRM's published ranges SHRM. A given firm's contract can differ.
How do staffing firms get paid for contract work?
When a staffing firm places you as a contractor, you are usually the firm's employee. Robert Half says its contract workers are its own employees, paid by it, and that the client pays a fixed rate only for hours worked. If the client later hires the contractor permanently, it typically pays a one-time conversion fee Robert Half SEC filing.
What does a recruiter's fee mean for you?
- A recruiter's client is the employer. Expect them to work the roles they are paid to fill and nothing else.
- Because the fee is a share of your first-year pay, a recruiter earns more when your offer is higher. Their interest and yours line up on salary, though not always on speed.
- An agency hire costs the employer the fee on top of your salary. A direct application avoids that cost, which is one reason to apply directly to companies you already know you want.
Questions people ask
Do recruiters charge job seekers?
Agency recruiters and headhunters are paid by the employer. Robert Half says it charges candidates no placement fee, and the FTC says honest placement firms do not typically charge job candidates. New York bars employment agencies from taking an advance fee from applicants.
How much does a recruiter make per hire?
SHRM puts contingency fees at about 20% to 25% of the role's first-year cash compensation and retained fees at about 33% of salary, bonus and signing bonus. On a $150,000 role that is $30,000 to $37,500 on contingency and about $49,500 retained.
What is the difference between contingency and retained recruiters?
A contingency recruiter is paid only if the employer hires someone they presented. A retained firm is paid a retainer plus payments at set milestones, whether or not a hire results, and usually works the search exclusively.