Recruiters make money primarily through a few different business models, depending on the type of recruiting they engage in. Here are the main ways recruiters generate income:
1. Contingency Recruiting: In this model, recruiters are paid a fee only when they successfully place a candidate in a job. The fee is typically a percentage of the candidate’s first-year salary, often ranging from 15% to 25%. This approach incentivizes recruiters to find suitable candidates quickly.
2. Retained Recruiting: Retained recruiters work on a contracted basis and receive payment upfront, regardless of whether a placement is made. Companies pay a retainer fee, which can be a flat amount or a percentage of the expected total fee. This model is common for executive search firms and high-level positions.
3. Temporary Staffing: Recruiters who focus on temporary or contract staffing charge clients for the services of temporary workers. They pay the temporary employees a set wage and charge the client a higher rate, keeping the difference as profit. This model allows recruiters to earn ongoing income as long as the temporary placements are active.
4. Recruitment Process Outsourcing (RPO): Some recruiters offer RPO services, where they manage all or part of a company’s recruitment process. They may charge a flat fee, hourly rates, or a per-hire fee, depending on the agreement.
5. Consulting Services: Recruiters may also provide additional consulting services, such as market analysis, talent mapping, and employer branding strategies. These services can generate extra revenue beyond traditional placement fees.
6. Training and Workshops: Some recruiters offer training programs or workshops for employers and job seekers, providing guidance on the hiring process, resume writing, and interview techniques. These services can be another source of income.
Overall, recruiters leverage their expertise in talent acquisition to generate income through various models, adapting their approach based on the needs of their clients and the job market.
