How are Agency Recruiters Compensated?Agency recruiters are compensated in various ways. Explore each method and how they impact the attention recruiters provide to job seekers and employers.
Recruiters are compensated for their work in a variety of different ways. While some rely on commission-only pay, some get a salary, others earn an hourly wage plus benefits. Whether you are salary or commission, it's important to know how recruiters get paid so that your own expectations and budgeting needs can be managed properly.
There are several ways that recruiters can be compensated, and the method of compensation can depend on the type of recruiting firm they work for, as well as the industry they specialize in.
After all, you’re helping clients find the best candidates for their company - hopefully you are getting paid for it!
In this post, we'll break down how recruiters are compensated and what kinds of incentives they can earn based on their performance.
Recruiters paid on commission receive a percentage of the hired candidate's yearly salary.
Recruitment agencies are paid by the employer to find candidates for open positions. They work with their clients (companies looking for employees) to fill specific roles and will typically charge a fee based on salary or hourly rate.
Salaried recruiters are paid a set amount per year, regardless of the number of placements they make. The benefits of being a salaried recruiter include a steady paycheck and a more stable job environment.
Whereas. the percentage of a candidate's salary varies depending on the recruiter’s experience and industry but typically it works out well for both parties: the candidate gets compensated fairly for taking on extra risk by changing jobs, while you get paid well for helping find those jobs.
There are two primary recruitment models to consider:
In the Contingency Model, recruiters are paid a percentage of the candidate's first-year salary if the candidate is hired.
For example, if the recruiter helps a candidate land a job with a salary of $100,000, the recruiter may receive a fee of 15% of that amount, or $15,000. Contingency recruitment is common in industries where there is high demand for top talent, such as technology or finance.
In Retainer Recruitment, the employer pays the recruiting firm a fee upfront to find and present a shortlist of candidates for a specific role.
The recruiter is then paid a percentage of the candidate's first-year salary if the candidate is hired. This method is often used for executive-level positions or hard-to-fill roles.
Recruiters’ commission might be capped.
A recruiter might have a capped commission. This means that the recruiter's compensation is based on a percentage of the hiree's annual salary, but the percentage cannot exceed a certain amount. The cap can be set by either the client or by the recruiting company.
Recruiters can take this into account when quoting fees and negotiating terms with clients, but it will also impact how they go about their work—for example, it may affect which candidates are pursued and when in their career cycle those candidates are pursued.
Recruiters may receive bonuses based on performance.
A recruiter may receive bonuses based on performance. Bonuses are usually paid only after a candidate has been hired and is working for the company.
The amount of the bonus is usually a percentage of the candidate's starting salary and is paid out over several months or years, depending on how well the candidate performs in their role. The bonus can be based on factors like tenure with the company, retention rate, profit generated by candidates who were sourced by this particular recruiter, etc.
The benefit of being a commission-based recruiter is the potential to earn a higher income, as their pay is directly tied to their performance. However, the downside is that their income may be more unpredictable, as it depends on the number of placements they are able to make.
Recruiters may receive additional rewards and benefits.
Recruiters are typically paid on commission rather than salary, with some additional rewards and benefits.
Many recruiters receive bonuses based on performance. While the average hourly rate of a recruiter is $53, top performers may earn up to $125 per hour. Some recruiters report spending an average of 10 hours per week per client, but this will depend on the size of the company and job market in your area.
Recruiters are often paid by the hour or by percentage of their hired candidate's yearly salary—typically between 15% and 25%—which makes them more likely than other professionals (e.g., lawyers) to be able to negotiate their payouts from clients upfront rather than having it deducted from after-tax profits at year-end when they file taxes next spring!
Commission-based recruiters, on the other hand, are paid a percentage of the placement fee for each successful placement they make. These recruiters may work for a recruiting agency or be self-employed. The benefit of being a commission-based recruiter is the potential to earn a higher income, as their pay is directly tied to their performance. However, the downside is that their income may be more unpredictable, as it depends on the number of placements they are able to make.
In addition to their base compensation, recruiters may also be eligible for bonuses or incentives based on their performance. These can be based on the number of placements made, the quality of the placements, or other metrics.
Recruiting is a job everyone should try.
Recruiters are in the business of finding the right people for their clients' companies. These professionals must be well-versed in many fields and have an understanding of how to match candidates with positions based on their skills, experience and personality traits. In short, they need to know what they're doing!
Regardless of the method of compensation, recruiters play a crucial role in helping job seekers find the right fit and helping employers find top talent.
Some recruiters may prefer the stability of a salary, while others may be drawn to the potential for higher earnings through commission-based pay or starting their own business!
Chatkick’s Talent CRM platform allows recruiters to easily source candidates, automate outbound messages, and provide valuable insight to clients!