Definitions

employment recruiter

Recruiter

[ri-kroot]

A recruiter is someone engaging in recruitment, which is the solicitation of individuals to fill jobs or positions within any group, such as a corporation or sports team. Recruiters can be divided into two groups; those working internally for one organization, and those working for multiple clients in a third-party broker relationship, sometimes called headhunters or agency recruiters.

Internal recruiters

An internal recruiter is member of a company or organization and typically works in human resources (HR), which in the past was known as the Personnel Office, or just Personnel. Internal recruiters may be multi-functional, serving in an HR generalist role (negotiating, hiring, firing, exit interviews, employee disputes, contracts, benefits, recruiting, etc.) or in a specific role focusing all their time on the activity of recruiting. They can be permanent employees or hired as contractors for this purpose. Contract recruiters tend to move around between multiple companies working at each one for a short stint as needed for specific hiring purposes.The responsibility to filter the candidate as per the requirement of the client.

Third party recruiters or headhunters

A third party recruiter acts as an independent contact between their client companies and the candidates they recruit for a position. They can specialize in client relationships only, and in finding candidates. Most recruiters tend to specialize in permanent or full-time, direct hire positions or contract positions, but occasionally in both.

Executive search agents/professionals who typically have a wide range of personal contacts within the area in question, a detailed specific knowledge of said area, and typically operate at the most senior level. Executive search professionals are also involved throughout more of the hiring process, conducting detailed interviews as well as only presenting candidates to clients where they feel the candidate in question will fit into the employment culture of the client. Executive search agencies typically have long-lasting relationships with clients spanning many years, and in such cases the suitability of candidates is paramount. It is also important that such agencies operate with a high level of professionalism.

Executive search agencies often also provide clients with (legal) inside rumors gleaned from contacts within their clients' competitors.

Compensation methods for recruiters specializing in direct hire placements fall into two broad categories; contingent and retained. Retained recruiters present opportunities and oversee the interview, and placement process for their clients. The contingent recruiter can earn as much as 20%-25% of the candidates base salary as a hiring fee.

Retained search

High-end executive search firms get a retainer (up-front fee) to perform a specific search for a company officer or other senior executive position. Typically, retained searches tend to be for positions that pay upwards of $100,000 and often far more.

Search fees are usually 33% of the annual compensation of the recruited executive. Fee payments are made in thirds, 1/3 of fee paid on initiation of the search, 1/3 paid thirty days later, and the final 1/3 paid thirty days later or upon placement of the candidate. It is important to note that in a retained search you are paying for the time and expertise of the search firm. You have employed the firm to conduct the entire recruitment effort from startup until the candidate has started working.

Retained recruiters work for the organizations who are their clients, not for job candidates seeking employment.

Search firms generally commit to off-limits agreements. These agreements prevent a firm from approaching employees of their current clients as candidates for other clients (for instance, if a top headhunter recruits the new CEO into Boeing, they will agree not to recommend Boeing executives to other companies). Since they act as management consultants working in the best interests of the clients for whom they conduct searches, it would be counterproductive to simultaneously remove talented executives from those client companies. Search firms may decline assignments from certain companies, in order to preserve their ability to poach candidates from those companies. Some large search firms may insist on guarantees of a certain number or dollar value of searches before they will put an entire company "off-limits". The trade association of the retained search industry is known as the Association of Executive Search Consultants (AESC) and is based in New York.

Delimited search

Another form of high-end executive search, delimited search, is often improperly categorized as retained search, although there are distinct differences.

Similar to retained search firms, delimited search firms require an up-front fee before engaging the search. Unlike a conventional retainer, however, the delimited search commitment fee is refundable if the recruiter fails to achieve a hire or other deliverable specified in the contract. Moreover, the delimited search commitment fee does not follow the typical 1/3, 1/3, 1/3 model of retainers, but rather is a relatively small up-front fee which is discounted from the final placement fee of 30-35% of the successful candidate’s first year compensation.

Both retained and delimited searches involve partial payment prior to filling the job, and the contracted recruiter has the search exclusively. Therefore, the search can be customized to the client organization’s needs, with the search professional providing a consultative service throughout the process.

While both retained and delimited searches serve client employers rather than job-seeking executives, delimited search contracts always (as opposed to sometimes) state a future date when the project must be completed or the downpayment refunded.

Relative advantages

Clients (companies seeking to hire) often tend to work with contingent search firms when filling mid-level positions. As contingent search firms generally rely heavily on their contacts, and seldom work on an exclusive basis, it is not rare for a client to work with a large number of contingent recruiters on the same search at the same time, in order to maximize the volume of candidate (job seeker) resumes they receive. Beyond the increased volume of candidates that such an approach allows, contingent firms do not get paid until the placement is made (a candidate is successfully hired), and thus the search risk is shifted almost entirely to the search firms. Moreover, contingent search firms often work with clients on Higher percentage fee basis, relative to retained and delimited search firms as they shoulder more risk.

For senior level roles, clients often prefer to work with Recruiters who have performed in the past for them and usually will end up in the hands of a contigency recruiter. By working exclusively with one firm on such searches, the client generally develops a much deeper relationship with the recruiter, and receives a much higher level of service. With both retained and delimited searches,and contigency search clients rely on search professionals to provide not just resumes, but also insightful, consultative information about the market in general.

A delimited search is often preferred by clients who are seeking a retainer-style service level, while not willing to accept the level of risk that retained search entails. While delimited search does entail up-front fees, they tend to be much smaller than total pre-placement fees that retained search entails. Moreover, delimited search professionals shoulder the risk of their own failure to execute the search within a specified time-frame, offering to refund the up-front fees in such an event. While delimited search is not as desirable for searches that are open-ended in nature, the “ticking clock” is often seen by clients as an incentive that motivates delimited search recruiters to stay more active and involved throughout the hiring process.

Specialization

Headhunters tend to either be generalists or specialists in a particular niche, with some recruiting firms also specialising in a geographical region as small as a city, and others recruiting worldwide. Niche headhunters may specialise in a specific industry or type of employee, such as medical specialists, information-technology professionals, senior-level executives, or sales professionals.

Ethics

The retained search industry has a widely accepted body of ethical principles that most professionals know and most firms uphold.

A primary tenet is that, being paid on retainer as a consultant regardless of whether hiring occurs, the recruiter has a duty not to weaken the client organization he or she has been paid to strengthen. Therefore, a retained search firm considers its client's employees off-limits and does not solicit them for other clients. Details vary and arrangements are often specified in writing rather than merely assumed as standard industry practice. Traditionally, client employees are considered off-limits for one or two years after a retained search is completed.

Candidates, too, deserve ethical treatment. They should not be misled through advertising or otherwise, and their resumes should not be distributed without their permission.

Notes

See also

www.Nason-Nason.com

External links

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