From both companies and job seekers alike, there is often much confusion about what recruiters, or headhunters, actually do, and whether they're worth the sometimes high fees they command. Like many things in the business world, the answer ultimately depends upon your company's needs, the current state of the job market and how unique the position is that your company is trying to fill.

Inside the Industry
Most recruiters have industry-specific niches. Whether your company is in the medical field, construction, engineering, insurance, law or just about any other business, there's probably a recruiter that specializes in your industry. These recruiters have extensive knowledge of the particular challenges and trends that your industry is currently facing, and will be able to tailor their candidate search to ensure they're locating the very best talent.

Time Is Money
In business, time is money. Screening and recruiting new hires takes time, and a good recruiter will perform these tasks for you. They'll advertise the role, scour their own database of candidates, screen incoming resumes and headhunt passive candidates, sending you only the very best candidates they find. The recruiter's work eliminates your company's need to sift through the massive number of resumes that come in and limits the number of interviews you'll have to conduct to only a few.

Established Business Networks
One of the primary selling features of recruiters is their developed pool of business contacts. It's important to be well connected when you work in the recruiting industry, and for that reason recruiters constantly attend business lunches and networking events, spend massive amounts of time reaching out to people through online forums, and develop large pools of outstanding candidates that they can market to companies that may be interested in them. There's a good chance that when you contact a recruiter who specializes in your area of business, it may already have someone in mind who can fill the gap in your organization.

Access to Passive Candidates
The term "headhunting" came about as a result of the way that many recruiters source passive candidates: they "hunt" for the right person to fit your company's needs. Recruiters can often gain access to people who are not looking for a new job, and might even work for your direct competition. If these candidates are successfully recruited into your company, it could help you gain a competitive advantage.

Results Come With a Cost
When it comes to recruiters, everyone worries about the cost. The truth is, sometimes using a recruiter can cost a lot. Most recruiters bill their client companies by charging them a percentage (generally in the range of 20 to 25%) of the salary that a successfully placed candidate will be paid in the first year. If it is a particularly high-profile position, this fee could represent a fair chunk of change. In many cases, the cost is worth it if the position is highly specialized or if the job market is particularly competitive. On the other hand, the same could be true in a job market flooded with candidates, where the amount of time required to sift through resumes and screen candidates could be astronomical.
Additionally, many employers don't have to pay recruiters until the employee officially starts work, so if the search is unsuccessful, your company owes nothing, and most new hires also typically come with a guarantee period of three to six months. However, if you're working with a retained recruiter, your payment structure may be based upon its ability to produce suitable candidates, regardless of whether you hire those candidates.

The Bottom Line
The important thing to remember about recruiters is that they aren't all created equal. Some recruiters and recruiting firms use more methods to source suitable candidates than others do. Also, some recruiters invest far more time into research and the tracking of passive candidates than others do. Be up front with your recruiter about what you need, and don't be afraid to ask questions about what search methods they'll be using on your behalf. At the end of the day, having talented staff is worth it - as long as you're spending your recruiting dollars wisely.

Related Articles
  1. Budgeting

    Lost Your Job? 6 Things to Do Immediately

    If you’ve lost your job, shoring up your finances as best you can will make it easier to get back on your feet again when that next position rolls around.
  2. Professionals

    Broker Or Trader: Which Career Is Right For You?

    Both brokers and traders buy and sell securities, but there are some subtle differences between the two careers.
  3. Personal Finance

    Don't Sign That Non-Compete Without Reading This

    Non-compete contracts aren't just for high-level execs these days. How to protect yourself if your employer – or prospective employer – insists you sign one.
  4. Professionals

    Financial Career Options For Professionals

    A career in finance can take a business professional down many different paths.
  5. FA

    The Basics of The Series 79 Exam

    Passing the Series 79 exam is usually necessary for anyone who wants to work in investment banking.
  6. Professionals

    10 Steps To A Career In Hedge Funds

    The first step to getting your hedge fund career started is to be sure you really want to work for a hedge fund. If you do, it’ll show in your actions.
  7. Professionals

    Business Analyst: Job Description & Average Salary

    Learn the different types of business analyst careers available; understand the skills and education needed and the salary you can expect to make.
  8. Entrepreneurship

    How To Make Money With Domain Names

    Domain names are hot commodities in today’s tech-centric world, and for good reason.
  9. Professionals

    How To Get A Job On Wall Street

    Although Wall Street has its share of problems, finding people who want to become traders isn’t one of them.
  10. Economics

    What is the American Dream in 2016?

    The American Dream is still alive and well, but it looks very different than it used to.
RELATED FAQS
  1. Does a financial advisor need an MBA?

    Obtaining a license as a financial adviser does not require an Master's of Business Administration (MBA) degree. The Certified ... Read Full Answer >>
  2. How can an investment banker switch to a career in corporate finance?

    It's pretty easy for an investment banker to switch to a career in corporate finance. The career skills are easily transferable, ... Read Full Answer >>
  3. How do I get started with a career in asset management?

    The asset management industry has a variety of different career paths. Depending on what asset management area you would ... Read Full Answer >>
  4. For which kind of jobs is having Magnum Cum Laude most important?

    Having a magna cum laude degree is most important for jobs in the fields of finance, management consulting and engineering. ... Read Full Answer >>
  5. Other than accounting, what does a corporate finance job involve?

    While a corporate finance job almost always involves accounting in some capacity, there are many additional job duties and ... Read Full Answer >>
  6. What qualities are necessary to be an effective member of the c-suite in a publicly-traded ...

    Several qualities are needed to be a member of the c-suite of a publicly traded company. The c-suite is business jargon term ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center