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. Personal Finance

    How To Get That Entry-Level Financial Analyst Job

    Landing a job as a financial analyst takes study, strategy and a lot of hard work. Here's how to hone your competitive edge.
  2. Personal Finance

    Does It Make Sense to Go to College in Europe?

    If you're deciding whether to get a degree abroad, first do your research and talk to alumni who have completed the same program.
  3. Professionals

    Small RIAs: How to Level the Playing Field

    In order to compete with larger firms, small RIAs have to get a little creative. Here are a few ways to kickstart growth.
  4. Professionals

    The Rich Get Richer: Global Wealth is Rising

    Global wealth is rising and expected to continue. Advisors should know that the wealthy value fee transparency, performance.
  5. Entrepreneurship

    Bill Gates Success Story: Net Worth, Education & Top Quotes

    Learn about billionaire Bill Gates, and how the computer genius forged his own path from an early life and eventually changed the world with his innovation.
  6. Entrepreneurship

    Donald Trump Success Story: Net Worth, Education & Top Quotes

    Discover more about Donald Trump the man. Learn about his history and back story, path to success and current political aspirations.
  7. Entrepreneurship

    Hillary Clinton Success Story: Net Worth, Education & Top Quotes

    Learn about Hillary Clinton's early life in Chicago, her years in Arkansas with her husband, and her time as first lady, senator and secretary of state.
  8. Entrepreneurship

    Mark Zuckerberg Success Story: Net Worth, Education & Top Quotes

    Learn about Mark Zuckerberg, the founder and CEO of Facebook. Understand where he came from and what in his life helped him achieve success.
  9. Entrepreneurship

    Charlie Munger Success Story: Net Worth, Education & Top Quotes

    Learn about Charlie Munger. Understand what drives him, how his early life shaped his later success, how he found that success and what he's doing with it.
  10. Taxes

    Top Tips for Minimizing Taxes on Severance Pay

    A look at the top ways to lessen the tax burden on severance pay.
RELATED TERMS
  1. Lilly Ledbetter Fair Pay Act

    A federal law designed to ensure equal pay for all workers, regardless ...
  2. Age Discrimination In Employment ...

    A federal statute protecting "certain applicants and employees" ...
  3. Society of Actuaries (SOA)

    The SOA is a professional organization for actuaries in the U.S., ...
  4. Networking

    A process that fosters the exchange of information and ideas ...
  5. Credit Business Associate - CBA

    A designation awarded to those who show mastery in financial ...
  6. Always Be Closing - ABC

    Retail jargon used to describe a sales strategy in which a salesperson ...
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. Which professional athletes are on pace to join Michael Jordan as billionaires?

    Michael Jordan is perhaps one of the most well-known and richest athletes in the world. However, two notable athletic giants ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!