Job Seeker Series: Agency Recruiters (Part 1)

There are a variety of things that help when working with agency recruiters, however, I think the first thing to do is explain the core business model for agency recruiting. Until you understand this, any suggestions about how to work with recruiters can seem a bit arbitrary.

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It is important to understand that you are not an agency recruiter’s primary client. You are their client, but more than that, you are their product. Their job is NOT to get you a job. Their job is to fill their customers’ positions with qualified candidates. This may seem harsh but it is reality and it is essential for you to understand. I am not saying that Recruiter Stacy is purely self-seeking and does not care about you, I am simply saying that Recruiter Stacy also has to pay the bills and put food on the table.

So how does Recruiter Stacy make money? In many cases, she works for Super Duper Staffing Agency, along with Recruiter Bob and Sourcer Jolene. Their roles are a each a little different. Bob and Stacy are primarily responsible for working with Super Duper Staffing Agency’s corporate clients. Sourcer Jolene is focused on finding candidates and helping funnel candidates to Bob and Stacy for current openings.

Openings are generally one of three types and each type works a little differently.

  1. Temporary (“Temp”): These roles are set at an hourly rate and are generally short or fixed-term contracts. Short term contracts may have an open ended duration but are generally not intended to last more than 3-6 months. Recruiter Bob specializes in temporary staffing and may also be referred to as a “Staffing Manager.” Super Duper Staffing Agency charges Corporate Client a percentage markup on your hourly rate. The markup can range from 30-60% depending on the agency and their agreement with Corporate Client. That markup pays for Recruiter Bob’s wages, Sourcer Jolene’s wages, Super Duper Staffing Agency’s overhead costs, and your access to benefits such as healthcare, 401k, etc. while you are on assignment.
    During a temporary assignment, you are the employee of Super Duper Staffing Agency and they have loaned you out to Corporate Client. Bob’s pay rate will be based on how many candidates he can keep working under Super Duper Staffing Agency’s clients at any given time. He is more likely to obtain more positions to fill if his current candidates are doing great work on their assignments.  If an assignment goes bad, Bob can lose both current and future income as a result (which means he also will have fewer jobs in which to place you and other candidates). He wants you to be happy in your job, but the more important thing is that your happiness contributes to his clients’ happiness.
  2. Direct Hire: Direct hire roles can be at any level and can be set at either an hourly rate or a salary. The distinct thing about this job is that you will never be the employee of Super Duper Staffing Agency. Instead, when hired, you go directly into the employ of Corporate Client. This is Recruiter Stacy’s specialty. Corporate Client pays Super Duper Staffing Agency after they hire one of Stacy’s candidates, which means Super Duper Staffing Agency and Stacy are not going to get paid for all their hard work if you biff it in the interview. Kidding, kidding! Well… not really. The other part of this is that if Stacy is good at her job, she is not going to send you to interview at Corporate Client if she doesn’t think they would hire you. She’s going to wait to try with Other Client, because after interviewing you herself, they would be a better fit. The markup for Direct Hire positions is a little bit lower than for temporary wages, it’s more like 20-40%, but it is also based on your entire first year expected earnings and it is usually paid in 1-3 installments. Here’s the gotcha, and why Corporate Client could consider such an investment worthwhile: Super Duper Staffing Agency guarantees their placements for 3-6 months when it’s a direct hire. That means if you do a crappy job and Corporate Client fires you during the guarantee period, or if you do a great job but then jump ship for a “better” opportunity before the guarantee runs out, Super Duper Staffing Agency has to pay a pro-rated portion of their fee back to Corporate Client. This usually burns your bridge with Super Duper Staffing Agency, Corporate Client, and Stacy herself. Don’t let this happen!
    How do you benefit from Direct Hire, versus skipping past Super Duper Staffing Agency and going straight to Corporate Client? 1. Stacy has a relationship with someone at Corporate Client. She is your “network” working for you. 2. Stacy is motivated to get the best possible rate of pay for you, because her wages are directly impacted. She also has inside info on what the company is willing to pay, so she can help make sure you don’t lose the opportunity by low or high-balling it. 3. If things go well, you can reach out to Stacy again in a few years, even if she is no longer working at Super Duper Staffing Agency and she might help you find your next job too.
  3. Temp-to-Hire: This is most simply described as “try before you buy.” Corporate Client pays the hourly markup described above for Temporary roles, and when they do hire you, they pay a pro-rated reduction of the fee described in Direct Hire roles. What they gain in being able to try before they buy, is balanced out in the form of sacrificing the guarantee provided with Direct Hire roles. For roles like this, you could be working with Recruiter Stacy or Recruiter/Staffing Manager Bob, or both.

I hope this helps you better understand the business model for most (not all) staffing agencies, as well as providing some insight into how they work and why they do what they do, the way they do it.

Tomorrow, in Part 2, I will outline some tips on how to work effectively with agency recruiters such as Stacy and Bob.


About the Job Seeker Series
The Job Seeker Series is a set of weekly reference materials developed for a Facebook group that is dedicated to Job Seekers providing mutual support to each other through the taxing and uncertain journey of pursuing new employment. Topics for these posts are selected by a vote of group members on a weekly basis.

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