Should I use a recruiter to find my next job?

December 20, 2020

By: Lisandro Vazquez, PE

So you’re thinking about changing jobs—or your career—and you’re wondering if you should work with a job recruiter. You’ve got mixed feeling on this. Do they make you more expensive to hire? Who pays them? Whose side are they on anyways? You’ve heard conflicting views. You’ve done online searches and asked around but you aren’t sure what to believe—or trust.

Well, you’ve come to the right place. Engineer Q&A tackles these questions plus many more.

You can rest assured that the insight presented here is free from some “hidden agenda.” It is based on my own background working with job recruiters both as a manager and as a jobseeker. Now, while I can’t tell YOU what’s best for YOU, I can share my own experiences and thoughts to help you along your path to success.

I’ve been hired through a recruiter; been hired without a recruiter. I’ve hired people via a recruiter; and hired people without a recruiter. I’ve been on both sides of the hiring equation with and without a job recruiter. Each experience afforded a learning opportunity and each one presented its own special reasons on why I chose to work with a recruiter or went out on my own.

In following read I’ll offer some key points for your consideration and hopefully will dispel a couple of myths you may have heard regarding working with recruiters. Enjoy!

What is a job recruiter?

A recruiter is someone whose primary aim is to help a client (usually a company) fill an open position. For our discussion we’re talking about recruiters who are filling skilled positions like designers, accountants, engineers, and managers etc. Even though some of the talking points in this article are applicable across the board, many of the fine details may not specifically correlate to placement for “temp” work or unskilled labor. This clarification said, let’s move on to learn more.

During the course of your job search you’re bound to run into a couple of different types of recruiters:

Internal Recruiters (AKA Corporate Recruiters): These recruiters are typically full-time employees whose job is to recruit qualified candidates to fill open positions in their own company. In general, they receive a salary from their company and may or may not receive a commission or bonus for landing a qualified candidate… it just depends on the specific firm. As full-time employees of a company whose principle business is likely not job-placement, corporate recruiters may have other HR or Admin related collateral duties besides recruiting.

External Recruiters: These recruiters are third-parties. In other words, they are not employees of the hiring company. They work under contract or formal agreement to provide candidates to fill open positions in a company (or multiple companies) to earn a commission or fee for their services. They may be freelance recruiters or work as employees of recruitment firms. Within this category of external recruiters there are multiple subcategories or classifications, two of which are Contingency and Retained recruiters.

Contingency Recruiters: A contingency recruiter is contracted by a company looking to fill a position on a contingency basis, meaning the recruiter is paid his/her fee contingent (i.e. dependent) upon that person providing the company with a qualified candidate who is then hired by the company and completes a certain probationary period of time following his/her start date. Depending on the negotiated contract between company and recruiter this probationary period could range from zero to upwards of 90 days. It just depends.

So, in this scenario the recruiter does not get paid unless the candidate he/she provides is not only selected by the hiring company but that the candidate accepts the company’s job offer, shows up on the start date, and works through a predetermined timeframe. Only then does the recruiter get paid in full (payment may also be negotiated to occur over a number of installments during the probationary period).

If the company does not select the candidate(s) provided by the recruiter, then the recruiter must “eat” the costs associated with searching for, interviewing, processing, and promoting their candidate(s).

Retained Recruiters: A retained recruiter is similar in many respects to a contingency recruiter except that they are paid a retainer (small lump sum) upfront regardless of whether the client company ultimately hires a candidate provided by the recruiter. The retaining fee can be used by the recruiter to pay for administrative processing, ads, and labor hours spent throughout the candidate search.

This initial lump sum serves to retain or keep the recruiter focused and motivated on finding qualified candidates for the client company because it reduces the recruiter’s exposure to risk (i.e. not receiving any money for their time & effort). Furthermore, it makes it more attractive for a recruiter to develop a long-standing relationship with the client company because doing business with that particular firm is a less risky and likely more profitable use of resources.

On the other hand, because this retainer results in a guaranteed sunk cost for the client company—as opposed to a purely contingent arrangement—use of a retained recruiter is sometimes limited to higher-level or high-impact positions where a poor hire could result in significant disruption to business or worse. Moreover, as the candidate pool for these higher-level positions such as Vice-Presidents, CFOs, Departmental Managers, Technical Experts etc. is vastly smaller than that for entry or mid-level roles significantly more time and effort may be required in the candidate search & screening phases.

RETAINED RECRUITMENT
=
LESS RISK TO RECRUITERS

On a purely contingent basis this would represent a greater exposure to risk for the recruiter as the added effort and use of constrained resources (time & money) could result in no earned income—a financial loss.

WOW… we really got into the weeds on the whole “types of recruiters” topic, but why did we dive into this topic first? The reason is economics. It’s important for us as jobseekers to understand who a recruiter truly works for and how he/she is paid because this knowledge will help us to better leverage our own valuable time & resources when engaging with a recruiter.

Additionally, it allows us to more accurately set expectations with respect to how our relationship with a recruiter will be like.

*Key takeaway:

A recruiter works for the client, and that client is usually NOT you the jobseeker. You are a client of sorts—a stakeholder—but it’s the hiring company that pays the recruitment fee. This means that a recruiter will not be your personal job searching assistant wholly devoted to your pursuits. If you’re a qualified candidate for the position(s) which he/she has been contracted to source applicants for, they’ll likely be responsive to your inquiries and very much interested in helping you (because it will help their client… the company).

Conversely, if you are NOT a qualified candidate it’s possible that a recruiter will be relatively slow to respond to you or may outright turn you down. Don’t get bent out of shape… remember who the ultimate client is and remind yourself that recruiters are working to do the best job for their clients because that is what their business is about. Try not to take it too personally; you’ll save yourself some stress.

Of course, if you think they’ve made a mistake in their professional judgement of you, or perhaps they’ve overlooked some of your qualifications, by all means illuminate these attributes to the recruiter (in a non-accusatory manner) as this could make or break your opportunity for consideration of a specific job.

Myth: Recruiters will ALWAYS work to get me the best possible starting pay because they’ll get a bigger commission.

This is NOT a sure assumption. Remember, recruiters typically get their commission IF you are selected and IF you start your job, and IF you complete the contingency/probationary period as stipulated by their contract with the hiring company. If the company doesn’t hire you, then they likely won’t get paid a dime.

So, it may actually be in the recruiter’s best interest to get you to accept a low-ball offer if it means a company will hire you. Keep in mind that the hiring company will not only have to pay your salary but will also have to pay a hefty commission to the recruiter which could be upwards of 20-30% of your first year’s salary.

Granted, this is only one narrow view of the economic factors associated with recruitment intent & motivations and many recruiters will absolutely work hard to get you the best possible compensation acceptable to their client. They know that if you’re happier, you’re more likely to be dedicated to your new company while being less of a flight risk. And the better the track record of candidates supplied by a particular recruiter, the better it is for that recruiter’s long-term relationships with clients.

Does working with a recruiter make me more expensive and/or less appealing to a potential hiring company?

Hiring people is expensive. It takes time & money to search for candidates, post job ads, review/process resumes, conduct interviews, and to finally onboard a new employee. In some cases a direct replacement could end up costing a firm upwards of 50-60% of that employee’s first year salary¹.

While that number may be valid for some situations it seems a bit high. Let’s say this figure is in the upper percentile with respect to overall cost of hiring. Even if it were halved it’d still represent a significant expense which itself does not directly contribute to earned income from a company’s perspective. It may not be too terribly far off the mark though as there are a multitude of costs to consider which may not at first be evident.

We must account for potentially significant costs associated with disruption to business due to carrying an open position. If a company is understaffed it may be forced to reduce output resulting in lost revenue; or, perhaps it must increase costs by paying overtime to existing staff.

Then there are those damages which can be difficult to isolate or quantify. What is the long-term effect to employee job satisfaction of working long hours caused by an understaffed team? Will this situation push another staff member to leave? What would be the consequences? What is the effect on relationships with suppliers, vendors, or customers precipitated by slipping deadlines or issues with inconsistent quality? What is the long-term price to pay from having to turn away new projects or miss opportunities because of a lack of necessary personnel?

When the bigger picture comes into focus the true importance and real costs associated with hiring might be far larger than you had initially imagined. The purpose of this whole thought exercise is to reshape the context with which we again ask the question:

Does a recruiter make you more expensive to hire?

Well, yes and no. Let’s explore a couple of examples and YOU be the judge.

YES. For a company possessing an effective administrative infrastructure with team-members who are adept at recruiting & interviewing and who have the TIME available to recruit, paying a third-party recruiter to source candidates may be an unnecessary expense. They can probably find great candidates on their own without paying tens of thousands of dollars to a recruiter.

Therefore, if you have your heart set on only a few companies for your next position I recommend that you go to those firms’ respective “jobs” or “careers” webpages and read through a few job postings. Sometimes you’ll find notes at the bottom of these pages stating that the firm does not wish to receive any solicitation from recruiters or agents. It’d be a good idea to do this early in your job search, especially before opening any serious dialogue with a third-party recruiter.

NO. For a small or medium-sized company that does not employ a full-time internal recruiter or may have an understaffed administrative department, working with a third-party recruiter could serve to outsource a significant amount of time/energy in searching for, contacting, screening, and processing job candidates.

This may also allow a company to avoid carrying a full-time employee dedicated to recruitment, enabling it to operate with a leaner and potentially more financially flexible framework. Recruitment costs are incurred only when there’s a need to recruit.

LESS
FULL-TIME STAFF

With this approach, even though the per unit cost of the recruitment fee is most certainly HIGH this is the price paid for an added degree of scalability in addition to reducing a company’s overall wage burden when economic activity slows. This scenario will be dependent upon each company’s unique staffing makeup and corresponding distribution of duties & responsibilities.

On the flipside, the outsourcing argument might not make a whole lot of sense if a firm is sufficiently staffed/organized.

YES. If you’re in the market for an entry-level position it might be hard for a hiring company to make a positive financial case for working with a third-party recruiter. Let’s run through a quick scenario to explain.

If a company is looking for upcoming college graduates it can simply send some of its own people to university job fairs a couple of times a year. Each event usually nets a pile of resumes while allowing company staff to speak with applicants face-to-face all in a single day. Wow, talk about an efficient use of time & resources.

Quick note: I cannot stress enough the importance of university job fairs to students. Go every year. Oftentimes, the same company personnel will attend these events every semester and/or year. Make a good impression as a freshman or sophomore and they will remember you when you’re a senior.

As a manager I used this method of recruiting with great success to source new engineering graduates for my design team. It just made the most sense. Factoring in event registration fees, per-diem expenses, lodging, rental cars, fuel, handouts, and wages associated with the hours spent recruiting, these university job fairs might cost ~$1,000-$2,500 each (assuming a plane ticket is not required). This small investment can yield several qualified pre-screened candidates. Why would you pay a third-party recruiter $10,000-$15,000 to source an entry-level professional when you can find one yourself for less than two grand?

NO. A recruiter can help a company avoid a bad hire. This is huge. According to the Center for American Progress, the median cost of individual staff turnover to a company is 21% of an employee’s annual salary.² Compound that with overall turnover rates and the costs begin to soar. Take for example the engineering/manufacturing industry. The annual voluntary separation rate for this segment ranges from 5.7% for the bottom quartile of companies to 12.7% in the top quartile.³

Let’s consider a single open position needing to be filled at our fictitious company ABC Engineering Inc. According to the US Bureau of Labor Statistics (BLS) the median annual salary for a Mechanical Engineer in 2018 was $87,370. If we were to hire a new employee at this salary, when all costs are accounted for the whole process may end up costing us the median turnover amount of ~$18,350 (21% of first year salary).

Now, let’s say that after a couple of months it becomes apparent this new hire is NOT the right fit and his/her continued employment at the firm represents an unacceptable liability. So, at the five-month point the new employee is terminated and we’re left with an open position again.

A couple of months later we finally bring on a replacement, paying about the same for wages and turnover costs (another ~$15-20k). In less than one year this poor hiring decision likely cost us between $25,000 and $50,000.

What if our assumed median turnover cost is way too high? Let’s say it’s double what we should actually expect. Even then the cost of our bad hire could be in the $15,000 to $25,000 range. Keep in mind, there are costs associated not only with recruiting & hiring but with training & reduced efficiencies while the new employee gets familiarized with new software, company procedures, and personnel. All of these represent real-world dollar values.

BAD HIRES LEAD TO HIGHER TURNOVER
& HIGHER COSTS

Facing this potential scenario, use of a Contingent Recruiter presents a low-risk avenue for increasing the number of qualified candidates reaching our administrative staff within a given timeframe. Not only would we potentially have more candidates to choose from, but if we’re working with an experienced recruiter we can expect that these candidates have already been pre-screened, interviewed, and vetted.

If the recruitment fee is 25% we’d pay $21,850 for a candidate sourced through the recruiter.

Of course, this does not represent the overall cost of turnover borne by our team since we still have administrative costs, onboarding, training etc. But, if this gets us the RIGHT new employee who will stick with our team for at least a few years, then we avoid the strife, stress, and high dollar costs associated with a poor hiring decision.

YES. This one is short and sweet. If you apply for a job via a recruiter while a similarly qualified candidate applies for that same job without a recruiter… you will be 20-30% more expensive to hire. It’s as simple as that.

For higher-seniority or technical positions “similarly qualified” might be difficult to appraise, but for mid-level or intermediate-level positions this may represent a real concern for you as a jobseeker, especially if there’s a diverse pool of candidates at your specific experience level. If it were your company would you want to pay an extra $20,000 for a “similar” candidate?

MYTH: 80% of all jobs never get listed?

If you’ve looked into using a job recruiter before, or scoured the internet on how to get your next job, it’s likely you’ve heard some sort of derivation of the following: 80% of all jobs never get listed. What did you think when you read it? Did you—do you—believe it? Did you look for more information?

If you’ve dug deeper you probably found so much contradicting information that you threw in the towel and just accepted the “statistic.”

Well, so what now? What does this statistic mean to you? Should you give up applying for jobs online? Should you stop searching job boards like Indeed.com? Are you just wasting your time? Nope.

If you’re feeling discouraged, don’t. This 80% claim does not mean that that majority of jobs are hidden out of sight, even if some articles refer to a “hidden job market.” Hidden implies that these jobs are being purposely concealed from you. That is not the case.

If a company has an open position that needs to be filled, then it makes no sense to “hide” this opening. That’s silly. Keeping it a secret isn’t in the company’s best interest. What may occur however is that the position gets advertised on an internal job board within the company rather than on public job boards. Lots of firms do this. It keeps talent from leaving the team, mitigates much of the “unknown” quantities of new hires, and reduces overall training costs.

Sure, there are some jobs that aren’t actively advertised. Some are promoted only via word of mouth. There are even openings that don’t exist until a qualified individual inquires about a job. Are these “hidden” from you? No.

The takeaway from claims of 60-80% of jobs going unlisted is this: Expand your search beyond the online job board. Be more active. And yes… do some networking. Networking isn’t some convoluted term, or some artform that can only be performed by those “in the know.” And it is certainly not “schmoozing” or “being fake” or whatever other negative connotations that sometimes get applied.

Networking can be as simple as going through your list of professional contacts from the past few years and seeing if any of those friends or acquaintances may be able to assist you in your job search. Call them or take them out for coffee. Ask them if they know of any openings in their company. Ask them if they know of anybody who might be about to leave their current position. Ask them for advice (if you want it).

That’s it. That’s networking. You can of course do much more, but simple active outreach like this might land you that next job.

Now, sometimes there are openings which are hidden. Maybe these are for high-profile positions. Maybe these are for jobs whose current occupant will be fired. It happens. But what percentage of jobs are open due to somebody actually getting fired? Not that many.

So don’t worry about this whole 80% of jobs going unlisted claim. Do some networking. Don’t just limit yourself to passive job board surfing. Be active!

Does a recruiter’s commission come out of my paycheck as a new hire? Do I end up paying for the recruiter’s fee by some roundabout manner?

Not exactly. Similar to the previous discussion points this will depend on the specific company and position; however, I offer a simple example for your consideration. Say you’re looking for a new job. Your goal is to land a starting salary of $80,000, which is a fair market value for your level of experience.

Suppose a company offers you a position with a starting salary of $64,000 ($80,000 minus a 25% recruitment fee). Would you be excited about the new position? Would you accept this drastic pay cut and undervaluation of your skills & time? I HOPE NOT!

JOB OFFERS MUST CONSIDER FAIR MARKET VALUE OF SALARY REGARDLESS OF RECRUITMENT COSTS

If a company wants to fill its ranks with competitive & competent team members, then it needs to offer competitive compensation packages.

Now, does the fact that you got hired via a recruiter impact when you get a raise or the magnitude of your raise… that’s going to depend on your company. But again, you have to consider that your company likely wishes to avoid excessive turnover, so it must keep your salary within market norms unless it’s willing to lose you.

Counterpoint: While there are countless hiring decisions made in which the recruitment fee does not get factored into the jobseeker’s offered salary, employers KNOW this cost is part of the deal. Therefore, it does factor into your total cost to the firm which may actually impact the initial salary they’re willing to offer you.

Imagine you’re a hiring manager and you have two qualified candidates with similar experience, but one of them was brought to you by a recruiter. If the position’s base pay were $80,000, hiring the candidate via the recruiter might actually cost ~$100,000 instead of $80,000.

On the other hand, you could actually “sweeten” the deal with the candidate not working with the recruiter to make that individual more motivated to join your team. If the going rate is $80,000, you could offer that person a $5,000 signing bonus and a $2,000 first year retention bonus at the completion of one full year at the firm. So, that candidate could stand to earn $87,000 instead of $80,000; and for you the employer, you get a potentially more motivated team member for $87,000, which is still $13,000 less than the candidate hired through the recruiter.

Still think this doesn’t impact hiring decisions?

Keep in mind, though, that even if it does cost more to hire through a recruiter it may be totally acceptable to a company if the candidate is the RIGHT FIT for the job. This could save them a big headache by avoiding the need to find another replacement after a short period of time. Money well spent!

The Choice:

As we’ve discussed there are so many facets to the question of whether to work with a job recruiter that it’s not possible to give a one-size-fits-all answer. There are pros and cons and a lot of it is going to depend on the specific job you’re pursuing, your experience level, the industry, and the unique companies you’re looking at.

Hopefully the information provided here will help you in making a more informed decision that lands you an excellent next job. If you do decide to work with a recruiter, check out Engineer Q&A’s article “Top tips for working with job recruiters” for quick pointers & recommendations.

Throughout your professional journey, ALWAYS keep moving forward. Always keep looking to learn more and grow. Be confident. Be proud. Keep it up! From Engineer Q&A we wish you all the best in your current and future endeavors. Thank you for reading!

Explore more great reads from Engineer Q&A:

Top tips for working with job recruiters

Salary, the full story—how you could be missing out on your full earnings

How to Improve Work Life Balance: 9 Ways from Easiest to Hardest

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