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Do Recruiters Read Cover Letters?

Why Would a Company Pay a Fee to A Recruiter? They Are So Expensive! (VIDEO)

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Why Would a Company Pay a Fee to A Recruiter. They are So Expensive!

I think the answer is obvious but I worked in search for more than 40 years. Here’s the reason.


Having worked as a recruiter for more than 40 years, I have a perspective on answering this question… "Why would a company pay a fee to a recruiter? They are so expensive!"

When you stop and think about it for a second and look at it from a company's perspective, I will divide this between contingency a retained search firms, if they are working with a contingency recruiting firm, you can work with multiple firms and only pay the one that provides the person that was hired. That means you have a sales force available to you that is enormous out there trying to find the right talent for your firm to hire.

But still, it seems expensive. A company will pay a fee of 20%, 22.5%, 25%, 30%, 35% or even more on a contingency basis. For retained firm, is always the high end of the scale plus expenses. This seems expensive. Again, let's look at from the employer's perspective... You may have a few people doing recruiting for your firm. Some firms may work with a team of individuals who are able to source, interview, assess, and refer talent because they have a big pool of. Individuals available to them doing the recruiting.

Using IT or accounting as an example, most firms are not going to have a team of individuals that their firm. They may have one individual who is responsible for filling a certain type of role. Not only are they filling one type of job, but they are filling multiple jobs. They have to find these people.

You may say, "Just run an ad!" That's easy for you to suggest. Typically, you get many many many bad responses, hoping against hope, that one person comes through their that you want to actually talk to. You see, there is a lot of kissing frogs and talking to frogs before you decide you actually want to go out on a date with them let alone customer want to get married to them! As a result, there is a lot of time that goes into sourcing talent.. The result is a decision that you would be better served by having a bigger salesforce out there serving you to find talent and qualifying people for you.

What third-party recruiters and sourcers often do is that they are out there finding the talent and referring people for interviews. From there, companies take over and do the rest of the process. They don't do the scheduling; the 3rd party recruiter or the sourcer or might do that. It just saves them a lot of time he gets an access to a bigger pool of talent because their "sales force" is bigger.

In addition, you may be thinking of one job. They may be trying to fill 15 or 20 different types of jobs. As a result, there just isn't enough time and in the day to do that. Without a doubt, companies find it cost-effective to pay the fee on a contingency basis to whoever finds the right talent.

On a retained basis, it is different. On a retained basis, you are paying them for focused attention. They ARE going to find that person you will eventually hire. Thus, you are prepaying them a certain amount of money to purchase their attention and commitment to filling a particular job. This tends to be done for positions in a high level within an organization. C suite and senior positions in an organization will generally be put out to a retained search firm. They are definitely going to fill that job. It is cost-effective for them. Is cost-effective because they can't dedicate the resources to do everything they need to do.

Jeff Altman, The Big Game Hunter is a coach who worked as a recruiter for what seems like one hundred years. His work involves life coaching, as well as executive job search coaching and business life coaching. He is the host of “Job Search Radio,” “No BS Job Search Advice Radio,” and his newest show, “No BS Coaching Advice.”

Are you interested in 1:1 coaching from me?  Email me at [email protected] and put the word, “Coaching” in the subject line.

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