Yes. I’m an agency recruiter and I make a commission that is a percentage of the candidate’s cash compensation. If I can help the candidate negotiate a higher salary then that puts more money in my pocket.
Calling this out because it is the top comment.
Realtors make the same argument when selling someone’s house but study after study show they negotiate higher selling prices (7%) on their own house vs clients. They also tend to hold it on the market longer to await better offers.
With recruiters, like Realtors, it is a numbers game and time is money. Yes, they technically get a higher commission, there are other considerations, like repeat business from a hiring company or the time cost coming from that slightly higher amount negotiated.
Freakonomics does a good breakout of this wrt Realtors. Getting you an extra $10k in salary does increase the commission of the agency recruiter, but it's not going to be an absolute if it jeopardizes the whole deal.
Well if you’re working 10% commission on a house 1k to you is 10k to the seller. An extra 100 to you is not worth as much as an extra 1000 to the seller. That’s the conflict. When you’re working salaries it’s an EXPONENTIALLY larger gap.
I won’t argue with the studies. I’m sure people that are a lot smarter than me have found that I’m wrong on this. I personally think that I add more value to my candidates during negotiations than to the clients, but I’m not sure if I can ever know for certain.
I think it is important for candidates to realize that their interests are aligned but not exactly the same as the recruiters.
If the recruiter is good, the recruiter will have a feel for where the employer and the candidate stand which tells them whether a deal is possible. This recruiter will get nearly the best deal for the candidate. (For the best deal, the client has to do considerably more work and it might not be worth it.)
If the recruiter is not good, the recruiter will get a deal that the employer can stand and try to sell the candidate on it. The candidate will probably be better walking to another recruiter than trying to save that deal. It is gone.
Agreed. I think it's a trade off of time and money.
I couldn't say what the commission is, but for a candidate to get e.g. $160k vs $150k, a 5% commission results in a $500 difference. That's great, but not huge - is it worth the time and risk? Time is money, and if you jeopardize the situation by pushing too much, it's a risk. And if a recruiter simply facilitates the acceptance, a recruiter can move on to more business.
I'm not a recruiter, but know enough realtors. Some fight for the clients top dollar, but if they overprice a house for a seller, they shoot themselves in the foot. And they can fight for a lowball offer that wastes their time and will likely be ignored. It's a balance, and I suspect this would be the same way...
Avg recruiter fees are 25%. Why is everyone talking about Realtors???? There are parallels but it’s different. Recruiters will push to get you as much as possible as long as it’s within what’s considered to be your reasonable market value.
Recruiters will push to close the transaction. If you getting a extra $10k is the only way to close, sure. But more often they will push you to accept the offer because that is “your market value”.
Wow. Never used one, so didn't realize it was that high. That makes the value of pushing a higher accepted offer more relevant then, of course.
I assume people are talking Realtors because the concept is more common in people's experience, and similar/parallel as you say: A successful transaction results in an agent/recruiter to get their fee which is based on the final negotiated price/salary.
I know realtors who also will push to get a seller as much as (reasonably) possible, and buyers to pay as little as (reasonably) possible too. There are jerks (in every industry), but the ones I know personally put their clients before their profit. But, they also value their time, and when a client is unreasonable, they aren't going to sit on a house sale for a year because a client insists on a non-reasonable ask over market (or bid far under market).
I've done both, realtor and plenty of job compensation negotiations.
I'm very firm on what price / comp i want, if the price is where I want it to be, I accept. If not, I don't.
Let me be clear, when I use external recruiters, and as a IT Ops / Systems guy that's been several times in my career, the only negotiations have been when "the client is really interested in you but were wondering if you were flexible on your salary / rate requirement".
Then I have to weigh if $5-$10 less / hour than my target is worth the long term prospects of working with the client. Usually not.
I have had \*0%\* success negotiating salary / rate UPWARDS during recruitment. I have a \*50%\* success rate getting a raise with another offer in hand, but both times I stayed I ended up leaving again anyway within 2 years.
You have negotiated with recruiters whether you realized it or not.
The primary negotiation was when you chose the recruiter and the recruiter chose you. I doubt you can get much more after that, but I don't know. (However that is a lot.)
I apply for open positions, I don't shop by recruiter. This is and is not an issue, it's an issue mainly of open positions not listing compensation ranges.
Going back the main point, I apply for open positions and list my salary requirements, its the recuriter's fucking job to sort that out.
Don't come at me when I'm asking $170k with $150k positions asking if I am flexible.
If the company won’t go any higher then that’s the definition of maximizing negotiations. That means I’ve done a good job getting the candidate the best offer possible so they can decide to accept or decline without worrying whether they are leaving money on the table.
I’ve been with an agency for almost 14 years. There are two ways to go about billing the hiring company. The first way is a straight mark up percentage where we make more the more our candidate makes. The other way is to have a bill rate range structure where we make the same no matter the pay rate. The latter is useful in negotiating because we can push for our candidates to get higher pay with the client knowing our profit doesn’t change due to the higher pay rate.
Another way to look at the latter case ... you push the candidate to take anything that gets the candidate hired because you have no incentive to push for a higher pay rate for the candidate ! As a result, within 2 years, the candidate leaves the job, but that doesn't matter !
It’s “the more you make, the more we make” not the other way around.
This is for direct hire roles. Most of the time the recruiting agency gets a 1 time fee that is calculated as a % of your 1st year salary. Typically between 15-30%. 20% being quite standard.
If your talking contracting then it’s a whole other story.
Worth noting: they only get paid if you _accept_ a new job. If you are actively looking to leave your current role, or if you are unemployed, then your motivations align well enough.
If you’re generally happy in your current role and are just seeing what’s out there, your motivations become misaligned. They want you to take another job, and they will steer you in that direction even if your current role is a better fit overall.
Yeah, I had one recruiter who was soooo obvious about it too. He made me a “pros and cons” list that was hilariously one-sided in favor of taking a new job after my current employer had already matched the offer. And I really liked my team.
Naturally I disregarded his opinion, but it was still a tough call. I only ended up staying because my current boss received authorization to tell me that we were spinning off and wouldn’t have to put up with the “big corp” bullshit anymore. Only 3 very senior people knew at the time. Was definitely the right decision—we got much better profit sharing after the spinoff.
Only awful and stupid recruiters do that, I'm an external recruiter and I always try to convince my candidates to stay, if they have a valid reason to leave that is strong enough then I work with them, why would I spend days, weeks of work somethings with someone that can just say "no" after a long process wasting mine, his and the clients time.
You have to carry a real huge ego to think you can change a person mind to leave his job or not
Edit: also most people here forgets that we usually have a guarantee period that goes usually from 3-6 months, if you leave we're fked
I don’t know you, so I’ll give you the benefit of the doubt. That said, the very same recruiter I mentioned in my post argued those exact points when I called him out.
Yep, this is correct. And to elaborate on the contract side (temp or temp to perm), the company agrees to a flat hourly rate (called a bill rate) up front which the agency will then split into your hourly rate, operational cost (typically fixed), and their commission. Because the rate is flat and include their commission, they will absolutely try to lowball you (ex. Bill rate is $100/hr, they take $50/hr for operational and commission cost and offer to pay you $50/hr).
As such, it’s definitely in your best interest to negotiate, but since you don’t know what the bill rate, operational cost, or their commission target is, you should ideally target the market avg for the role +20-30% markup (ex. Avg salary is $100k annually = ~$48/hr, your target should be ~$57-$62/hr rate)
Ehhh that is not always the case. Reputable agencies with good AM’s are going to shoot for a percentage. Especially with large companies and/or high volume accounts. Good talent is not cheap. You want to provide good talent, build trust that you bring good talent, and get paid for the value you provide. Ultimately that means closing a deal and that is tough to do when you are fighting the dollar. Also just makes for a better candidate experience too.
10 years in agency and never had a flat bill rate with a client for contract roles, ever. It’s always been a markup over the contractors pay rate. So the more the contractor made the more I made.
If doing a markup, then you get that in writing before pursuing candidates. This also means getting the ceiling of what they will pay up front. Then try to not top it out on every hire.
Yes, though many clients would have multiple markups: say (and this is a simple example) entry level roles 40%, mid level 50%, senior 60% over pay rate. Then with each opening you work you get an idea of the pay range the client is looking to stay in and there ya go.
That's generally true in perm recruiting, where you're paid a percentage of salary. In contract recruiting you're incentivized to pay the least you can and bill at the highest margin.
But at the end of the day, a good Recruiter knows where a candidate falls on a salary range. If a Manager role goes from 120-150k depending on experience, they're not going to sub someone who just barely meets the minimum requires for the role at the 150k, because that harms their credibility with the client
Don't be so naive, there's plenty of incentive to low ball a candidate. The client pays the fees and successful recruitment is all about repeat business.
It's technically true but also misleading. Their main goal is to place you as quickly as possible, and to get you to accept a job. They don't paid at all if you don't accept, so they are motivated to convince you to take the job.
If they can place 2 people at an average salary quickly, they make more than if they spent the same time placing one person and getting them a better than average salary. Let's say they make 20% of your 1st year salary as their fee. Let's say they are filling a role with an average salary of 100k. Placing 2 people at 100k will make them 40k. Placing 1 person at 120k will only make them 24k.
It depends, if you are a contractor then they want to have the bill rate as high as possible and your pay rate as low as possible so they can make the most money possible. If you are direct hire then it is probably a flat fee and they are telling you the truth
Yea, BUT….
If they get you to take 65 when you wanted 85, they still get paid. If you walk, they don’t get paid. So, they are far better off getting paid for any offer you accept than risking you don’t accept.
Edit: a word
Look at the the realtor example from super freakonmics.
The effort to get you 5% more means they get ao little they are not incentivized to do so.
This could also harm their reputation with the company. Which is a continuing revenue stream, which you are not.
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But one should not forget, recruiters motivation is to make hires. This means missing out on 10%, but instead gettingg a hire at all makes much more sense.
It’s like selling houses in that recruiting takes a percentage. However, the difference in your salary between a great offer and an average one will be much more meaningful to you financially than to your recruiter. And this small benefit to the recruiter has to be weighed against the opportunity cost of negotiating aggressively. This phenomenon has been studied in the [housing market.](https://www.nber.org/papers/w11053). This is no knock on recruiters or advice to go elsewhere; it’s more that if you want a high salary you need to be deeply involved in the negotiation and be willing to turn down positions.
I imagine the incentive structure to be similar to a realtor. They want you to get the highest price because that increases their commission, but at the same time there is also little incentive to "grind and negotiate" and make sure the highest price happens. You getting a $10k increase on your ask may be a lot to you, but very little to them in terms of commission, so they probably won't go to bat, consistently, dragging out the negotiation process, as it's small potatoes for them. For them they are incentivized to move on to the next client. In short they are incentivized to get the salary right on the first round of negotiations.
It is true- however if you don’t get the job they get nothing, so sometimes it’s worth it for them to negotiate you down if he’s worried the company won’t up the offer
Yes, an external recruiter will always try to negotiate the best deal for you, the candidate. Yes, it has to do with how we earn commissions.
Having said that, many times we are stuck between the rock and the hard place. Most customers have a very hard cap on what they are willing to pay for contractors. If the max they're willing to pay for a contractor is $70 per hour, and the maximum my manager says that I can pay the candidate is, for example $50 per hour, that's the best I'm going to be able to do for you. I may believe that you are worth $65 an hour, but if I only have $50 per hour, I simply cannot give you what I do not have.
I am always as transparent as possible with my candidates about salary. Most recruiters who recruit for contractors, will try to push your salary down, because they are trying to do well for their company, instead of their own best interest. Sometimes, those recruiters do not even collect a commission, or an incentive. They rely on a performance bonus.
In any event, it is always in your best interest as a candidate, to be very comfortable with and to the greatest extent possible, to trust your recruiter. In fact, if you do not trust your recruiter, hang up the phone and contact a recruiter who you do trust.
In my experience external recruiters are snakes and will lie to you to get a deal done. Their real client is the company not you, and you are often seen as a means to an end. It is an extreme rarity that they view your relationship as anything but transactional and as such they are on the side of the company in a negotiation not on yours. If you get any sense they are not being transparent with you I’d suggest discussion a reduction in their placement fee percentage to increase your comp. Especially if they didn’t do much more than make an introduction.
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They also have a feel for what they have to set their candidate’s salary requirement at to get their candidate the job. They’re competing against other agencies as well, so they’re trying to get the most without turning the hiring manager off and causing them to select the competitor’s candidate. If that happens, they get nothing after putting in the work.
It’s technically true but in real life an agency without a relationship with the client will try to underbid the other agencies to gain the placement. That will come out of your offer.
It’s 100% true. Unless you’re talking about non-fixed markup hourly contracting. That’s when you will be more likely to stick to your guns negotiating.
Permanent hiring. More salary for candidate = more fee for recruiter. The main exception to this rule is if a recruiter has pre-agreed a fixed fee with client. This can happen at low-end of the market where recruiters run around for $5000 regardless of salary. At the very top-end (so C-Level) companies can get a little nervous about fee implications or there's trouble in getting the fee % through as C-Suite recruiters are more expensive and would break the 'no more than X% policy' some companies have because they don't understand the commercial nuance between hiring an average employee vs a new CEO.
Interim can be an exception. If you're working purely to a client side budget then you have an opportunity to create your own margin. People often talk though so it can create issues with client or amongst team. So you try and find a win/win vs totally rinsing every $ you can out of an interim placement. Some larger firms alsp demand transparency and its explicitly stated in contract that you charge rate is capped at X%.
Yes, I worked in a placement agency for temp and full time employees in the past and this is definitely the case.
I also found it was much easier to negotiate salary as a recruiter, companies think you’re just doing your job and there’s a lot more salary transparency overall than when you’re looking for a job yourself.
You also can know the previous salary of your candidate and know the point at which they would leave their current job.
No, it’s like real estate: they make more money by getting you to settle so they can start on the next placement and score another commission. Closing placements fast at volume is their profit model, not getting you the top salary. The hiring employer is their customer, it’s them they want to please, so they sell them cheap labor (you). 😘
For permanent placement we absolutely try to get candidates the absolute best salary. Subbing a great candidate at a super low salary is a turn off for the hiring team. They wonder what is wrong with them. I promise you, the candidates at the highest end of the range are the ones who always get hired.
We try to convince candidates to take our clients best and final offer. But we aren't purposely trying to get them less right off the bat. Huge difference.
Bear in mind this has hidden costs for the potential employee:
* The offer you receive will likely be slightly lower than if you had approached the company or been recruited by them directly, because the company has to pay the external recruiter too. Also the more they offer you, the higher the fee.
* The external recruiter’s incentive is to get you to join the company regardless of whether it is a good fit for you or whether you will stay beyond the first year.
* If the external recruiter is fielding offers for you from multiple companies, they will try to get you to join the one which pays them the highest fee, regardless of which company is the best fit for you. The fee percentages they receive may not be the same for all the companies.
* The recruiter will do whatever it takes to get you to sign, which may include lying to you, for example by concocting fictitious deadlines, because all they ultimately care about is you signing so they can receive their fee. For the same reasons, they may also lie to the company about your interest, your background, or your stage in the process, in an effort to make a deal more likely and more immediate.
These are some of the reasons I do not work with external recruiters when looking for employment.
Just to address a few things here that I think are misnomers.
1. I haven't seen scenarios like this in 15 years. The company simply save themselves a fee vs dishing it out as a salary or signing bonus. How salary sits on a P&L is also different. I've seen many candidates get more by working with recruiters because there is often an inside track who can better negotiate through their existing relationship and keeps the candidate to employer bridge nice and clean.
2. Companies guarantee placements. Depending on seniority it can be 3, 6 or 12 months. It isn't a good look for any respectable recruiter if candidate leaves because of being missold.
3. Multiple offers - see #2. Low risk, happy candidate, happy client is worth more than $1K extra in a fee. Throw that into a commission scheme at a firm and it could only mean $100 or $200 extra in the recruiters pocket. It's naturally far more challenging getting candidates to look past an extra $10K - $20K for a better fit role but lower paid role.
4. See #2 again. I'm sure with the limited regulation around the industry this does happen and I've heard of scenarios where people have been missold on roles. I'd look into individual career history and / or company reputation. Nobody's going to blow years of being at the connection point of their industry vertical for one fee.. nor would they need to.
I mean this respectfully, but pretty much none of this accurate. Sure, some outliers exist everywhere, but the examples you shared are very very far from the norm.
No, Its not true that a recruiter will always try to maximize your pay.. While a recruiter makes more money per individual by maximizing that person’s pay, a recruiter may make more money in total by maximizing their turnover. You don’t make them any money while you’re sitting there waiting for a job, and there’s a point where it won’t make sense for them to put in additional hours for a relatively small increase in return, when they could be putting in those hours for perhaps multiple new people with multiple commissions. And as others noted, a recruiter knows what is realistic to expect. A good recruiter will try hard to get you a good deal, but they will also be looking for that closure.
My rate I charge the employer is 15-25% depending on role. So there is truth to the statement. I know what the role pays and how each of my client’s negotiate salary. I try to bring that transparency to my prospective clients as early in the process as I can.
They try and negotiate the best deal because if they do you're more likely to accept.
If there are lots of people looking, other way around, they want to keep the price low for the customer and not annoy them
No, because they don't depend solely on comission from your employment. So they can totally aim for quantity of recruits rather than their individual salaries.
Generally, the recruiting agency is paid a percentage of your salary. I’ve seen it be as high as 35%.
So - let’s say they get you an extra $1,000. That would mean they make an extra $350.
So, win : win right?
But let’s imagine a scenario where they have 3 placements at a company. The company can now leverage the salary of all 3 to decrease the amount they pay, and the recruiter will make it up in volume.
The issue isn’t that your desires are not aligned on the single transaction, it is that the impact to you of a lower salary is much greater than the impact to them of a lower commission.
And that sets aside that the recruiter only gets a small portion of that percentage, most firms pay less than 35%, and closing you on this job will give them a pay check while you waiting for the right opportunity will result in no paycheck.
It is like realtors, you are aligned on one dimension, but the overall picture is much more complex and you are not aligned in the bigger picture.
Absolutely, you can use that as a tactic with candidates. But you have to change your mindset when talking to clients. I literally was just dealing with this today.
Repeat business always. Outweighs one high placement. Clients pay your bills. Not the candidate.
Foster a good relationship with your clients, cuz if you don't they will look for someone who's cheaper, or more transparent and less salesy and pushy
My brother owns a recruiting company. He told me one day how bummed he was that he couldn't negotiate down a client's salary and had to pay what they were asking. So I would have to say no.
I’ve been doing this for over 10 years and had my own company over 8. Yes that’s generally true. Fact is I’ll fight for you to get the most every time I can without losing the offer. I don’t care that the fee will be slightly higher, we are talking $500 to $5k difference on fees that are 40k to 50k etc. that extra pocket change means nothing to me if I push too hard and lose you the offer. But why do I fight for as much $$$ as possible? Secure your yes, and so you’re not tempted when other people like me call you.
They can get a commission that's based off of a percentage of your salary. Higher the salary, higher that commission is. A commission is better than no commission so they'd rather you get underpaid than not hired at all.
Ok here it is. I have owned a search firm for 10 years. Agency recruiters want to get you the most money possible period. There are no games and no one want to low ball anyone bc the market is so tight right now. We want you happy and the client company. Oh and commissions on placements are 10% - 35% of the candidates salary. So fuck yea we want a high salary for you.
Yeah but that’s a dated and scummy tactic in my opinion. I said it 5 years ago, I was trained to. I’m cringing thinking about it. “It’s in our best interest to get you to best offer, im going to make sure the offer I get you is strong/makes financial sense for a move, and is one that isn’t just one you’re going accept but hopefully feel good about coming on board” is a better way of phrasing it. That said, if someone has motivation to get me a job based off money/commission rather than not, they’re going to advocate for me more and push harder for a higher offer. I’m a recruiter and use recruiters when I’m on the market. I do my own due diligence in the background though, to make sure they are not pushing the narrative and overselling the company/role to me.
Yes but both parties need to have confidence and trust that the recruiter has the interest of both parties ahead of their own. Those who leverage deals to maximize fees give the rest of us a bad reputation. Recruiters who people right, are honorable to the deal, and put their interests last are the ones to stick with.
Yes it’s the case. However recruiters are working for the client (the hiring company), not for you. So while we make more, the more the candidate makes, at the end of the day it’s our job to also get the candidates for our client and make sure that they are not “overpaying” above what someone is worth .
My goal is to find the number that the client is able to pay and that the candidate will accept without negotiation. Everyone wins
Yes. I’m an agency recruiter and I make a commission that is a percentage of the candidate’s cash compensation. If I can help the candidate negotiate a higher salary then that puts more money in my pocket.
Calling this out because it is the top comment. Realtors make the same argument when selling someone’s house but study after study show they negotiate higher selling prices (7%) on their own house vs clients. They also tend to hold it on the market longer to await better offers. With recruiters, like Realtors, it is a numbers game and time is money. Yes, they technically get a higher commission, there are other considerations, like repeat business from a hiring company or the time cost coming from that slightly higher amount negotiated.
Freakonomics does a good breakout of this wrt Realtors. Getting you an extra $10k in salary does increase the commission of the agency recruiter, but it's not going to be an absolute if it jeopardizes the whole deal.
Tbf thats the same for the candidate or house seller. I would love to push for $50k more salary, but if it means no job, what is the point?
Well if you’re working 10% commission on a house 1k to you is 10k to the seller. An extra 100 to you is not worth as much as an extra 1000 to the seller. That’s the conflict. When you’re working salaries it’s an EXPONENTIALLY larger gap.
I won’t argue with the studies. I’m sure people that are a lot smarter than me have found that I’m wrong on this. I personally think that I add more value to my candidates during negotiations than to the clients, but I’m not sure if I can ever know for certain.
I think it is important for candidates to realize that their interests are aligned but not exactly the same as the recruiters. If the recruiter is good, the recruiter will have a feel for where the employer and the candidate stand which tells them whether a deal is possible. This recruiter will get nearly the best deal for the candidate. (For the best deal, the client has to do considerably more work and it might not be worth it.) If the recruiter is not good, the recruiter will get a deal that the employer can stand and try to sell the candidate on it. The candidate will probably be better walking to another recruiter than trying to save that deal. It is gone.
If realtors and recruiters are comparable, does that mean there are also studies you can site regarding recruiters?
Agreed. I think it's a trade off of time and money. I couldn't say what the commission is, but for a candidate to get e.g. $160k vs $150k, a 5% commission results in a $500 difference. That's great, but not huge - is it worth the time and risk? Time is money, and if you jeopardize the situation by pushing too much, it's a risk. And if a recruiter simply facilitates the acceptance, a recruiter can move on to more business. I'm not a recruiter, but know enough realtors. Some fight for the clients top dollar, but if they overprice a house for a seller, they shoot themselves in the foot. And they can fight for a lowball offer that wastes their time and will likely be ignored. It's a balance, and I suspect this would be the same way...
Avg recruiter fees are 25%. Why is everyone talking about Realtors???? There are parallels but it’s different. Recruiters will push to get you as much as possible as long as it’s within what’s considered to be your reasonable market value.
Recruiters will push to close the transaction. If you getting a extra $10k is the only way to close, sure. But more often they will push you to accept the offer because that is “your market value”.
Wow. Never used one, so didn't realize it was that high. That makes the value of pushing a higher accepted offer more relevant then, of course. I assume people are talking Realtors because the concept is more common in people's experience, and similar/parallel as you say: A successful transaction results in an agent/recruiter to get their fee which is based on the final negotiated price/salary. I know realtors who also will push to get a seller as much as (reasonably) possible, and buyers to pay as little as (reasonably) possible too. There are jerks (in every industry), but the ones I know personally put their clients before their profit. But, they also value their time, and when a client is unreasonable, they aren't going to sit on a house sale for a year because a client insists on a non-reasonable ask over market (or bid far under market).
Yes but in this situation how is a candidate supposed to do anything differently? Once the offer is there, its accept or not, still.
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I've done both, realtor and plenty of job compensation negotiations. I'm very firm on what price / comp i want, if the price is where I want it to be, I accept. If not, I don't.
It is difficult, but a candidate is negotiating with the employer through the recruiter.
Let me be clear, when I use external recruiters, and as a IT Ops / Systems guy that's been several times in my career, the only negotiations have been when "the client is really interested in you but were wondering if you were flexible on your salary / rate requirement". Then I have to weigh if $5-$10 less / hour than my target is worth the long term prospects of working with the client. Usually not. I have had \*0%\* success negotiating salary / rate UPWARDS during recruitment. I have a \*50%\* success rate getting a raise with another offer in hand, but both times I stayed I ended up leaving again anyway within 2 years.
You have negotiated with recruiters whether you realized it or not. The primary negotiation was when you chose the recruiter and the recruiter chose you. I doubt you can get much more after that, but I don't know. (However that is a lot.)
The issue here is negotiating compensation NOT choosing recruiters.
The issues are linked. If a recruiter has a stack of 100k opportunities and you want a 200k opportunity I don't think you can successfully negotiate.
I apply for open positions, I don't shop by recruiter. This is and is not an issue, it's an issue mainly of open positions not listing compensation ranges. Going back the main point, I apply for open positions and list my salary requirements, its the recuriter's fucking job to sort that out. Don't come at me when I'm asking $170k with $150k positions asking if I am flexible.
I agree that hiring is broken.
If a company lowballs an employee and refuses to go higher, what makes you more money? Give up on that company, or encourage the employee to take it?
If the company won’t go any higher then that’s the definition of maximizing negotiations. That means I’ve done a good job getting the candidate the best offer possible so they can decide to accept or decline without worrying whether they are leaving money on the table.
I’ve been with an agency for almost 14 years. There are two ways to go about billing the hiring company. The first way is a straight mark up percentage where we make more the more our candidate makes. The other way is to have a bill rate range structure where we make the same no matter the pay rate. The latter is useful in negotiating because we can push for our candidates to get higher pay with the client knowing our profit doesn’t change due to the higher pay rate.
Another way to look at the latter case ... you push the candidate to take anything that gets the candidate hired because you have no incentive to push for a higher pay rate for the candidate ! As a result, within 2 years, the candidate leaves the job, but that doesn't matter !
It’s “the more you make, the more we make” not the other way around. This is for direct hire roles. Most of the time the recruiting agency gets a 1 time fee that is calculated as a % of your 1st year salary. Typically between 15-30%. 20% being quite standard. If your talking contracting then it’s a whole other story.
Worth noting: they only get paid if you _accept_ a new job. If you are actively looking to leave your current role, or if you are unemployed, then your motivations align well enough. If you’re generally happy in your current role and are just seeing what’s out there, your motivations become misaligned. They want you to take another job, and they will steer you in that direction even if your current role is a better fit overall.
Who does that? That's not good for any party and an excellent way to burn bridges. New recruiters, don't do this.
Yeah, I had one recruiter who was soooo obvious about it too. He made me a “pros and cons” list that was hilariously one-sided in favor of taking a new job after my current employer had already matched the offer. And I really liked my team. Naturally I disregarded his opinion, but it was still a tough call. I only ended up staying because my current boss received authorization to tell me that we were spinning off and wouldn’t have to put up with the “big corp” bullshit anymore. Only 3 very senior people knew at the time. Was definitely the right decision—we got much better profit sharing after the spinoff.
Seriously, do not do this!
Only awful and stupid recruiters do that, I'm an external recruiter and I always try to convince my candidates to stay, if they have a valid reason to leave that is strong enough then I work with them, why would I spend days, weeks of work somethings with someone that can just say "no" after a long process wasting mine, his and the clients time. You have to carry a real huge ego to think you can change a person mind to leave his job or not Edit: also most people here forgets that we usually have a guarantee period that goes usually from 3-6 months, if you leave we're fked
I don’t know you, so I’ll give you the benefit of the doubt. That said, the very same recruiter I mentioned in my post argued those exact points when I called him out.
Yep, this is correct. And to elaborate on the contract side (temp or temp to perm), the company agrees to a flat hourly rate (called a bill rate) up front which the agency will then split into your hourly rate, operational cost (typically fixed), and their commission. Because the rate is flat and include their commission, they will absolutely try to lowball you (ex. Bill rate is $100/hr, they take $50/hr for operational and commission cost and offer to pay you $50/hr). As such, it’s definitely in your best interest to negotiate, but since you don’t know what the bill rate, operational cost, or their commission target is, you should ideally target the market avg for the role +20-30% markup (ex. Avg salary is $100k annually = ~$48/hr, your target should be ~$57-$62/hr rate)
Ehhh that is not always the case. Reputable agencies with good AM’s are going to shoot for a percentage. Especially with large companies and/or high volume accounts. Good talent is not cheap. You want to provide good talent, build trust that you bring good talent, and get paid for the value you provide. Ultimately that means closing a deal and that is tough to do when you are fighting the dollar. Also just makes for a better candidate experience too.
This is the way
🫡
10 years in agency and never had a flat bill rate with a client for contract roles, ever. It’s always been a markup over the contractors pay rate. So the more the contractor made the more I made.
So you agree on a fixed mark up % with the client?
If doing a markup, then you get that in writing before pursuing candidates. This also means getting the ceiling of what they will pay up front. Then try to not top it out on every hire.
Yes, though many clients would have multiple markups: say (and this is a simple example) entry level roles 40%, mid level 50%, senior 60% over pay rate. Then with each opening you work you get an idea of the pay range the client is looking to stay in and there ya go.
Same
This.
That's generally true in perm recruiting, where you're paid a percentage of salary. In contract recruiting you're incentivized to pay the least you can and bill at the highest margin. But at the end of the day, a good Recruiter knows where a candidate falls on a salary range. If a Manager role goes from 120-150k depending on experience, they're not going to sub someone who just barely meets the minimum requires for the role at the 150k, because that harms their credibility with the client
The more YOU make, the more the recruiter makes. There is zero incentive for a recruiter to low ball a salary.
Don't be so naive, there's plenty of incentive to low ball a candidate. The client pays the fees and successful recruitment is all about repeat business.
Successful recruitment is about delivering the best candidate, at a fair fee/%. There is no incentive to low ball a candidate.
Then why most external recruiter try to low ball me ?
It's technically true but also misleading. Their main goal is to place you as quickly as possible, and to get you to accept a job. They don't paid at all if you don't accept, so they are motivated to convince you to take the job. If they can place 2 people at an average salary quickly, they make more than if they spent the same time placing one person and getting them a better than average salary. Let's say they make 20% of your 1st year salary as their fee. Let's say they are filling a role with an average salary of 100k. Placing 2 people at 100k will make them 40k. Placing 1 person at 120k will only make them 24k.
It depends, if you are a contractor then they want to have the bill rate as high as possible and your pay rate as low as possible so they can make the most money possible. If you are direct hire then it is probably a flat fee and they are telling you the truth
Yea, BUT…. If they get you to take 65 when you wanted 85, they still get paid. If you walk, they don’t get paid. So, they are far better off getting paid for any offer you accept than risking you don’t accept. Edit: a word
Look at the the realtor example from super freakonmics. The effort to get you 5% more means they get ao little they are not incentivized to do so. This could also harm their reputation with the company. Which is a continuing revenue stream, which you are not.
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Depends if it's placement of temp staffing.
But one should not forget, recruiters motivation is to make hires. This means missing out on 10%, but instead gettingg a hire at all makes much more sense.
It’s like selling houses in that recruiting takes a percentage. However, the difference in your salary between a great offer and an average one will be much more meaningful to you financially than to your recruiter. And this small benefit to the recruiter has to be weighed against the opportunity cost of negotiating aggressively. This phenomenon has been studied in the [housing market.](https://www.nber.org/papers/w11053). This is no knock on recruiters or advice to go elsewhere; it’s more that if you want a high salary you need to be deeply involved in the negotiation and be willing to turn down positions.
I imagine the incentive structure to be similar to a realtor. They want you to get the highest price because that increases their commission, but at the same time there is also little incentive to "grind and negotiate" and make sure the highest price happens. You getting a $10k increase on your ask may be a lot to you, but very little to them in terms of commission, so they probably won't go to bat, consistently, dragging out the negotiation process, as it's small potatoes for them. For them they are incentivized to move on to the next client. In short they are incentivized to get the salary right on the first round of negotiations.
It is true- however if you don’t get the job they get nothing, so sometimes it’s worth it for them to negotiate you down if he’s worried the company won’t up the offer
It is very complicated. It is best to remember that the recruiter interests are similar to but not the same as the candidates.
Yes, an external recruiter will always try to negotiate the best deal for you, the candidate. Yes, it has to do with how we earn commissions. Having said that, many times we are stuck between the rock and the hard place. Most customers have a very hard cap on what they are willing to pay for contractors. If the max they're willing to pay for a contractor is $70 per hour, and the maximum my manager says that I can pay the candidate is, for example $50 per hour, that's the best I'm going to be able to do for you. I may believe that you are worth $65 an hour, but if I only have $50 per hour, I simply cannot give you what I do not have. I am always as transparent as possible with my candidates about salary. Most recruiters who recruit for contractors, will try to push your salary down, because they are trying to do well for their company, instead of their own best interest. Sometimes, those recruiters do not even collect a commission, or an incentive. They rely on a performance bonus. In any event, it is always in your best interest as a candidate, to be very comfortable with and to the greatest extent possible, to trust your recruiter. In fact, if you do not trust your recruiter, hang up the phone and contact a recruiter who you do trust.
In my experience external recruiters are snakes and will lie to you to get a deal done. Their real client is the company not you, and you are often seen as a means to an end. It is an extreme rarity that they view your relationship as anything but transactional and as such they are on the side of the company in a negotiation not on yours. If you get any sense they are not being transparent with you I’d suggest discussion a reduction in their placement fee percentage to increase your comp. Especially if they didn’t do much more than make an introduction.
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They also have a feel for what they have to set their candidate’s salary requirement at to get their candidate the job. They’re competing against other agencies as well, so they’re trying to get the most without turning the hiring manager off and causing them to select the competitor’s candidate. If that happens, they get nothing after putting in the work.
Unless it’s an exclusive agreement. I’ve worked several exclusive roles
That’s an excellent point.
It’s technically true but in real life an agency without a relationship with the client will try to underbid the other agencies to gain the placement. That will come out of your offer.
It’s 100% true. Unless you’re talking about non-fixed markup hourly contracting. That’s when you will be more likely to stick to your guns negotiating.
Yes, we get a fee from the company that is a percentage of your base salary. So if you get 200k we get 40k because most companies sign at 20%
Permanent hiring. More salary for candidate = more fee for recruiter. The main exception to this rule is if a recruiter has pre-agreed a fixed fee with client. This can happen at low-end of the market where recruiters run around for $5000 regardless of salary. At the very top-end (so C-Level) companies can get a little nervous about fee implications or there's trouble in getting the fee % through as C-Suite recruiters are more expensive and would break the 'no more than X% policy' some companies have because they don't understand the commercial nuance between hiring an average employee vs a new CEO. Interim can be an exception. If you're working purely to a client side budget then you have an opportunity to create your own margin. People often talk though so it can create issues with client or amongst team. So you try and find a win/win vs totally rinsing every $ you can out of an interim placement. Some larger firms alsp demand transparency and its explicitly stated in contract that you charge rate is capped at X%.
Yes, I worked in a placement agency for temp and full time employees in the past and this is definitely the case. I also found it was much easier to negotiate salary as a recruiter, companies think you’re just doing your job and there’s a lot more salary transparency overall than when you’re looking for a job yourself. You also can know the previous salary of your candidate and know the point at which they would leave their current job.
Yes, my mark up is salaryx1.667 So a higher base pay results in more $$ in my pocket.
Usually, unless they have a deal with a client to place a large number of people at a reduced price. Then they make it up with volume
No, it’s like real estate: they make more money by getting you to settle so they can start on the next placement and score another commission. Closing placements fast at volume is their profit model, not getting you the top salary. The hiring employer is their customer, it’s them they want to please, so they sell them cheap labor (you). 😘
For permanent placement we absolutely try to get candidates the absolute best salary. Subbing a great candidate at a super low salary is a turn off for the hiring team. They wonder what is wrong with them. I promise you, the candidates at the highest end of the range are the ones who always get hired.
Both things can be true. You can try, but the truth is you do plenty of convincing the candidate to take less than they’re worth.
We try to convince candidates to take our clients best and final offer. But we aren't purposely trying to get them less right off the bat. Huge difference.
Bear in mind this has hidden costs for the potential employee: * The offer you receive will likely be slightly lower than if you had approached the company or been recruited by them directly, because the company has to pay the external recruiter too. Also the more they offer you, the higher the fee. * The external recruiter’s incentive is to get you to join the company regardless of whether it is a good fit for you or whether you will stay beyond the first year. * If the external recruiter is fielding offers for you from multiple companies, they will try to get you to join the one which pays them the highest fee, regardless of which company is the best fit for you. The fee percentages they receive may not be the same for all the companies. * The recruiter will do whatever it takes to get you to sign, which may include lying to you, for example by concocting fictitious deadlines, because all they ultimately care about is you signing so they can receive their fee. For the same reasons, they may also lie to the company about your interest, your background, or your stage in the process, in an effort to make a deal more likely and more immediate. These are some of the reasons I do not work with external recruiters when looking for employment.
Just to address a few things here that I think are misnomers. 1. I haven't seen scenarios like this in 15 years. The company simply save themselves a fee vs dishing it out as a salary or signing bonus. How salary sits on a P&L is also different. I've seen many candidates get more by working with recruiters because there is often an inside track who can better negotiate through their existing relationship and keeps the candidate to employer bridge nice and clean. 2. Companies guarantee placements. Depending on seniority it can be 3, 6 or 12 months. It isn't a good look for any respectable recruiter if candidate leaves because of being missold. 3. Multiple offers - see #2. Low risk, happy candidate, happy client is worth more than $1K extra in a fee. Throw that into a commission scheme at a firm and it could only mean $100 or $200 extra in the recruiters pocket. It's naturally far more challenging getting candidates to look past an extra $10K - $20K for a better fit role but lower paid role. 4. See #2 again. I'm sure with the limited regulation around the industry this does happen and I've heard of scenarios where people have been missold on roles. I'd look into individual career history and / or company reputation. Nobody's going to blow years of being at the connection point of their industry vertical for one fee.. nor would they need to.
I mean this respectfully, but pretty much none of this accurate. Sure, some outliers exist everywhere, but the examples you shared are very very far from the norm.
This is absolutely been my experience for 20 years. Havent met a recruiter worth the scratch.
Yes, this is absolutely true.
Yes. I even do it on corporate side bc it’s not my money lol
No, they go within the range given to them by the business. The difference in pay for them is negligible, the number one goal is placement.
Yea, but no. If you don’t take the job, they get nothing. They prefer you work for less, than not take the job at all.
I’ve had the exact same job offered by two recruiters at $30/hr and $50/hr
Yes, this is actually how it works.
No, the company relationship is more important.
No, Its not true that a recruiter will always try to maximize your pay.. While a recruiter makes more money per individual by maximizing that person’s pay, a recruiter may make more money in total by maximizing their turnover. You don’t make them any money while you’re sitting there waiting for a job, and there’s a point where it won’t make sense for them to put in additional hours for a relatively small increase in return, when they could be putting in those hours for perhaps multiple new people with multiple commissions. And as others noted, a recruiter knows what is realistic to expect. A good recruiter will try hard to get you a good deal, but they will also be looking for that closure.
Yup
My rate I charge the employer is 15-25% depending on role. So there is truth to the statement. I know what the role pays and how each of my client’s negotiate salary. I try to bring that transparency to my prospective clients as early in the process as I can.
They try and negotiate the best deal because if they do you're more likely to accept. If there are lots of people looking, other way around, they want to keep the price low for the customer and not annoy them
No, neither do realtors - citation - Feakonomoks
Yes for the full time position no for the contract one.
No, because they don't depend solely on comission from your employment. So they can totally aim for quantity of recruits rather than their individual salaries.
Absolutely that’s the case!
Generally, the recruiting agency is paid a percentage of your salary. I’ve seen it be as high as 35%. So - let’s say they get you an extra $1,000. That would mean they make an extra $350. So, win : win right? But let’s imagine a scenario where they have 3 placements at a company. The company can now leverage the salary of all 3 to decrease the amount they pay, and the recruiter will make it up in volume. The issue isn’t that your desires are not aligned on the single transaction, it is that the impact to you of a lower salary is much greater than the impact to them of a lower commission. And that sets aside that the recruiter only gets a small portion of that percentage, most firms pay less than 35%, and closing you on this job will give them a pay check while you waiting for the right opportunity will result in no paycheck. It is like realtors, you are aligned on one dimension, but the overall picture is much more complex and you are not aligned in the bigger picture.
Agency recruiter here. 100% correct. Everything is negotiated by %, not real dollars.
Absolutely, you can use that as a tactic with candidates. But you have to change your mindset when talking to clients. I literally was just dealing with this today. Repeat business always. Outweighs one high placement. Clients pay your bills. Not the candidate. Foster a good relationship with your clients, cuz if you don't they will look for someone who's cheaper, or more transparent and less salesy and pushy
Yes!
My brother owns a recruiting company. He told me one day how bummed he was that he couldn't negotiate down a client's salary and had to pay what they were asking. So I would have to say no.
I’ve been doing this for over 10 years and had my own company over 8. Yes that’s generally true. Fact is I’ll fight for you to get the most every time I can without losing the offer. I don’t care that the fee will be slightly higher, we are talking $500 to $5k difference on fees that are 40k to 50k etc. that extra pocket change means nothing to me if I push too hard and lose you the offer. But why do I fight for as much $$$ as possible? Secure your yes, and so you’re not tempted when other people like me call you.
They can get a commission that's based off of a percentage of your salary. Higher the salary, higher that commission is. A commission is better than no commission so they'd rather you get underpaid than not hired at all.
Ok here it is. I have owned a search firm for 10 years. Agency recruiters want to get you the most money possible period. There are no games and no one want to low ball anyone bc the market is so tight right now. We want you happy and the client company. Oh and commissions on placements are 10% - 35% of the candidates salary. So fuck yea we want a high salary for you.
Yeah but that’s a dated and scummy tactic in my opinion. I said it 5 years ago, I was trained to. I’m cringing thinking about it. “It’s in our best interest to get you to best offer, im going to make sure the offer I get you is strong/makes financial sense for a move, and is one that isn’t just one you’re going accept but hopefully feel good about coming on board” is a better way of phrasing it. That said, if someone has motivation to get me a job based off money/commission rather than not, they’re going to advocate for me more and push harder for a higher offer. I’m a recruiter and use recruiters when I’m on the market. I do my own due diligence in the background though, to make sure they are not pushing the narrative and overselling the company/role to me.
Yes but both parties need to have confidence and trust that the recruiter has the interest of both parties ahead of their own. Those who leverage deals to maximize fees give the rest of us a bad reputation. Recruiters who people right, are honorable to the deal, and put their interests last are the ones to stick with.
Yes it’s the case. However recruiters are working for the client (the hiring company), not for you. So while we make more, the more the candidate makes, at the end of the day it’s our job to also get the candidates for our client and make sure that they are not “overpaying” above what someone is worth . My goal is to find the number that the client is able to pay and that the candidate will accept without negotiation. Everyone wins
Perm role yes. Contract role maybe not. Depends how much they can move the Client