Know Your Recruiter: The Specialized World of Third Party Recruiting

Dear Resume Survis Lady,

 I posted my resume online and I have had a few third party recruiters contact me.  What exactly is a third-party recruiter and how does a third-party recruiter differ from a Corporate Recruiter

For this question I have turned to an expert in third-party recruiting:  Todd Nilson.  Todd is managing director of Social Syntax, a social media strategy, governance and analytics firm with specialized  expertise in employer branding. He is also the founder of the Milwaukee JobCamp events. You can read his personal blog at: https://talentline411.com

If you’re in a job search, it’s important to remember that not every recruiter you will encounter works in the same way. While some recruiters work as full-time employees of a corporation, you’ll find a much larger number of what’s known in industry jargon as third-party recruiters.

Why is it important to know the distinction? Third party recruiters are compensated in a completely different way than corporate recruiters. Think of a third-party recruiter as a recruiter-for-hire, someone who companies go to because their internal recruiters don’t have enough time or have too many requisition or the hiring need is simply too specialized for the internal team to handle. Companies pay for third-party recruiters as a matter of expediency.

A third-party recruiter may work for a staffing firm, as part of a boutique or search firms, or as an independent businessperson.

How does it work?

Since a third-party recruiter is not an employee of the company doing the hiring, third-party recruiters usually have some sort of financial arrangement with a company called a search agreement.  Leaving aside contract work, third-party recruiters are usually compensated in one of two ways: contingency and retained search agreements.

In a retained search agreement, the recruiter is paid a portion of a search fee to engage in the search up front. The remainder of the fee is disbursed to the recruiter upon the successful completion of a search assignment—namely, when you’ve been hired. Retained searches usually reside at the upper end of the search spectrum, where companies are engaged in a highly confidential search for a new C-level executive. These searches require recruiters with skills at the top of their game and often a highly specialized network of candidates.

As you might imagine, retained searches are in the minority.

Far more frequently the case, contingency searches also involve the payment of a fee based on a percentage of the hired person’s starting salary, but there is no up front cost to the employer to engage services. By contrast, where retained searches are usually given exclusively to just one recruiter or firm, a contingency search is typically given to two, three or even dozens of recruiters depending upon how savvy the company doing the hiring is or how many requirements they’ve got to hire for.

What do I need to know when working with third-party recruiters?

 Knowing payment terms for third-party recruiters is one key to making it a successful relationship. Most of the fees paid to third-party recruiters are significant amounts to the companies paying them, so there is a guarantee period. In many cases, if you are hired via a third-party recruiter and leave the job within the first few months, that recruiter has to refund all of that fee if he or she cannot find a suitable replacement. When you work with a third-party recruiter, therefore, understand that it is in that recruiter’s best interests to make sure you are sincere about accepting an offer of employment and that you feel as certain as you can be that it will be a good company for your career growth.

Most third-party recruiters develop a sixth sense about candidates who are just “shopping” for a new job. If you’re just looking and not seriously committed to your search for a new position, a solid third-party recruiter will confront you about it (hopefully in a nice way) in an effort to protect his or her own time.

A large benefit of working with third-party recruiters is that they tend to have a wide breadth of companies engaging their services. Some of these recruiters work a particular geography or industry segment and tend to have deep connections with a handful of premiere client companies.

Another big plus to working with third-party recruiters is that they can serve as an additional buffer in the dreaded salary discussion process for a job offer. The third-party recruiter is not a disinterested party. In most cases, his or her compensation is directly impacted by the amount of your base salary offer. Treating the third-party recruiter as an advisor, just as you might consult an attorney about your taxes or your lawyer about a legal case, can result in a better, faster offer since most recruiters on this side of the business already know about a tolerable salary range for the position you’ve applied for and can tell you if your expectations are consistent with that range. They understand that range not only from what the hiring company has shared with them, but they also know what the market bears due to the nature of their experience working with many other companies.

Finally, think for a moment about contingency searches. The recruiter is only paid after a successful placement. Successful placements often take months, representing many hours of unpaid work with the promise of a payoff in the form of a placement. Candidates who back out of a search prematurely or are perceived to waste time will be remembered. Take care when working with these recruiters, because they have a long memory and talk frequently to other recruiters in their industry space!

However, managing a friendly relationship over the years with one or more third-party recruiters can make a large difference in your job search. Their broad understanding of industry segments and variety of search assignments make them good people to know and interact with on a regular basis.

Todd’s personal blog can be found at: https://talentline411.com

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4 Comments (+add yours?)

  1. Dennis Salvatier
    May 16, 2011 @ 23:16:11

    This is really valuable information. I’m going to share this with a couple of people who would benefit from it.

    Reply

  2. Chizucc Huxtable
    Aug 10, 2011 @ 19:57:27

    Thanks for the info. I was approached on Linkedin by a 3rd party recruiter regarding a sales position. They didn’t tell me the name of the company hiring, but with research I found out. I happen to know the person that I’d potentially be replacing. She told me to apply online through the company and she’d drop my name to HR and the Hiring Mgr. She also told me to deal with the recruiter as well. I talked to a friend that told me that I shouldn’t have done both. He said it could potentially cause a money conflict. In your opinon did I make a mistake? If so, what can I do to rectify the situation?

    Reply

    • resumesurvislady
      Aug 12, 2011 @ 11:57:09

      Your friend is rigt, there could potentially be a problem down the road if you are hired into the position. I’ve worked for companies that if there is a conflict with a particular candidate regarding an outside agency, they have decided to no longer consider that candidate. I don’t know all the specifics of your particular case but the best thing you can do is to be honest and upfront with both the company that you applied for the position with and the third party recruiter so that this does not come out further in the interview process, details can be worked out there are no surprises further in the process.

      Good luck!

      Reply

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