You just entered the job market and find yourself being contacted by dozens of recruiters. This is an exciting time in a person’s career, yet many people aren’t aware of the importance of knowing what type of recruiter they’re working with. Here’s what you need to know about the types of recruiters you’ll come across in the job-search process, and how you can set yourself up to have an upper hand in salary negotiations when working with them.
Understanding Recruiter Motivations
Recruiters are paid out differently based on what role they’re trying to fill. As a general rule of thumb, if the conversation is around a contract role or contract-to-hire role, then you’re working with an agency recruiter. If it’s a full-time permanent role, you’re working with a headhunter or search firm recruiter. Once you’ve determined whether you’re working with an agency recruiter or search firm recruiter, you can move forward to understanding the recruiter’s motivations, which can impact salary negotiations.
Agency recruiters usually receive commissions on the gross profit of the hourly amount. For instance, if you’ve negotiated $40 an hour as your pay rate, the agency will add on a burden (cost of doing business, employee benefits, etc.) and a profit margin, totaling the amount they bill the client each hour: (e.g., $40 Pay Rate + $14 Burden + $25 Profit Margin = $79 Bill Rate to the Client). For every hour you work, an agency recruiter gets paid. The less money you make per hour, the more profit is made by the agency recruiter. This doesn’t mean you’re getting paid unfairly, but it is in the agency recruiter’s best interest to place you in a role at a rate where they make a decent profit margin. While there is some room to negotiate when working with an agency recruiter, keep in mind they usually don’t have the authority to go lower than a certain profit margin dictated by their firm. They could go back to the client to see if they can increase the bill rate, but this is typically only done if the recruiter knows you will accept the role if the salary increase is granted. It’s also absolutely okay—even encouraged—to ask the recruiter upfront what the budget and salary range is for a role. Agency recruiters typically don’t share bill rate, but they usually have a max rate they can pay out. Tell them you are seeing a variety of ranges offered for the same work and are seeking the best possible rate—what can they offer?
Search Firm Recruiters
Search firm recruiters get paid in a very different way. They typically receive a commission range based on the percentage of your starting salary. For example, if your starting salary is $100K, the search firm charges the client 20% of $100K—a $20K fee paid to the agency. The recruiter will then get a portion of that fee in commissions. The takeaway: The more you make, the more they make. However, it’s important to make sure your requests are reasonable and in line with the current marketplace. I’ve seen candidates ask for significantly more than what was offered in the marketplace and price themselves out of the process. (A recruiter will typically tell you if this happens.)
No matter what type of recruiter you’re working with, make sure to prepare for your interviews and put your best foot forward. The better you do in your interview, the more leverage you and your recruiter will have to negotiate. If you wow the employer, they’ll push the agency recruiter to close you, and you may have more flexibility in what they’re able to pay. My final piece of advice is to negotiate hard, negotiate fair, and, when you find a good recruiter, stay close to them. The best recruiters build relationships over a lifetime. Angela Stugren is the VP of Career Development at Coding Dojo, a 14-week coding bootcamp in Silicon Valley, Seattle and Los Angeles, and founder of Cloutera Consulting Group, a Seattle-based recruitment consulting firm helping start-ups compete for world class technical talent.