How recruiters get paid and how they make money is not a simple issue. It’s dependent upon several different factors and extenuating circumstances. Right off the bat, are we talking about internal recruiters or external recruiters? Before we do that, let’s define internal vs. external recruitment. External recruiters are also known as independent recruiters or agency recruiters. That means they work for themselves; they don’t work for one specific company. They work for several different organisations, helping to fill their open positions. Internal recruiters are just what they sound like they’re internal. They are an actual employee of a company. As such, they recruit exclusively for that organisation and nobody else.
So why bring up that distinction? For one very big reason: typically, internal recruiters make less than external recruiters. That’s because internal recruiters almost always have a set salary. Their compensation has a cap on it. Not so for external recruiters. They’re more like commissioned salespeople. There is virtually no limit to the amount of money they can make.
How do recruiters make money?
There is one thing that internal recruiters and external recruiters have in common. That’s who pays them. In all placement situations, the company pays the recruiter, not the candidate. The only difference is that the internal recruiter is paid a yearly salary by a single organisation. An external recruiter is paid much differently. External recruiters do not receive a salary. They receive what is called a recruitment fee or a placement fee. This can take the form of a check or an electronic transfer. Here are some different aspects of this fee:
The company always pays the fee, not the candidate.
External recruiters typically receive fees from multiple organisations. They refer to these organisations as their “clients” or “client companies.” The amount of each placement fee is different. That’s because it’s based upon the candidate’s first-year salary.