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Old 08-02-2012, 05:45 PM   #1
Retro Rob
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Default Do recruiting Agencies take from your check? How much, if so?

Hey guys,

I have never had to deal with staffing agencies until recently. I've heard that they take a portion of your pay as a "finders fee" shall I say, but I'm looking up info on that now. I know that their clients pay them for your services, and the clients get a much needed worker.

So, basically, if they do take some of your pay check, how much? If they don't, then that's the answer I am looking for!

Thanks.
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Old 08-02-2012, 05:49 PM   #2
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staffing agency = they take a portion from your check
recruiting agency = they charge the employer a fee for recruiting you


So if you're working for a staffing agency like Appleone or Accountemps or whatever, yes they will be taking a portion.
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Old 08-02-2012, 05:55 PM   #3
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staffing agency = they take a portion from your check
recruiting agency = they charge the employer a fee for recruiting you


So if you're working for a staffing agency like Appleone or Accountemps or whatever, yes they will be taking a portion.
No. Staffing/Recruiting/Employment agencies are the same thing. Their methods, services and agreements may differ, but the name doesn't change anything.

Standard bill rate is a 40-50% markup on the hourly rate the temp employee gets. Standard direct placement fee is 25-30% of total first year compensation. Retained search fees are usually 20-30% of total first year compensation charged in installments. All of these costs are most often paid by the employer.

I deal with Accountemps on a regular basis and they charge us a 35% markup for hourly temp work.
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Old 08-02-2012, 06:06 PM   #4
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No. Staffing/Recruiting/Employment agencies are the same thing. Their methods, services and agreements may differ, but the name doesn't change anything.

Standard bill rate is a 40-50% markup on the hourly rate the temp employee gets. Standard direct placement fee is 25-30% of total first year compensation. Retained search fees are usually 20-30% of total first year compensation charged in installments. All of these costs are most often paid by the employer.

I deal with Accountemps on a regular basis and they charge us a 35% markup for hourly temp work.
Are we talking about the same thing here?

With accountemps, your check comes from accountemps, thus they get a cut.

with a recruiting agency (ie headhunter), your check comes from the company you signed with. They are getting a fee from the company.


I dunno if things have changed, but when I was working for AppleOne I knew what they were getting from the company, and I knew what I was getting after AppleOne took their cut.

I don't know of a single person who has said "Headhunter X charged me X amount after I got hired", or "Headhunter X took 10% out of my paycheck this week for services rendered", or whatever.
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Old 08-02-2012, 06:15 PM   #5
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Are we talking about the same thing here?

With accountemps, your check comes from accountemps, thus they get a cut.

with a recruiting agency (ie headhunter), your check comes from the company you signed with. They are getting a fee from the company.
We are talking about the same thing, and though it may just be semantics the agency is not "taking a portion of your pay" as stated in the OP. For temp work, you are on the agency's payroll and receive a check from them, but you aren't paying them / they aren't taking a cut from your check. They get paid by the employer.

Say you take a temp job as an AP clerk from Accountemps for $16/hr. You will be paid that full $16/hr less taxes. Accountemps will most likely charge the employer $24/hr to cover the cost of overhead, but you would have never seen that $24/hr. They aren't taking it from you, they are getting paid by the employer. Instead of a lump sum fee (as with direct placement) the employer pays for only the hours used.
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Old 08-02-2012, 06:16 PM   #6
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We are talking about the same thing, and though it may just be semantics the agency is not "taking a portion of your pay" as stated in the OP. For temp work, you are on the agency's payroll and receive a check from them, but you aren't paying them / they aren't taking a cut from your check. They get paid by the employer.

Say you take a temp job as an AP clerk from Accountemps for $16/hr. You will be paid that full $16/hr less taxes. Accountemps will most likely charge the employer $24/hr to cover the cost of overhead, but you would have never seen that $24/hr. They aren't taking it from you, they are getting paid by the employer. Instead of a lump sum fee (as with direct placement) the employer pays for only the hours used.
Semantics, because this is what I was trying to convey.
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Old 08-02-2012, 07:12 PM   #7
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Hey guys,

I have never had to deal with staffing agencies until recently. I've heard that they take a portion of your pay as a "finders fee" shall I say, but I'm looking up info on that now. I know that their clients pay them for your services, and the clients get a much needed worker.

So, basically, if they do take some of your pay check, how much? If they don't, then that's the answer I am looking for!

Thanks.

If it's a temporary assignment, the agency charges your rate plus their fees. So, if they're paying you {$20}, they're charging {$30} to the company you're working at.

For full time placement, your new employer pays a one time fee - usually something like 3~6 month's salary.
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Old 08-02-2012, 09:15 PM   #8
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Just wondering why do companies feel the need to use a staffing/recruiting agency? And how do they justify the 25% to 40% commission fee?

A lot of companies already have a HR department fully capable of screening and interviewing candidates. If I am a company head, I would have a hard time justifying such cost.
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Old 08-02-2012, 09:22 PM   #9
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Originally Posted by IHAVEAQUESTION View Post
Just wondering why do companies feel the need to use a staffing/recruiting agency? And how do they justify the 25% to 40% commission fee?

A lot of companies already have a HR department fully capable of screening and interviewing candidates. If I am a company head, I would have a hard time justifying such cost.
cause time is money, and it takes time to weed through all the possible candidates to actually find someone that may work, which is why they pay headhunters and recruiters to do that legwork.

in my field (software dev) when looking for a new job you deal with recruiters like 95% of the time. i experienced this the past few months while hunting. and the company i ended up with actually has 3 recruiters who are full time employees with the company. i was brought on board through a 3rd party recruiter though.
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Old 08-02-2012, 09:31 PM   #10
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Hmmm..maybe just to play devil's advocate for a second...

If a company is willing to pay for a position 25% to 40% higher than what's being advertised, it would be able to attract talents at a different level. I think an experienced HR department should be able to weed through potential candidates in few seconds.
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Old 08-02-2012, 09:33 PM   #11
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Originally Posted by IHAVEAQUESTION View Post
Just wondering why do companies feel the need to use a staffing/recruiting agency? And how do they justify the 25% to 40% commission fee?

A lot of companies already have a HR department fully capable of screening and interviewing candidates. If I am a company head, I would have a hard time justifying such cost.
Sourcing is the hardest part of recruitment. Agencies usually have large databases of qualified candidates and have networked with many different professionals which makes the sourcing part a bit easier.

It's not hard to find Admin or Clerk type rolls, but try to find me a qualified mining engineer without connections. We usually source on our own for 2-4 weeks and then list with an agency if unsuccessful.
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Old 08-02-2012, 09:35 PM   #12
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Originally Posted by IHAVEAQUESTION View Post
Hmmm..maybe just to play devil's advocate for a second...

If a company is willing to pay for a position 25% to 40% higher than what's being advertised, it would be able to attract talents at a different level. I think an experienced HR department should be able to weed through potential candidates in few seconds.
A placement fee is a once off cost. A higher salary is long term and has indirect costs tied to it as well.
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Old 08-02-2012, 09:45 PM   #13
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Maybe. Maybe not.

What if the employee left after a year?

I still believe the money is better spent on an employee, rather than on a recruiting agency.
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Old 08-02-2012, 09:52 PM   #14
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Maybe. Maybe not.

What if the employee left after a year?

I still believe the money is better spent on an employee, rather than on a recruiting agency.
In my experience, most HR departments are not skilled at hiring IT people. When I've asked for a senior .Net Developer, I've had HR send resumes to me of people working at McDonald's that, "used Frontpage" once.

The recruiter expense is viewed as a necessary expense, not part of the salary budget line.
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Old 08-02-2012, 09:56 PM   #15
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Thanks, guys.

This information was basically what I needed.

It makes sense for the Agency to charge the employer the markup to get a profit.

Taking cheese off the top of what they're paying you its tantamount to simply recycling it, it seems.
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Old 08-02-2012, 10:08 PM   #16
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The company is paying for the service, not the candidate.

If recruiting firms didn't pay competitive wages they would go out of business (no candidates). i.e. a company is not going to pay you, the candidate, $100/hr, if your market rate is $50. Unless you want to call every company in the area, constantly, and maintain relationships with every hiring manager in town, you don't get that markup--the recruiter gets that for making those calls 8-10 hours per day, 5 days per week and finding the project for you.

A better way of think of it is the company is basically outsourcing part of their HR department. Like they might hire a different company to handle cleaning the office, they hire a recruiting firm to find talent. They weigh the cost of recruiting fees versus hiring recruiters on staff.

Contracting is an hourly rate with a markup (in my industry, typically 50%-100%). For direct hire, a percentage of your negotiated salary (20%-30% in my industry, software engineering).

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Old 08-02-2012, 10:14 PM   #17
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Maybe just different philosophy. But I'd rather pay 25% to 40% higher to someone who will actually be working for me, rather than some 3rd party recruiting agency.

Think of it...if you pay top dollar = less turnover = less need for recruiting agency.
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Old 08-02-2012, 10:20 PM   #18
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Maybe just different philosophy. But I'd rather pay 25% to 40% higher to someone who will actually be working for me, rather than some 3rd party recruiting agency.

Think of it...if you pay top dollar = less turnover = less need for recruiting agency.
25% represents roughly the burden (taxes, insurances, insurance, etc.) of an agency paying employees on a W2 with benefits. So, factoring in the burden, you're now equally competitive in terms of pay with an agency.

At 40%, you're within the margin of error in negotiating salary. Go post your iOS developer position with 15% (40 minus 25) more pay and see how many qualified applicants you get (hint: none). Now hire the wrong person because you don't spend all day sorting good from bad (yes it is a developed skill). Waste money paying that person for 3 months, and then pay the agency fees anyway when you come to us for help
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Old 08-02-2012, 10:21 PM   #19
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Maybe just different philosophy. But I'd rather pay 25% to 40% higher to someone who will actually be working for me, rather than some 3rd party recruiting agency.

Think of it...if you pay top dollar = less turnover = less need for recruiting agency.
I could go into a large amount of detail on market wage analysis, engagement methods and metrics, or even the simple fact that wage is not a major factor in turnover; but I don't think it would do any good. You are certainly entitled to your opinion.
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Old 08-02-2012, 11:53 PM   #20
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Hmmm..maybe just to play devil's advocate for a second...

If a company is willing to pay for a position 25% to 40% higher than what's being advertised, it would be able to attract talents at a different level. I think an experienced HR department should be able to weed through potential candidates in few seconds.
We have paid a staffing agency to find us temporary employees to fill in for anywhere from 2-4 weeks. We don't have an always ready supply of temps to fill positions while we are recruiting for the position, so in this instance, it makes sense.

Also the staffing agency will deal with timecards, hiring verifications, and if you don't like the employee, you can tell the agency "tell them not to come back" and you don't have to tell them to not come in the next day. For a short term assignment, it's helpful. We will incur the cost so just that the department doesn't wind up a month behind.
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Old 08-03-2012, 12:33 AM   #21
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Just wondering why do companies feel the need to use a staffing/recruiting agency? And how do they justify the 25% to 40% commission fee?

A lot of companies already have a HR department fully capable of screening and interviewing candidates. If I am a company head, I would have a hard time justifying such cost.
It's a lot less expensive for the company to hire a temp. They don't have to deal with the tax issues, the insurance issues, or the unemployment issues, among other things.

Typical cost for an employer to employ someone directly is around 50% above what you make, and then they have to be liable for future unemployment. If they can hire a temp through an agency for 35% instead and expense it, that can save them money and make their books look better.
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Old 08-03-2012, 12:47 AM   #22
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Head Hunters usually take money from the employer, I think of them as an outsourced branch of HR.
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Old 08-03-2012, 07:49 AM   #23
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It's a lot less expensive for the company to hire a temp. They don't have to deal with the tax issues, the insurance issues, or the unemployment issues, among other things.

Typical cost for an employer to employ someone directly is around 50% above what you make, and then they have to be liable for future unemployment. If they can hire a temp through an agency for 35% instead and expense it, that can save them money and make their books look better.
Hmmm..

I see. But something doesn't seem right about that. I mean, I am trying my best to look at it from an employer's perspective - saving them more money to keep the business open and, consequently, keep people employed and, of course, to pocket more money for them. It can also help offset increasing operating costs, etc.

Something doesn't seem quite right about a group to hiring and paying me to work in someone else's environment, under their normal hazards, with NO benefits from either party. It's like the client get what they need, the Agency gets what they need, but you get the chaff.

No wonder this country is crazy and people are stressed and sick and tired of stuff. Too many people looking out for themselves... even at the employee level.
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Old 08-03-2012, 08:33 AM   #24
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They don't take any of your paycheck, you are not employees of the company you work at. You are an employee of the recruiting firm, and the recruiting firm pays you your wages.

Where I work we have temps, the temps are not paid by us, and are not our employees, they are employees of the temp agency.
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Old 08-03-2012, 09:00 AM   #25
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Hmmm..

I see. But something doesn't seem right about that. I mean, I am trying my best to look at it from an employer's perspective - saving them more money to keep the business open and, consequently, keep people employed and, of course, to pocket more money for them. It can also help offset increasing operating costs, etc.

Something doesn't seem quite right about a group to hiring and paying me to work in someone else's environment, under their normal hazards, with NO benefits from either party. It's like the client get what they need, the Agency gets what they need, but you get the chaff.

No wonder this country is crazy and people are stressed and sick and tired of stuff. Too many people looking out for themselves... even at the employee level.
You are correct. Temp work can suck. However it can have benefits. At my work we will do temp-to-hire. We basically bring someone on and if they work out we convert them to regulary employee after say 3-months. Bringing a temp in at my work is a lot quicker process than bringing in a regular employee since everything is going through the agency. Also from the behind the scenes in accounting a lot of times a Temp employee will come out of a different accounting bucket than a regular FTE.
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