FAQ: What Is a Headhunter Fee and How Much Does It Cost?

Do you know how much Banking and Finance companies paid for candidate placements in 2018? The average recruiting firm received $33,922.

Recruitment agency fees don’t have to cost an arm and a leg, but the numbers make anyone feel like they’ve lost limbs.

How do you find recruiters that don’t hurt the bottom line? Is there a better way to negotiate your headhunter fee percentage? Can you build a talent pool that fits the budget?

There’s good news: you can do both. Read on to find the secrets you need to negotiate a better recruiter fee agreement.

Setting a headhunter fee and fee hold period

What is the difference between a headhunter and a recruiter?

A headhunter and a recruiter have different roles involving candidates:

Another difference between headhunters and recruiters is that a headhunter only gets paid if they successfully recommend and place a suitable candidate with the company, and recruiters often are salaried employees of the company.

What does a headhunter do?

A headhunter works with companies and organizations to find the right candidate for a role, often in high-status positions that require special attention, like director-level or above. Headhunters are contractors hired to search for qualified candidates on their clients behalf, and they earn a commission once they fill the position. They often know in-depth information about a job market and openings and can be a worthwhile contact to have when seeking a new position or looking to fill one.

Headhunters often do intensive research before reaching out to prospective candidates, scouting talent in a variety of ways to find, screen and recommend the best people for roles. They review people who have applied for a role, search on professional networking platforms for candidates who are actively looking for a new role and fit the ideal candidate profile and contact others who have the right talent and skills, even if they may not actively be looking and entice them to consider a new opportunity. Here are some other tasks of a headhunter:

The work of a headhunter is often industry-specific. For example, a headhunter may concentrate in recruiting for the information technology field, entertainment industry or law enforcement and government roles. Within their respective industry, headhunters may even specialize in a subset of categories, like JAVA developer coding for IT or finding corporate counsel for nonprofit agencies.

What is the difference between retained and contingency headhunting?

Companies can hire a headhunter on a retained or contingency basis. Here is the difference between the two:

What is a standard headhunter’s fee?

A standard headhunters fee is often a percentage of the negotiated first-year salary in an offer letter (including any sign-on bonuses), paid by the hiring company on the start date of the successful candidate. The average percentage fee is 20-25%, though it can range from as low as 15% to as high as 40% or more, depending on the firm the headhunter works with and the type of job position being filled.

For example, if a company hiring a director of marketing offers a salary of $100,000 with a headhunter fee of 20%, then an additional $20,000 goes to the headhunter for locating the successful candidate.

While initial sign-on bonuses are part of the total salary amount calculated for a headhunter fee, other compensation factors are not, including:

Be mindful when considering headhunter fees—a higher percentage may not mean better service, nor does a lower cost mean service is lacking.

How is a headhunter fee paid out?

Businesses looking to retain a headhunter can typically expect to pay the fee in three installments, usually tied to the stages of recruitment. For example, a headhunter who requires 30% may charge the fee like this:

There are also stipulations between a headhunter and the client company to cover common situations. For example, the hiring company may require a candidate to work for a minimum of three to six months before paying out the commission percentage to the headhunter.

How can you decide on a headhunter?

There is more than just the fee to consider when deciding on a headhunter to hire for your company or if youre a job seeker looking to work with a headhunter, including:

Researching the headhunter first can save time and energy and confirm whether to work with a particular one. Their level of experience or quantity and quality of network contacts may factor into a decision, but also knowing a bit about their background can help you secure the right candidate for a role or a new career position.

Tips for working with a headhunter

Here are some helpful tips for working with a headhunter if you are a job seeker:

Be direct

Working with a headhunter is best for those who are seeking a specific opportunity or position at a company rather than being open to any kind of work. For example, a seasoned customer service executive looking to join a C-suite team may desire the help of a headhunter more so than a recent college graduate.

For companies and organizations looking for candidates, make sure that you clearly communicate which roles you want them to search for so that the process is as efficient and effective as possible.

Have a tailored resume

Headhunters glance at resumes and CVs to see if a person is qualified, so have your most important information visible and communicate focus and direction within your resume. Consider a brief bio or executive summary at the top to let them know what you offer. For example, “MBA, 10+ years of engineering project management leadership and fluent in Korean” stands out, even if the headhunter skims the rest of a resume. Also, having an online professional presence lets recruiters find you more easily.

Be polished and confident

Treat the headhunting meeting like an actual interview, even if it is more casual than meeting with a hiring manager. Dress appropriately and be well-groomed, smile and offer a firm handshake. Strong first impressions matter to the headhunter besides your qualifications for the role, so focus on showing the right attitude and motivation for the position. Offering the hiring company the best candidates upholds their reputation, even though only one gets the job.

Stay competitive as a candidate

Continue learning in your field, earning new degrees, enrolling in online studies or executive management programs raise your profile and value in the job market. The more relevant you are in your role, the more appealing you may be to a headhunter.

Be patient and realistic

Working with a headhunter may take time to receive a job offer or find the right candidate simply because it is a highly focused search with only a few candidates suggested to the company at a time for a role. Even while a candidate pool is smaller than typical recruiting, there are still strong odds of being hired and many exclusive, top-tier positions require working with a headhunter.

Cultivate a continued relationship

Think of the long-term aspect of growth in your career and how a headhunter can help get you there, particularly if you have a long career ahead. Developing a sincere connection can lead to future job opportunities, so take the time to be open and honest with what you are looking for, show interest in the headhunter and their experience and maintain the relationship. Periodically follow up, or reach out when you have new credentials, certifications or degrees. Keeping in touch may make the difference in being considered for a role when you might not otherwise be seeking one.

Continue your job search

A headhunter can be a key part of any professional job search, though it is important to not solely depend on it. Your career path matters most to you, so stay vigilant when exploring roles. Keep working your own network and connections, or meeting with hiring managers on your own, even as you work with a headhunter. Being proactive is the best way to find a new career opportunity.

FAQ

Is it worth it to pay a headhunter?

The high fees to work with a paid headhunter, on average anywhere between $500 and $4,000, may be worthwhile if you land a quality job. Before paying any fees to a recruiter, make sure that you ask for and check references from job seekers and employers.

How much does it cost to get a headhunter?

How Much Does it Cost to Hire a Headhunter or Recruiter? Headhunters and recruiters often cost between 25% to 33% of a hired candidate’s annual base salary. Hiring companies pay those fees. Headhunters and recruiters rarely charge job seekers.

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