Many employers undertake their own in-house recruitment, using their human resources department, front-line hiring managers and recruitment personnel who handle targeted functions and populations. In addition to coordinating with the agencies, in-house recruiters may advertise job vacancies on their own website and other job boards, coordinate internal employee referrals, target and headhunt external candidates (much like an external agency or search firm), work with external associations, trade groups and/or focus on campus graduate recruitment.
In-house recruiters (also known as internal recruiters or corporate recruiters) may be multifunctional, serving in an HR generalist role or in a specific role focusing all their time on recruiting. Activities vary from firm to firm but may include, screening CVs or résumés, conducting aptitude or psychological testing, interviewing, undertaking reference and background checks, hiring; administering contracts, advising candidates on benefits, onboarding new recruits and conducting exit interviews with employees leaving the organization. They can be permanent employees or hired as contractors for this purpose. Contract recruiters tend to move around between multiple companies, working at each one for a short stint as needed for specific hiring purposes. The responsibility is to filter candidates as per the requirements of each client.
Internal recruitment (not to be confused with internal recruiters!) refers to the process of a candidate being selected from the existing workforce to take up a new job in the same organization, perhaps as a promotion, or to provide career development opportunity, or to meet a specific or urgent organizational need. Advantages include the organization's familiarity with the employee and their competencies insofar as they are revealed in their current job, and their willingness to trust said employee. It can be quicker and have a lower cost to hire someone internally. An employer may choose to advertise a job both externally and internally simultaneously, or only externally or only internally.
A temporary internal appointment for a period of a few months sometimes occurs, after which the employee would normally be expected to return to their previous job. This is known as a secondment; someone on a secondment is said to be seconded to the new team. Secondments may also take place between related organizations.
Lateral hire may refer to the hiring of someone into a position that is at the same organizational level or salary from another, similar organization or to an employee moving from one position to another within the same organization, possibly luring them with a better salary and the promise of better career opportunities.
An employee referral program is a system where existing employees recommend prospective candidates for the job offered, and in some organizations if the suggested candidate is hired, the employee receives a cash bonus. Job seekers may also be referred or recommended by a third-party affiliate within a particular field based on certain criteria resulting in a lead or interview with a potential future employer.
In some cases the organization provides the employee referral bonus only if the referred employee stays with the organization for stipulated time duration (in most cases, 3–6 months). The referral bonus depends on the grade of the referred employee - the higher the grade, the higher the bonus; however, this method is not used for senior-level hiring.
An external recruiter may suit small organizations without the facilities to recruit. Typically, a formal contract for services is negotiated, known in the industry as Recruitment Process Outsourcing. It may involve strategic consulting for talent acquisition, sourcing for select departments or skills, or total outsourcing of the recruiting function.
Employment agencies operate in both the public and private sectors. Publicly funded services have a long history, often having been introduced to mitigate unemployment in economic downturns. The commercial recruitment industry strives to provide a candidate to a client for a price. Agencies at one end of the spectrum are paid only if they deliver a candidate that successfully stays with the client beyond an agreed probationary period.
Agencies at the other end charge a retainer to focus on a client's needs and achieve milestones in the candidate search, and receive a percentage of the candidate's salary when the candidate stays beyond a probationary period.The agency recruitment industry is highly competitive, therefore agencies have sought out ways to differentiate themselves and add value by focusing on a particular part of the recruitment life cycle. Most agencies provide a broad range of services, and with the extremes being the traditional providers and the niche operators.
A traditional agency historically has had a physical location, where a candidate visits a local branch for a short interview and an assessment before being taken onto the agency’s books. Recruitment consultants work to match their pool of candidates to their clients' open positions. Suitable candidates are short-listed and put forward for an interview with potential employers on a contract or direct basis.
An agency or consultancy representing multiple "traditional agencies" is called a broker. A client employs the broker who supplies candidates from potentially multiple recruitment agencies. The consultants work to match their pool of candidates to the Brokers' open positions. Suitable candidates are short-listed and put forward for an interview with potential employers on a contract or direct basis. Typically the broker fee is paid by the recruitment agency as a percentage of the placement rather than direct from the client..
'Specialized recruiters' exist to seek staff with a very narrow specialty. These firms can produce superior results due to their ability to channel all of their resources into networking for a very specific skill set. This specialization in staffing allows them to offer more jobs for their specific demographic, which in turn attracts more specialized candidates from that specific demographic over time building large proprietary databases. Niche firms tend to focus on building ongoing relationships with their candidates, as the same candidates may be placed many times throughout their careers. Online resources have developed to help find niche recruiters. Niche firms also develop knowledge on specific employment trends within their industry of focus (e.g., the energy industry) and are able to identify demographic shifts such as aging and its impact on the industry. Agencies' financial arrangements may take several forms:
- A contingency fee paid by the company when an agency-introduced candidate accepts a job with the client company. Typical fees range from 15% to 35% based on the candidates first-year base salary (fees as low as 12.5% can be found online. This type of recruitment usually has a rebate or replacement guarantee should the candidate fail to perform or leave within a set period of time (often up to a three-month period and as much as a 100% rebate).
- An advance payment that serves as a retainer, also paid by the company, is non-refundable and paid in full depending on outcome and success (e.g., 40% up front, 30% in 90 days and the remainder once a search is completed). This form of compensation is generally reserved for high level executive search/headhunters.
- Hourly charge for temporary workers and projects. A negotiated hourly fee in which the agency is paid and then pays the applicant as a consultant for services as a third party. Many contracts allow a consultant to transition to a full-time status upon completion of a certain number of hours with or without a conversion fee.
"Executive search firm" and "headhunter" are industry terms for a third-party recruiter who works on behalf of an employer and seeks out candidates for executive and professional positions on their behalf. Headhunters are generally considered more aggressive than in-house recruiters or may have existing industry experience and contacts. They may use advanced sales techniques. They may also purchase expensive lists of names and job titles but more often generate their own lists.They may arrange a meeting or a formal interview between their client and the candidate, and usually prepare the candidate for the interview, help negotiate the salary, and conduct closure of the search. They are frequently members in good standing of industry trade groups and associations. Headhunters may attend trade shows, college job fairs and other meetings nationally or even internationally that may be attended by potential candidates and hiring managers.
Headhunters are typically small operations that make high margins on candidate placements (sometimes more than 30% of the candidate’s annual compensation). Due to their higher costs, headhunters are usually employed to fill senior management and executive level roles. Headhunters are also used to recruit very specialized individuals; for example, in some fields, such as emerging scientific research areas, there may only be a handful of top-level professionals who are active in the field. In this case, since there are so few qualified candidates, it makes more sense to directly recruit them one-by-one, rather than advertise internationally for candidates.In-house recruiters tend to attract candidates for specific jobs.
Headhunters both attract candidates, and actively seek them out. To do so, they may network, cultivate relationships with various companies, maintain large databases, purchase company directories or candidate lists and cold call prospective recruits. Headhunters are increasingly using social media to find and research candidates, also called social recruiting.
Executive research and resourcing firms
These firms are the new hybrid operators in recruitment, discovering passive candidates and making them hires for their clients. They may generate varying degrees of candidate information from people currently engaged in the position a company is looking to fill and provide "passive candidate intelligence" to the recruiting company. These firms may charge a daily rate or fixed fee.