Recruitment is the process of selecting, attracting, and screening qualified applicants for a specific job or position. As a general rule, mid-size to large organizations hire professional recruiters or outsource some of their processes to outside recruitment agencies.
There are four different types of agencies within the recruitment industry. Employment agencies, headhunters, recruitment websites and job search engines are used by a variety of different companies. The type of agency will depend upon the position that is being recruited. For example, a headhunter can be used to recruit executive and other professional positions.
An applicant and a company can use employment agencies. The applicant can contact an employment agency so that they can help them find a job. The company uses employment agencies to find a pool of qualified applicants who have already been screened.
Presently, this industry is based on the goal or objective of providing a candidate to a customer for a certain price. However, there are some agencies that are not paid until they can provide a successful candidate. A successful candidate is an employee who remains with their client longer than a specified probationary period of time.
On the other hand, there are agencies that are paid a retainer in advance to find the right candidate. The company is paid an additional sum or percentage when they are placed and remain in employment longer than the specified probationary period. Today the recruitment agencies within the industry are fairly competitive. Therefore, they are seeking out ways to differentiate their services by adding value while they focus on a specific area of the recruitment cycle.
Typically, when an agency is compensated for their services, the compensation can be made in several different forms. The company can pay the contingency-based fee when the applicant accepts the position with a client. This fee is calculated at a rate of 20% – 30% of the candidate’s yearly salary (first year).
However, these fees can be lower if the applicant is found online. A standard practice also includes a guarantee, which states the employee must remain 30-90 days or the amount will have to be prorated or fully refunded. Advance payments (retainer fees) are not normally non-refundable. However, this will also depend on the success of the applicant that was placed. This type of compensation is provided for high-level executives.
Recruitment agencies receive hourly compensation for placing temporary workers on certain projects. These amounts are pre-negotiated. In these cases, the agency pays the applicant directly but as a third party in the transaction. Temporary candidates can convert to a full-time status when they have performed a specific number of temporary hours.
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