Why do recruiters make so much money?

Staffing agencies work with many employers, and companies pay a lot of money to get help from them. When a company goes to an agency, they pay a contingency fee. The fee goes to the staffing agency if the organization hires a candidate they sent their way. Then, the agency pays the recruiter part of the contingency.

careersherpa.net - How Much Do Recruiters Make? A Full Earnings Breakdown

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If you’re someone who has ever considered becoming a recruiter, it’s only natural to wonder how much money they make. After all, the job is rather unique! This guide will go over everything you need to know about how much recruiters make, how they get paid, and what kinds of recruiters earn the most money.

How Much Do Recruiters Make?

Recruiters play an essential role in nearly every industry. However, their impact is even more significant in demanding fields where having the best talent is crucial to a company’s success. It’s not enough for companies to simply publish a job listing and hope that high-quality candidates come in. They have to be proactive about finding the best people possible. That’s why so many organizations turn to dedicated recruiters. These jobs are demanding, and the recruitment industry is more complex than most realize. The best way to gain perspective on the diverse world of recruitment is to take a look at average earnings! In the United States, the average recruiter can make anywhere from $35,000 a year to $200,000. That’s a broad annual earning spectrum, and you’ll likely see different numbers from different sources. For example, looking at popular salary websites would lead you to believe that the national average is around $45,000 across the board. But many recruiters make far more than that, going well into the six-figure territory. The earning disparity is due to the different types of recruitment jobs available. Like any other profession, this field has a career ladder with multiple positions and salary ranges. In the case of recruiters, one of the most significant ways to influence their earning potential is to choose certain types of recruiting.

There are two main kinds of recruiters: External and internal.

Internal Recruiter Pay

Internal recruiters work for a business just like any other employee. They’re part of the company’s payroll and are typically a human resources team member. You’re more likely to see internal recruiters at larger companies or those that hire employees continually throughout the year. In those cases, it’s worth having an in-house recruiter to maintain a quality pool of applicants. You benefit from stability and a more traditional work environment as an internal recruiter. These recruiters typically work in an office, have a support team nearby, and have access to many different hiring resources. In larger corporations, the brand name alone is enough to attract a sizable pool of applicants for every job. However, recruiters can use the power of the company’s name to reach out to top-notch candidates, making offers to those who might not even be on the hunt for a new job. In-house recruiters know the ins and outs of the company’s hiring needs. In many cases, these positions require additional employee-related work. For example, recruiters are often responsible for tracking hiring metrics, creating reports about employee retention, the efficiency of job listings, etc. Generally, internal recruiters have hourly or salaried compensation. Internal recruiters make around $35,000 to $75,000 per year depending on where they work and how much experience they have. It is possible to earn more working internally, but you’d have to become a technical recruiter (more on that later).

External Recruiter Pay

Those wanting to maximize how much they make as a recruiter often forgo internal salaried positions in favor of working with a recruitment agency. External recruiters aren’t tied to a specific company. Some refer to these recruiters as “headhunters,” and that’s an excellent way to explain how they work. In this field of work, recruiters spend their time finding the best possible candidates for many companies. In most cases, external recruiters work for a staffing agency. Some positions with base salaries are available, but most work on a contract basis using a commission pay structure. As an external recruiter, other organizations pay you to find qualified candidates for them.

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Recruitment agencies often work with many different companies. It’s not uncommon to see agencies with a client roster of 25 to 50 companies. But why do they use external recruiters?

You’re more likely to see businesses work with third-party external recruiters when they have more challenging positions to fill. Maybe the organization rarely hires new people because they have highly skilled employees with in-demand qualifications. Those companies often have high retention rates, making hiring sessions few and far between. In that scenario, it doesn’t make sense to devote resources to a dedicated recruitment team. Instead of having people in-house find potential new hires, they can turn to a staffing agency that knows how to reach a massive pool of people looking for a job. Most external recruiters have access to an enormous database of candidates. They can sift through that collection, find the best people, and reach out with job opportunities. Many will also look out in the industry, using their connections and powerful networking tools to find people that might fit the organization’s needs. If being paid well as a recruiter is a priority, external is the way to go. External recruiters could make upwards of $200,000 a year, and some make even more. It all depends on the industry, the volume of placements you get, and how many clients you have. These recruitment jobs are commission-based, so you’re not confined to an annual salary. The more placements you secure for your clients, the bigger your earning potential.

How Much Do Technical Recruiters Make?

This subset of the recruiting industry is an important one worth mentioning. Technical recruiters are individuals who have in-depth knowledge of a specific field. They’re not necessarily experienced working in that field (although that is a plus), but they usually have specialized knowledge about what employers are looking for. They work for companies that operate in fields that require a specific and deep skillset. For example, technical recruiters often work to find lawyers, nurses, medical experts, engineers, and more. They’re also prevalent in the IT and software development space. The hiring process in these industries is more complex, involving technical interviews and possible competency exams. Your average recruiter wouldn’t have the knowledge or experience to navigate those hiring processes. That’s why organizations turn to technical recruiters. They work closely with the hiring manager to identify, recruit, and screen candidates for highly specialized positions. Of course, that extra knowledge experience comes with a pay increase. Technical recruiters usually earn a base salary in the neighborhood of $75,000. However, that figure can go up more depending on the job. Technical recruiters can work internally for a specific company, but they can also work for staffing agencies. The latter can maximize annual earnings, surpassing what general external recruiters make.

How Do Recruiters Get Paid?

Recruiters can get paid in a few different ways.

As mentioned earlier, internal recruiters typically have hourly or salaried compensation. Paychecks are more reliable, and your earnings aren’t contingent on how many new hires you place. Some internal recruiters can work on a short-term contract basis. That’s common when organizations need extra help to complete a hiring push. It’s usually seasonal, and contracts can last between three and six months. Contracts are a great way to earn more as an internal recruiter. The average short-term hourly pay is around $50. It could make more than a full-time salary position with multiple contracts a year.

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External recruiters have a more complex pay structure. Positions with a base salary exist, but staffing agencies typically pay recruiters a commission. Staffing agencies work with many employers, and companies pay a lot of money to get help from them. When a company goes to an agency, they pay a contingency fee. The fee goes to the staffing agency if the organization hires a candidate they sent their way. Then, the agency pays the recruiter part of the contingency. How much is the contingency amount? It’s usually equal to 15 to 20 percent of the position’s salary! From that contingency fee, staffing agencies usually give about half to the recruiter. That’s the commission they make. Are you starting to see how external recruiters make so much more than internal recruiters? Let’s look at an example. Say that an external recruiter successfully places a candidate into a position that pays $175,000 annually. With a 20 percent contingency fee, the staffing agency gets $35,000. The recruiter receives half of that figure, making their earnings for placing a single candidate $17,500. An experienced recruiter can get two or three placements a month. It adds up quickly, making this route a very lucrative option. External technical recruiters can make even more.

Other Factors That Impact How Much Recruiters Earn

There’s a ton of earning potential as a recruiter (especially if you’re external), but several factors will impact how much you can make. In addition to the differences between internal, external, and technical recruitment, you must consider facets like location and job sector. Regarding location, it’s all about the cost of living and the overall job market. Recruiters are more likely to see success in larger cities. Why? Because the cost of living is higher and there’s a much bigger pool of applicants. As an external recruiter, there are more companies to work for and a massive pool of people looking to get jobs. Pair that with the overall higher salaries due to the cost of living, and these recruiters can make significantly more than they would in a more rural setting. The industry you recruit for makes a difference, too. Operating in sectors with high-paying jobs means recruiters can make more. For example, tech companies often have more high-paying jobs. The same goes for medical, law, and engineering companies. With higher paying salaries comes a beefier contingency fee and commissions per placement. Become a technical recruiter in these fields, and there are opportunities to make even more!

Conclusion

When it comes to how much money recruiters make, the kind of position and industry they operate in will heavily influence their earnings. If you’re interested in becoming a recruiter and favor a more consistent and stable work experience, then internal is probably the way to go. But if you’re looking to earn as much as possible, you should pursue the role of an external recruiter (ideally a technical one). There, the sky’s the limit!

careersherpa.net - How Much Do Recruiters Make? A Full Earnings Breakdown

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