According to NACE, “Third-party recruiters are agencies, organizations, or individuals recruiting candidates for temporary, part-time, or full-time employment opportunities other than for their own needs. This includes entities that refer or recruit for profit or not for profit, and it includes agencies that collect information to be disclosed to employers for purposes of recruitment and employment”. Third party recruiters can be broken into four groups. They are:
1. Employment Agencies list positions for a number of client organizations and receive payment when a referred candidate is hired. The fee for listing a position is paid either by the firm listing the opening (fee paid) or by the candidate who is hired.
2. Search Firms, often called Executive Search or Headhunters, contract with clients to find and screen qualified persons to fill specific positions. Their fees are always paid by the clients.
3. Contract Recruiters contract with an employer to act as the employer's agent in the recruiting for positions.
4. Online Job Posting or Resume Referral Services collect data on job seekers and display job opportunities to which job seekers may apply. The data collected on job seekers are sent to prospective employers. Fees for using the services are paid by the employer, school, or job seeker.
There are two ways that third-party recruiting organizations are compensated:
One, you pay the recruiter a flat fee for services rendered or a fee based upon your starting salary once you are placed with an employer.
Or two, the employer pays a fee in one of the following three ways:
1) Retainer firms—The employer pays a flat fee to the recruiter for services performed in the recruiting of individuals to work for the employer. They are paid whether or not they provide a candidate for the position. This is usually for only senior level positions.
2) Contingency firms —The employer pays to the recruiter a percentage of the applicant's starting salary once the applicant is hired by the employer.
3) Fee for service—The employer pays a fee for specific services, e.g. job postings, access to resumes, and other items.
When working with individuals, third-party recruiters must follow EEO standards in recruiting and placing candidates.
Before sending your resume to a company, the recruiter should tell you the name(s) of their client, or clients they are representing and to whom your' credentials will be disclosed. Please note that you can tell the recruiter you do not want your credentials sent to a firm – it is your choice.
Third-party recruiters should not disclose your information to any employer, including the client-employer, without obtaining prior written consent from you. Under no circumstances should your information be disclosed for any reason other than the original recruiting purposes, nor can it be sold or provided to other entities. Online job posting and resume referral services must prominently display their privacy policies on their web sites, specifying who will have access to your information.
To be clear, the following are companies that are NOT recruiters but are employers:
Temporary Agencies or Staffing Services are organizations that contract to provide individuals qualified to perform specific tasks or complete specific projects for a client organization. Individuals perform work at the client organization, but are employed and paid by the agency.
Outsourcing Contractors or Leasing Agencies are organizations that contract with client organizations to provide a specific functional area that the organization no longer desires to perform, such as accounting, technology services, human resources, cafeteria services, etc. Individuals hired by the outsourcing or leasing firm are paid and supervised by the firm, even though they work on the client organization's premises. Often times, a company will hire you after working for them temporarily.
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