Types of Recruitment Firms Explained

Recruitment is important in finding the right candidates to fill up vacancies in your company. While you may have a human resource department to handle that, there will come a time when the recruitment effort will become overwhelming for your in-house team. This is where hiring an outside recruitment firm may come in handy. But recruitment has many aspects that make choosing the right agency to address your recruitment needs necessary. 

There are different recruiting firms to choose from each with its own specialization. Thus it is important to choose the agency that will truly cater to your recruitment needs. According to Agency Central, more than 50% of candidates prefer to use an agency to help them find a job. With that in mind, let us take a look at the different recruitment agencies you can hire. 

Types of Recruitment Agencies 

  1. Retained Recruitment Firms
  2. Contingency Search Firms 
  3. Staffing Agencies 
  4. RPO Companies
  5. Internal Recruiter
  6. Niche or Specialist Firms 
  7. Traditional Recruitment Agencies 

Let’s break down each.

1. Retained Search Firms 

Also known as executive search firms, these recruitment agencies provide search services for senior, executive, or other highly compensated positions. Retained search firms find qualified candidates and present them to their clients. In addition, they check whether the candidate is open to new opportunities and conduct job offers and salary negotiations. These recruitment firms are client-exclusive and require a retainer fee upfront. They usually charge 30 to 35 percent of the salary of the position. 

Retained recruitment firms usually have a long list of potential candidates and then trim it down to a shortlist of strong candidates. Aside from that, executive search firms have an extensive network of highly qualified candidates. This gives you an assurance that you will find the right candidate while reducing the risk of a bad hire. 

Retained search firms build deep connections with their clients by knowing their mission and vision. Before the actual search, executive search firms conduct background information on the job position’s responsibility. Some of the methods they employ include competency-based interviewing, 360-degree referencing, and applying advanced psychometric assessment to create the perfect profile. Retained recruitment firms will help ensure that the candidates embody the values, branding, and culture of the client.

2. Contingency Search Firms 

As the name implies, contingency search firms only search for candidates for their clients when they need them. They only get paid when the candidate they called is hired by the client. Unlike the retained search firm, contingency search firms can work with multiple clients and agencies. These firms try to look for as many possible candidates as possible. 

These search firms recruit on a transactional and placement-oriented approach. Their work is what is called “no win, no fee” because their work is relatively free until a candidate they referred to the client has been hired. As such, they cannot spend too much time and effort beyond basic recruiting and resume submission. They can take on other job orders but speed is the key to their success. 

Contingency recruiters utilize advertising, networking, and online databases in selecting a qualified candidate. It is the client who handles the recruitment, evaluation, and review of the candidates. Thus, the more candidates that get hired, the higher is the revenue of the contingency firm.

3. Staffing Agencies 

Staffing agencies are geared towards adding consultants to their clients instead of permanent employees. These firms are called upon by clients who need to fill up several positions. There is also a specific budget and time frame within which the positions should be filled. With recruitment, the process is over when the job opening gets filled. On the other hand, staffing is a continuous process. There are open positions that always need to be filled. 

Staffing agencies have different fees based on the type of position to be filled. Executive and niche positions have higher fees compared to entry-level positions. The staffing agency you select and its fee structure will impact the amount you will pay for the firm’s services. With a staffing agency, you pay the agency an agreed hourly rate for the employees. It will first get its cut before paying the employee. 

Using a staffing agency can be expensive in the long run. However, it can be fast and efficient if you are hiring for short-term positions.  With a staffing agency, you only pay for the additional staff when you need them. You can save time and effort in hiring as well as the cost of taxes and benefits.

4. RPO Companies

Recruitment process outsourcing (RPO) companies are recruitment agencies that will handle all or part of your recruitment process. It is like an extension of an internal HR and talent acquisition. RPO companies do not only source candidates for certain positions but also handle the entire recruitment process. 

RPO can either be full-scale or on-demand. With the former, the agency becomes an internal recruiter handling all aspects of recruitment. The latter, on the other hand, means that the agency only handles some aspects of recruitment. Full-service RPO also handles functions like sourcing, screening, hiring, and onboarding candidates. On-demand RPO is only used in case of unexpected hiring needs. 

RPO companies have a broad network and in-depth industry experience. They can shorten the recruitment process and can help your business reputation as a great employer by helping shape the candidate experience. This could lead to an improved employer brand, higher retention rates, and better quality hires.

5. Internal Recruiter

If you are hiring applicants on a regular basis, you might be better off having an internal recruiter. This individual is a salaried employee whose main function is to attract and recruit the best talent for your company. Their job responsibilities may include writing job descriptions, posting online jobs, sorting resumes to filter out unqualified candidates, and scheduling interviews. 

An internal recruiter handles candidate sourcing and hiring but their focus is to search internally rather than from the outside. They work with members of the organization to determine hiring needs, placements, and policies. Internal recruiters assess their current staff and try to fill a vacancy from within the existing workforce either through promotion or internal transfer. The advantage of this is that they are already familiar with the business and how it operates. 

Getting an internal recruiter offers a cheaper and quicker way to recruit. In addition, it creates opportunities for promotion within the business. One setback of internal recruitment is that it may lead to resentment among the candidates who were not appointed. Aside from that, it limits the number of potential applicants.

6. Niche or Specialist Firms

Niche recruitment firms are responsible for finding highly skilled candidates who are specialized in certain fields or disciplines. Niche recruiters have deep knowledge of the industry and maintain a database of the best talents, whether actively seeking a job or not. Niche firms can work on a temporary, contingency, or retained recruitment basis. These recruitment agencies build relationships with specialist companies in their chosen niche. 

If you are looking for a job in a specific field or broaden your horizon, niche recruitment firms are the best to work with. They will often advise candidates to improve their CVs or ace an interview. However, they can also be tougher than your average recruiter. Niche recruiters usually have a background in their focused sectors. They constantly work to grow their pool of talents and widen their networks. 

Niche recruitment firms are proactive in their approach when finding candidates. They seek a long-term relationship based on trust. Since they are focused on their chosen field, they are likely to have repeat business which is often beneficial to them by increasing their industry knowledge.

7. Traditional Recruitment Agencies 

The most common type of recruitment firm is the traditional agency. In terms of the fee structure, they work like a contingency recruitment agency, that is they are not paid unless the client hires one of the candidates they recommended. Traditional recruitment agencies usually have a rebate and replacement scheme in place. For example, if the hired candidate resigns within a certain period of time, the agency will either have to replace that candidate for free or refund the fee. 

Traditional recruitment agencies implement four recruitment methods: resume screening, phone screening, interview, and psychometric testing. In traditional recruitment, the recruiter matches the skills of a candidate to the required skills of a position. In traditional recruitment, the hiring managers are usually involved in the entire process from resume screening to the discussion phase. Other methods employed in traditional recruitment include background checking, job offer, notifying unsuccessful candidates, and onboarding. 

Traditional recruitment has often been criticized for being outdated, expensive, and time-consuming. In addition, it only focuses on skills but not behavior. Studies have shown that 89% of candidate firings are made on a candidate’s attitude. Aside from that, it is focused on the wrong metrics. It is important to find quality hires that will stay with your company for the long haul. Sometimes traditional is not the best way to do business. The market has changed so you need to adapt to the change. 

There are different types of recruitment firms so how do you know which one is right for your business? It all boils down to identifying your recruitment needs, resources, and of course budget. 

Hire The Best Candidate For Your Business with airisX

Recruiting new employees for your team is a notoriously time-consuming process. Hiring an external outsourcing provider like airisX allows you to remove yourself from the tediousness of having to go through hundreds of resumes and bad interviews to find the right candidate that meets the criteria of the employee you are looking for and allowing you to focus on what matters in the recruiting process – doing the final interview for the right candidate, and making the final hiring decision. Book an appointment with us at contact@airisx.com and we will get back to you with the right solution for your needs. 


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