When a recruitment agency is recruiting for clients on demand and is paid only on successful placements, It is practicing Contingency recruitment.
In contingency recruitment, the firm is paid only when a successful placement is made. You essentially compete with the client’s internal efforts of filling that position along with other competing recruitment agencies. To have a better chance at success firms end up putting forward as many candidates as they can.
You raise an invoice the moment your candidate accepts the offer but it may take up to 3 months from the joining date for the client to actually pay you for your services.
Recruitment Firms charge anywhere from a small fixed fee per placement for entry-level/low skill positions and 8-35% of a candidates annual salary for more senior/niche positions. These numbers vary a lot based on region and the state of the economy. Agency Recruiters tend to make roughly 20%-60% of the revenue they generate as a combination of base salary + bonus.
The alternative to contingency recruitment is the more predictable “retained recruitment”.
Pro tip: In Contingency recruitment it is very essential to provide better candidates in time, hence make sure you have a system in place which helps you manage your clients and candidates requirements on a single platform and help you deliver the best!