FAQ: What Is a Headhunter Fee and How Much Does It Cost?
A headhunter is a hiring professional who finds the most qualified candidates and talent for a company, organization or position, often within a specific industry. Working with a headhunter can help you effectively hire for your company or organization or lead you to the next challenge in your career as a professional looking for a new role. In this article, we discuss what a headhunter does, how much it costs to hire a headhunter and what various headhunting fees are to help you decide if working with a headhunter is a good option for your goals.
What does a headhunter do?
A headhunter works with companies and organizations to find the right candidate for a role, often in high-status positions that require special attention, like director-level or above. Headhunters are contractors hired to search for qualified candidates on their client's behalf, and they earn a commission once they fill the position. They often know in-depth information about a job market and openings and can be a worthwhile contact to have when seeking a new position or looking to fill one.
Headhunters often do intensive research before reaching out to prospective candidates, scouting talent in a variety of ways to find, screen and recommend the best people for roles. They review people who have applied for a role, search on professional networking platforms for candidates who are actively looking for a new role and fit the ideal candidate profile and contact others who have the right talent and skills, even if they may not actively be looking and entice them to consider a new opportunity. Here are some other tasks of a headhunter:
Establish a network of companies.
Learn about open positions.
Seek strong potential candidates.
Review resumes and candidate skill sets.
Compile a shortlist for the employer.
Interview qualified candidates.
Evaluate candidates to narrow down choices.
Present the top three candidates to the hiring manager.
Develop and maintain a network of candidates with skills and experience in a specific field.
The work of a headhunter is often industry-specific. For example, a headhunter may concentrate in recruiting for the information technology field, entertainment industry or law enforcement and government roles. Within their respective industry, headhunters may even specialize in a subset of categories, like JAVA developer coding for IT or finding corporate counsel for nonprofit agencies.
Read more: How To Find a Headhunter
What is the difference between a headhunter and a recruiter?
A headhunter and a recruiter have different roles involving candidates:
Headhunters reach out to candidates directly to find the best qualified talent to fill a specific position. The individual or agency introduces a candidate to the employer and rarely does the hiring, salary negotiations or contract.
Recruiters hire qualified candidates in the right role after they apply. They screen candidates who respond to job postings, lead the interview process and serve as a point of contact throughout negotiations and the hiring process.
Another difference between headhunters and recruiters is that a headhunter only gets paid if they successfully recommend and place a suitable candidate with the company, and recruiters often are salaried employees of the company.
What is a standard headhunter's fee?
A standard headhunter's fee is often a percentage of the negotiated first-year salary in an offer letter (including any sign-on bonuses), paid by the hiring company on the start date of the successful candidate. The average percentage fee is 20-25%, though it can range from as low as 15% to as high as 40% or more, depending on the firm the headhunter works with and the type of job position being filled.
For example, if a company hiring a director of marketing offers a salary of $100,000 with a headhunter fee of 20%, then an additional $20,000 goes to the headhunter for locating the successful candidate.
While initial sign-on bonuses are part of the total salary amount calculated for a headhunter fee, other compensation factors are not, including:
Be mindful when considering headhunter fees—a higher percentage may not mean better service, nor does a lower cost mean service is lacking.
What is the difference between retained and contingency headhunting?
Companies can hire a headhunter on a retained or contingency basis. Here is the difference between the two:
Retained basis means a company pays an upfront fee for a headhunter to fill a role. In this method, a headhunter often works until the job is completed and means the company or organization could lose the upfront fee if for any reason the headhunter cannot complete the task.
Contingency basis means a company only pays a fee when hiring a candidate specifically found by the headhunter. There is less risk financially, as the headhunter collects no money upfront to work for the organization.
How is a headhunter fee paid out?
Businesses looking to retain a headhunter can typically expect to pay the fee in three installments, usually tied to the stages of recruitment. For example, a headhunter who requires 30% may charge the fee like this:
10% of salary at start of the candidate research stage
10% of salary after compiling a shortlist of viable candidates
10% of salary once a successful candidate starts employment
There are also stipulations between a headhunter and the client company to cover common situations. For example, the hiring company may require a candidate to work for a minimum of three to six months before paying out the commission percentage to the headhunter.
How can you decide on a headhunter?
There is more than just the fee to consider when deciding on a headhunter to hire for your company or if you're a job seeker looking to work with a headhunter, including:
Focus on the right headhunter. Seek someone specialized in your field who can bring in quality candidates for your business or place you with the right companies. Headhunters who have close relationships and several years of experience within your job field might lead to better outcomes.
Look for a strong reputation. A headhunter or firm with an excellent reputation can positively impact the quality of candidates recruited and their likelihood to explore the career opportunity presented.
Ask questions. Learn about the headhunter and their relationship with clients and candidates they represent. Inquire about what is important to you, whether you are looking to hire or are looking for a role. For example, you might ask "How strong is your network of those in the legal field for this type of role, and how did you build those connections?" or “How many people have you placed with the employer you're contacting me about in the past 12 months?”
Use your resources. Reach out to your own industry network and connections to see if colleagues can recommend a headhunter. Browse any industry newsletters or professional organizations, too.
Research online. Use headhunter guides, many of which are free, to explore working with these professionals and firms.
Consider paid membership alternatives. Some websites give access to a list of thousands of headhunters and firms by paying a flat fee.
Researching the headhunter first can save time and energy and confirm whether to work with a particular one. Their level of experience or quantity and quality of network contacts may factor into a decision, but also knowing a bit about their background can help you secure the right candidate for a role or a new career position.
Tips for working with a headhunter
Here are some helpful tips for working with a headhunter if you are a job seeker:
Working with a headhunter is best for those who are seeking a specific opportunity or position at a company rather than being open to any kind of work. For example, a seasoned customer service executive looking to join a C-suite team may desire the help of a headhunter more so than a recent college graduate.
For companies and organizations looking for candidates, make sure that you clearly communicate which roles you want them to search for so that the process is as efficient and effective as possible.
Have a tailored resume
Headhunters glance at resumes and CVs to see if a person is qualified, so have your most important information visible and communicate focus and direction within your resume. Consider a brief bio or executive summary at the top to let them know what you offer. For example, "MBA, 10+ years of engineering project management leadership and fluent in Korean" stands out, even if the headhunter skims the rest of a resume. Also, having an online professional presence lets recruiters find you more easily.
Be polished and confident
Treat the headhunting meeting like an actual interview, even if it is more casual than meeting with a hiring manager. Dress appropriately and be well-groomed, smile and offer a firm handshake. Strong first impressions matter to the headhunter besides your qualifications for the role, so focus on showing the right attitude and motivation for the position. Offering the hiring company the best candidates upholds their reputation, even though only one gets the job.
Stay competitive as a candidate
Continue learning in your field, earning new degrees, enrolling in online studies or executive management programs raise your profile and value in the job market. The more relevant you are in your role, the more appealing you may be to a headhunter.
Be patient and realistic
Working with a headhunter may take time to receive a job offer or find the right candidate simply because it is a highly focused search with only a few candidates suggested to the company at a time for a role. Even while a candidate pool is smaller than typical recruiting, there are still strong odds of being hired and many exclusive, top-tier positions require working with a headhunter.
Cultivate a continued relationship
Think of the long-term aspect of growth in your career and how a headhunter can help get you there, particularly if you have a long career ahead. Developing a sincere connection can lead to future job opportunities, so take the time to be open and honest with what you are looking for, show interest in the headhunter and their experience and maintain the relationship. Periodically follow up, or reach out when you have new credentials, certifications or degrees. Keeping in touch may make the difference in being considered for a role when you might not otherwise be seeking one.
Continue your job search
A headhunter can be a key part of any professional job search, though it is important to not solely depend on it. Your career path matters most to you, so stay vigilant when exploring roles. Keep working your own network and connections, or meeting with hiring managers on your own, even as you work with a headhunter. Being proactive is the best way to find a new career opportunity.
Explore more articles
- 12 Reasons To Be a Computer Science Major (Plus Jobs)
- 11 Golfing Jobs (With Salaries and Primary Duties)
- FAQ: How To Become a Sport Event Manager
- What Degree Does a Pilot Need? (With 8 Degree Options)
- 12 High-Paying International Jobs for College Graduates
- How To Become a Certified Dietary Manager (With Salary)
- 104 High-Paying Jobs in Tampa You Can Get Without a Degree
- How To Become a Truck Driver in Washington State (With FAQs)
- Learn About 19 Oil Companies Hiring in Colorado
- How To Become a Micro-Influencer (Plus Salary and Duties)
- Job Cast: Well-Being at Work
- 23 IT Jobs You Can Get With a 2 Year Degree