What is a recruitment agency?

Recruitment agencies are third-party companies that help businesses hire quality candidates for open positions. They manage the hiring process for you, handling applicant sourcing, resume screening and initial interviews. Recruiters present the top candidates to your hiring team for final assessments and interviews.

How recruitment agencies work can vary by company. Some agencies specialize in finding certain types of employees, such as contract workers, executives or people with specific skill sets. Others focus on defined sectors, such as technology or engineering. Larger agencies might offer full-service hiring across a range of industries.

Pros of using recruiting firms

Here are some advantages of using recruiting agencies.

They help build a positive reputation for your business.

Recruitment agencies act as representatives for your brand during the hiring process. An effective agency can communicate the value your company offers, so applicants understand the merits of the job and the work environment. Their recruiters offer an organized, efficient process that helps improve the candidate experience and reinforce your reputation.

Related: 10 Recruiting Strategies for Hiring Great Employees

They understand the industry.

Specialized recruiting agencies often have a deep understanding of a sector, industry or job type. They know where to find top candidates, and they’re up-to-date on the average salary and benefits packages for each role. Recruiters use their knowledge of the market to attract high-quality employees and help your company stay competitive in the hiring process.

They have access to a broader talent pool.

Recruitment agencies typically spend time cultivating large networks of job seekers and professional contacts. They leverage these networks to find candidates that your company might not be able to reach with standard job postings. Many recruiters also maintain a list of passive job seekers—people who aren’t actively looking for a new job but who might be willing to move for the right opportunity.

If you need an employee with a specific set of skills, access to a wider talent pool can make it easier to find the right person.

They save time for your HR team.

Recruiting can be time-consuming; a single job posting can bring in hundreds of applications. When you work with a recruiting agency, your in-house HR staff won’t need to spend time reviewing resumes and communicating with candidates. Recruiters handle this process for you so HR can focus on other high-value responsibilities.

Many agencies can also conduct phone screenings and first-round interviews, ensuring that only top candidates make it to in-person interviews with your team. Because recruitment agencies dedicate all their resources to hiring, they can often help you fill positions faster.

They can scale your hiring capacity quickly.

During periods of growth, your company might hire numerous employees at once. If your current HR department doesn’t have the capacity to manage a high-volume hiring process, a recruitment agency can fill the gap. Their services are flexible, so you can use them on a temporary basis until hiring needs slow down or you build a bigger HR team.

What to consider when hiring a recruitment agency

Knowing what to consider when hiring a recruitment agency can make it easier to compare firms. Here are some things to keep in mind as you explore your options.

1. Experience

Research to understand how much experience the recruiting agency has. Consider the following questions:

• How long has it been in business?
• How long has it served your area?
• When did it begin working with companies in your industry?

2. Specialization

Recruiting agencies may specialize in one area or industry, such as technology-focused firms or medical recruitment agencies. Verify the recruiter’s specialty aligns with your company. If you’re choosing a general recruitment service, you might ask whether it has assisted employers in your industry.

3. Personnel

Ask who will be working with your organization, whether you’ll have a single contact at the recruitment firm or be working with a team. Consider the individual’s or team’s education, training, experience and skills.

4. Strategies

How recruitment agencies work is generally the same from firm to firm. However, agencies can use different recruiting strategies to identify and attract quality candidates. Ask about the firm’s primary strategies. What are they based on? Do they align with your hiring needs?

Also, find out what methods of candidate sourcing they use. Do they make cold calls? Use job boards? Promote jobs on social media?

5. Candidate pipeline

Proactive recruitment firms build relationships with candidates over time. Ask if the agency has a candidate pipeline for positions like yours. If so, the firm may be able to fill jobs more quickly.

6. Services included

Some recruitment firms offer additional services which may benefit your organization. For example, some agencies provide onboarding support. With this service, the firm may assist with training and orientation.

7. Key metrics

A recruitment firm should be able to provide customer success metrics. These typically include:

• Overall fill rates
• Average time to fill positions
• Retention rates
• Client satisfaction scores
• Candidate experience scores
• Cost per hire
• Interview-to-hire ratios

8. Reputation

Find out what people say about the recruitment firm online. If possible, read reviews from other employers and job candidates and search the firm’s name on social media.

How to hire a recruitment agency step-by-step

To hire a recruitment agency, consider following these steps.

1. Identify your needs and priorities

Before contacting recruiters, review your hiring needs, and identify performance gaps you need to close. You can also make a list of your goals to choose one that meets your needs. These might include filling positions faster, improving retention rates or building a team with specific skills.

2. Establish a budget

Create a recruitment budget or review your existing one to determine how much you can pay new hires and your recruitment firm.

3. Research recruitment firms

Compile a list of potential recruitment agencies. Use the considerations outlined above to begin researching your options. Based on this information, you might narrow your list to a few top firms.

4. Schedule and conduct meetings

Contact the recruitment agencies and schedule meetings. Before you meet, compile a list of questions for each recruitment firm and note their responses. During the meetings, discuss your needs and priorities.

5. Evaluate your options

Review your preliminary research and meeting notes. Contact agencies to ask additional questions, and work with your team to select a recruitment firm.

6. Negotiate the contract

Notify the firm of your decision and begin negotiating a contract. Some things to consider during the process may include:

• Scope of services. What will the recruitment firm do for you?
• Fee structure. How much will the agency charge? Is it a flat fee or a percentage?
• Payment terms. When will the firm assess fees? When is payment due?
• Replacement. Some firms will find a replacement candidate if a new hire leaves within a set period.

Have your legal counsel review the contract before signing.

7. Supply job descriptions

Once your contract is in place, review the job descriptions for your open positions. Update and revise them as needed. Then, provide the recruitment firm with copies.

8. Assess the recruitment firm periodically

Track time to fill, retention rates, job offer rates and other metrics over time. You can use this data to evaluate the recruitment firm’s performance. Communicate regularly about your concerns and areas of improvement.

FAQs about hiring a recruitment agency

Should I use a local or national recruitment agency?

You might use a local agency when you want local support and a recruiter who knows the local market. A national recruiting agency may be a better option if you want access to more resources and a larger pool of candidates. Consider speaking with a few agencies of each type to find the right fit for your company.

How do recruiting agencies charge?

Typically, a recruiting agency charges a percentage of the successful candidate’s first-year salary. These agencies typically get paid when the job has been filled. Some recruiters charge a flat fee or a retainer, which you can negotiate before hiring begins.

How do recruitment agencies work?

Your business can hire a recruiting agency on a one-time or recurring basis. You will need to meet with the recruiter to discuss your preferred candidates, the company and the needs of the open position. From there, the recruiter finds candidates who match your job description and company culture. In many cases, your company only gets involved with candidates at the end of the hiring process.