The recruitment industry

The recruitment industry has four main types of agencies. Their recruiters aim to channel candidates into the hiring organisation’s application process. As a general rule, the agencies are paid by the companies, not the candidates. The industries practice of information asymmetry and recruiters' varying capabilities in assessing candidate quality produces the negative economic impacts described by The Market for Lemons.

Traditional recruitment agency :

Also known as a employment agencies, recruitment agencies have historically had a physical location. A candidate visits a local branch for a short interview and an assessment before being taken onto the agency’s books. Recruitment Consultants then endeavour to match their pool of candidates to their clients' open positions. Suitable candidates are with potential employers.

Remuneration for the agency's services usually takes one of two forms:

* A contingency fee paid by the company when a recommended candidate accepts a job with the client company (typically 20%-30% of the candidate’s starting salary), which usually has some form of guarantee, should the candidate fail to perform and is terminated within a set period of time.
* An advance payment that serves as a retainer, also paid by the company.
* It may still be legal for an employment agency to charge the candidate instead of the company, but in most places that practice is now illegal, due to past unfair and deceptive practices.

Online recruitment websites :

Such sites have two main features: job boards and a résumé/Curriculum Vitae (CV) database. Job boards allow member companies to post job vacancies. Alternatively, candidates can upload a résumé to be included in searches by member companies. Fees are charged for job postings and access to search resumes.

In recent times the recruitment website has evolved to encompass end to end recruitment. Websites capture candidate details and then pool then in client accessed candidate management interfaces (also online). Key players in this sector provide e-recruitment software and services to organisations of all sizes and within numerous industry sectors, who want to e-enable entirely or partly their recruitment process in order to improve business performance.

The online software provided by those who specialise in online recruitment helps organisations attract, test, recruit, employ and retain quality staff with a minimal amount of administration.

Online recruitment websites can be very helpful to find candidates that are very actively looking for work and post their resumes online, but they will not attract the "passive" candidates who might respond favorably to an opportunity that is presented to them through other means. Also, some candidates who are actively looking to change jobs are hesitant to put their resumes on the job boards, for fear that their current companies, co-workers, customers or others might see their resumes.

Headhunters :

Headhunters are third-party recruiters often retained when normal recruitment efforts have failed.

Headhunters are generally more aggressive than in-house recruiters. They may use advanced sales techniques, such as initially posing as clients to gather employee contacts, as well as visiting candidate offices. They may also purchase expensive lists of names and job titles, but more often will generate their own lists. They may prepare a candidate for the interview, help negotiate the salary, and conduct closure to the search. They are frequently members in good standing of industry trade groups and associations. Headhunters will often attend trade shows and other meetings nationally or even internationally that may be attended by potential candidates and hiring managers.

Headhunters are typically small operations that make high margins on candidate placements (sometimes more than 30% of the candidate’s annual compensation). Due to their higher costs, headhunters are usually employed to fill senior management and executive level roles, or to find very specialized individuals.

While in-house recruiters tend to attract candidates for specific jobs, headhunters will both attract candidates and actively seek them out as well. To do so, they may network, cultivate relationships with various companies, maintain large databases, purchase company directories or candidate lists, and cold call.

In-house recruitment :

Larger employers tend to undertake their own in-house recruitment, using their Human Resources department. In addition to coordinating with the agencies mentioned above, in-house recruiters may advertise job vacancies on their own websites, coordinate employee referral schemes, and/or focus on campus graduate recruitment. Alternatively a large employer may choose to outsource all or some of their recruitment process (Recruitment process outsourcing).