Definition, costs and more
If the position has been advertised for weeks, but there aren’t enough qualified applicants, then perhaps it’s time to put the search for suitable candidates in professional hands. A recruitment agency not only supports companies in their search for specialists and managers, but also fills vacant positions at every salary level and in every industry.
But what exactly characterizes a staffing agency, how much does it cost, and what is the difference between staffing agencies and other forms of recruiting? In this article, you’ll learn everything you need to know about staffing agencies.
Definition: Personnel placement in Germany
The purpose of recruitment is already evident in its name: It places personnel on behalf of companies. Companies typically use it to fill vacant positions for which suitable candidates are difficult to find.
From top international companies to regional medium-sized businesses: recruitment agencies cover all industries, sizes and salary ranges, whereby different recruitment agencies usually address different target groups and can, for example, set a regional focus.
Direct placement vs. temporary employment
Personnel placement can be further divided into direct placement and temporary employment. The former, as the name suggests, involves the direct placement of talented individuals into permanent positions. The employment contract is directly between the employee and the company. Temporary employment, on the other hand, refers to the temporary placement of workers who are contractually employed by the service provider during this period, not by the target company.
- Internal needs assessment
Before you contact the recruitment agency, you should clarify internally which positions should be filled with external help and what requirements you have for potential talent. - Developing the applicant profile:
Together with the recruitment agency, you will create a candidate profile that is as detailed as possible, taking into account both professional and soft skills. However, this step is generally less detailed with recruitment agencies than with HR consultancies and focuses more on the professional background. - Searching for Suitable Candidates
The recruitment agency now begins searching and scours its database for suitable applicants who might be interested in you as a potential employer. The position may also be advertised publicly. Which other search methods are used depend entirely on the specific services you have requested—and how much you are paying for them. - Selecting Suitable Candidates
Now you need to review the talents suggested by the recruitment agency, assess them yourself, and schedule interviews with promising candidates. Recruitment agencies typically provide more support than recruiters in this area, and also oversee the selection process and interviews. - Successful Placement & Payment:
Have you found someone who meets your requirements? Upon signing the employment contract, the service is concluded, and payment of the recruitment fee is due.
Every search is unique, and the processes may vary slightly from one recruitment agency to another. The boundaries between recruitment and HR consulting are often fluid. Therefore, it’s important to discuss the search methods, scope of support, and fee structure with your recruitment agency.
The difference between recruitment and personnel consulting
In recruiting, there are numerous terms that are often used interchangeably: In addition to personnel placement and HR consulting, these include direct placement, executive search, and headhunting. Let’s bring some order to this chaos by defining the terms and putting them in relation to one another.
The primary difference between recruitment and HR consulting is that the latter is a consultancy-intensive service, while the former focuses on placement. This results in several differences regarding the nature of the service. The differences are particularly important regarding the search effort and fee structure.
| HR consulting | Personnel placement | |
| Search effort | A recruitment consultancy typically uses extensive and time-consuming search methods. This includes direct recruitment, i.e., the targeted search, selection, and approach of talented individuals who match a profile previously agreed upon with the client company. This is referred to as executive search when the position to be filled is a management or key role within the company. Recruiters in this field are often also referred to as headhunters. | Recruitment is not a consultative service, but rather a mediating one. The focus here is therefore on filling a position quickly and efficiently. Less sophisticated search methods are usually used. The focus is often on databases that are scanned for the desired profile—this is also referred to as matching. |
| Fees & Costs | As a consulting service, HR consulting is paid in installments based on success. Payment is often made on an installment basis: Typically, portions of the fee are due after certain milestones—for example, one-third at the start, one-third after suitable candidates are presented, and one-third upon successful placement. Overall, HR consulting is also more complex than recruitment. | Legally, recruitment is classified as a brokerage activity. Accordingly, payment is only due once the placement is successfully completed. Recruitment agencies therefore usually work on a contingency basis: Payment is only made if a placement is made. Due to the lower search effort, recruitment is usually less expensive than recruitment consulting, but success is far from guaranteed and less predictable. |
Recruitment is therefore a less personalized and complex form of professional recruitment. For this reason, it is primarily attractive for the search for skilled workers, while HR consulting is often used for executive searches and filling key roles.
However, the boundaries between the two domains are fluid and in many places hybrid forms of recruiting are emerging that combine personnel placement and consulting or offer both in different forms.
Now you know how a recruitment agency works and what distinguishes it from HR consulting. Riverstate supports you with everything from simple placements to headhunting and executive searches for key specialists and managers. Contact us now for a no-obligation assessment of your situation.
Recruitment – Frequently Asked Questions
A recruitment agency places qualified workers with companies for a fee. It’s a brokerage activity performed on a contingency basis: payment is only made after a successful placement. The search is usually carried out using simple methods, such as comparing applicant profiles with available databases. In contrast to permanent placement, HR consulting is an advisory activity that is compensated in increments based on milestones and utilizes more comprehensive search methods. However, the boundaries between the two activities are fluid.
The recruitment agency is paid by the client, usually the company looking for the staff.
A recruitment agency is usually paid a commission based on the success of the placement. The amount of the commission is generally dependent on the annual salary of the recruited employees.
Direct placement means that the recruitment agency directly leads to a permanent employment contract. Alternatively, there is also recruitment for temporary work, for example, in the form of temporary agency work or temporary employment contracts.
