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Search firms or third-party recruiters can be worthwhile tools. They handle a significant proportion of jobs at the executive level. Often called executive search, recruiting firms or headhunters, they are external to the hiring organization, but assist with sourcing candidates.

Third-party recruiters are working for their client companies, not you. In the process of helping a company fill an opening, they can be useful in helping you find a job, but their primary client is the employer.

There are two kinds of firms: retained and contingent. Technically, these are the two kinds of searches they conduct; many handle both.

  • Retained searches: A company might retain a firm to find someone for a particular job, typically upper-level management and executive positions. It might scour the market for suitable candidates, but also could be much more involved in vetting them through interviews, research and reference/background checks. It receives payment whether or not someone is hired.
  • Contingency searches: For mid-level management and below, companies tend to use contingency firms, which serve as a broker of sorts, matching candidates to potential employers The employer pays the firm only if they hire the referred person. The search firm might or might not have any previous connection to the employer; the recruiter might have seen the job advertised just as you did. But if the firm presents a candidate who is subsequently hired, they are generally entitled to a fee. Some contingency recruiters have strong ties to local businesses and the employer might alert them when an opening occurs, even though they are not hiring the firm to conduct the search. In a small number of situations, mostly at low levels of responsibility and salary, the search firm might expect the candidate to pay the fee if the employer does not. Since the fee can be quite expensive, steer clear of these situations. If the recruiter asks you to sign anything, be cautious.