I was wondering what everyone's opinion is on these recruiting companies that contract an individual out to a hiring company.
First of all, are they required to provide you with the information of what the hourly rate the hiring company is paying them if you were to ask them? Would it be considered unethical to ask? Also, what is a fair percentage a recruiting company should keep considering that all they do is calculate and transfer your pay into your account?
are they required to provide you with the information of what the hourly rate the hiring company is paying them if you were to ask them?
Not sure why you would want to know.. The whole point in a recruiting company is to connect people with jobs.. You seem to have done so so I don't know why you need to know this. If you believe that you are being underpaid then this is generally the company cheaping out and not the recruiter as the recruiter would have advised their prices and the company would have said how much they were willing to pay.
Would it be considered unethical to ask?
Extremely.
Also, what is a fair percentage a recruiting company should keep considering that all they do is calculate and transfer your pay into your account?
How long is a piece of string? Recruiting companies would provide better rates to Karen who is constantly using their services as opposed to Bill who uses them once a year. I too have been intrigued by the answer to this question and I have asked it to a relative who is a recruiter, I was asked how long a piece of string is to begin with but essentially it ranges so much its insane. If I had to have it a guess i'd say between 10% more and 100% more than what the final recipient is paid. 10% being someone on a 6 month temporary assignment, and 100% being a singular staff member that comes into a workplace for a couple of casual shifts then it tossed to the curb.
From my understanding (I could be wrong..) they generally have a bigger mark up on unskilled labour jobs such as warehouse staff, production line staff etc. Also, they don't just 'calculate and transfer your pay into your account', they provide a service, they have sales staff that have to find companies for them to recruit for in the first place.
Here's some further info about my experiences that may aid you.
I worked a temporary assignment in the freight industry for 2 months and was paid $27 an hour. Full timers there were paid about $24.
Meanwhile my girlfriend has worked as a sales assistant on $23 an hour, well below the acceptable pay rate for both a temp role and the requirements of that role. A full timer would be paid much more than this (or should be..). As a result she left fairly quickly.
If you want more money tell your recruiter that you want a different role paying $xxxxx.
If you think all a recruiting company does is transfer your pay into your account, you're wrong.
Enlighten me. What else do they do for me? I understand they have their running costs but what does that do for me? The one and only thing they do for me is organise my pay. Surely that does not cost $200+ per day!!!
I can't comment specifically on your individual circumstances as we don't know what line of work you are in or your working hours.
A recruitment agency needs to
Organise shifts which includes communicating with the company the business needs
They need to pay taxes and workers comp insurances in association of your employment.
They need to invoice your costs for you and recover the amount from your employer.
They need to recruit you - this included finding companies with positions to fill, advertising for those positions, interviewing for those positions and so forth.
Just because you don't see those benefits on your pay doesn't mean that the company didn't fork out that money for you in the first place.
My case:
No need to organise shifts.
Communicating business needs with the company is done maybe twice a year.
Taxes, well….no one can escape that.
Insurance, workers comp, I'm pretty sure that is covered by the actual company or else they wouldn't spend time training us every year.
Invoicing…….geee, that must be really hard to do.
Money spent on recruitment, that's a one off thing and I understand it but everything else is pure greed and scam. No reason to keep hundreds of $$$$ per day as ongoing costs. We're not talking 20-50 bucks per day here but many hundreds of dollars per day!!!
@AceIsMe:
clearly nothing i say is going to convince you otherwise.
so i'll give you a number whether or not you disagree is up to you.
20%
While I believe 20% is an extravagant figure to swallow by anyone, currently I would be happy to fall under that figure.
Out of curiosity, how did you come up with that number?
@AceIsMe:
Super 9.5%
Payroll tax (average) 5.5%
Overheads and profit contribution 5%
and that's barely given then a reasonable return on profit.
@AceIsMe: It matters because there are certain industries that are dominated by recruitment companies that pass as labour hire companies. In other words the people in them claim to be recruitment agents but they are really just sales people who live of the earnings of people in mostly the IT industry but also other industries that do labour hire and can get away with it. So not all industries are affected by recruitment agents methods of working. So obviously there are similarities between telco's and IT people in that they line the pockets of agents who use them and put them forward for jobs. Some don't work on %'s - and it is more about what they can get away with - $'s wise.
Wow, what an ignorant attitude.
I am not necessarily defending recruiting firms but they have many expenses involved in running a business. How did they get the job for you? They expended effort in marketing and business development to get the contract. They advertised. They interviewed people. They provide your PPE (potentially). They pay your wages and your superannuation in advance - don't forget you get paid on time; they invoice in arrears and may not get their money for at least 14 days, sometimes even 90 days plus. They pay a worker's compensation premium for you.
I can go into detail about how the charge rate vs. pay rate is calculated, plus what the likely margin is, if you so wish, but it is evident you think the company who got you a job is simply doing nothing.
You do realise they are your employer, right, not the site you are placed to? It is they who pay payroll tax for you, pay your super, who you go to if you are sick or injured, etc.
I think you have an over inflated idea of what a recruitment org actually does. The back office tasks they undertake would not really come to more that a few quid (eg ad on job page and junior and entering a name into a payroll system)…the remainder is owners cream. On going support costs are very low.
I think you have an under-imagined idea of what a recruitment org actually does.
How do they get to the point of placing a job ad? They have invested in marketing and business development to get contracts. They have expended time in the recruitment process including reference checks and potentially police checks, etc., safety induction, PPE, ongoing safety inspections, workers compensation management, superannuation, payroll tax …
You don't even seem to think electricity is a cost, let alone running the payroll system - just "entering a name into a payroll system".
There's also the financing cost of guaranteeing payroll while invoicing in arrears.
Now, none of this doesn't mean maybe some recruitment companies are shonky and maybe some recruiters are thick as posts, and maybe the industry needs review but it is just simply ignorant to say "all a recruitment company does is place an ad and enter a name into a payroll system."
Are you seriously saying that a recruiter is entitled to almost half of your wage when you don't even get a sick day pay or any annual leave days or any public holiday pay or any RDOs or any pay increase or anything else? No wonder these people get away with it. Scum of all scums and there are even worst stories than this one.
Half of your wage? They are likely getting a 10% margin at best.
If you are a casual employee you get a casual loading which is in place of sick leave and annual leave. You should check your employment contract again. You can't have both; permanent employees don't get a casual loading on their hourly rate.
You would undoubtedly have public holiday loadings if you work those days, same as you will have afternoon and night shift and weekend loadings.
Your wages would undoubtedly be reviewed annually. I would suggest you check your contract again. It would even be automatic in most cases.
Again, as above, I am not necessarily defending any aspect of labour hire but it's important to be factual. The things you say are emotive and untrue. A labour hire org does not get 50% of your wages and you do get casual loadings in place of sick and annual leave.
I think you have an over inflated of what recruitment agencies do and the high margins they try and justify. Most agencies will only pay once they have been paid and so do not carry any risk there. In fact they often hold the pay for several days if not weeks before paying the worker. Re reference checks I think that would take about 10 minutes each and the police checks another 5 to 10 minutes .PPE etc is normally covered by the end client or else are charged to the client. Re payroll systems they are very cheap to run and the cost of the electricity is a very small element
I think it is very accurate that recruitment companies are basically meat grinders driven by numbers and commissions. The idea of any sort of development is mainly for the web page and the spiel when they are selling their services to the client. For them contractors are commodities and are treated as such. To say contrary to this is looking at the situation with one eye (possibly with the other eye on profit margin etc).
You are making it up when you say "most agencies will only pay once they have been paid" - this is totally untrue.
Labour hire companies are the employer (and this has been tested in court) and have the legal obligation to pay employees every week/fortnight/etc.
Many labour hire agencies use a factoring company (eg Scottish Pacific) to buy debt so as to guarantee supply for payroll. The factoring company then receives the remittances for the invoices.
I can appreciate you don't care for recruiters (me neither) but we need to be factual when we talk about it, not just imagine / guess / make up what we want to think.
I agree hence my comments based upon facts. You seem to have some ideal views which do not bare out to reality I am afraid.
You have to be f'ing kidding me.
I managed payroll and financial systems for labour hire firms for over a decade.
……you can take a horse to water but cannot make them drink
I note you offer no evidence to support your allegation of knowledge of the area, nor do you offer a proper refutation, merely rhetoric.
You are just trolling, aren't you.
Having worked in the contingent labour industry in several continents I am very comfortable with he reality behind my comments.
I am sure that administering a payroll system will have given you a certain insight into the industry and as per the adage "some one convinced against their will, will be of their original opinion still".
I have no intention of giving oxygen to people who descend to name calling, hence I am very happy for you to stay with your original opinion and move on to other more important issues.
You are a troll. You have - until your very last comment - actually refused to give any scent of evidence you had any involvement in the area, beyond just making it up. You also refused to give any basis for your allegations, merely asserting them, without substance.
I can assure you, I was not an administrator - don't read into things.
Check out Wikipedia.com's "labour hire" page. It substantiates what I have stated about pay and charge, etc.
The only point you are correct on is someone who is "convinced against their will", and particularly someone who is deliberately a troll and offers no alternate information except "you're wrong" is definitely not worth me wasting my time on. You can believe whatever you want. It doesn't make it factual, however.
Good day.
@davidmwilliams: And I've been hired by several recruiters for different roles in different industries. I've also been on the other side of the desk as the employer being offered so called candidates by recruiters. I've had recruiters trying to sell me a candidate for a fee - when I'm actually the one who has placed the ad and the same person has responded to my ad. I've had recruiters offer to send a CV of a person that they think is ideal and then when I receive it I know the person and contact them and they didn't know nor had they given permission for their CV to be passed around for all and sundry to gawk at. Recruitment in labour hire companies is all about selling human labour that they can charge an additional percentage as a commission. It is not that they own these people but they mostly keep the transactions at arm's length. Industries that use labour hire companies do so because they then don't have to take responsibility for any of the people stuff. Recruiters don't want to handle people stuff - they are just sales people after all. The majority have no qualifications. If there is a problem they just get rid of the problem - a person in their case - and find someone else to replace them. All businesses that employ staff have super; workers comp; payroll tax; sick leave; annual leave; to pay out so that's a typical business expense that the recruitment company covers anyway.
……no oxygen…..
Pretty scummy industry, I'm sure there are good people in there but generally just a bunch of snakes. I remember contacting them for help finding me a job, not a single peep or initial interview. Then I found a job on my own terms and in a position to hire but these people stealth send fake emails to steal your contact details. They also somehow cross-math The very same company I asked for help and now they want me to hire a stooge from one of their lists, I pretty much called them and told them to shove it. They also must have cross matched my name and contact with the resume I sent to them a while back, and now they also spam my personal Email…absolutely creepy.
This has been described as a meat grinder business. Make your targets or out. care for the poor contractor…mmmhhhhh
I was wondering what everyone's opinion is on these recruiting companies that contract an individual out to a hiring company.
Not really a fan of them, don't really have to deal with them very often in my line of work.
Would it be considered unethical to ask?
Yes, sure we'd all like to know how much more we 'could' be earning, but at the end of the day it's really none of your business. That's a bit like going into any shop and asking the retailer how much margin is in each product they sell.
Also, what is a fair percentage a recruiting company should keep considering that all they do is calculate and transfer your pay into your account?
Now hang on a sec, didn't they get you the placement in the first instance?
Oh further on that. Invoice that the recruiter sends to the company isn't what you could be earning in full.
You will need to deduct about 25-35% to cover on costs that an employer will need to pay themselves if they were to hire you.
eg
Recruiter invoice = 160k
Directly employed cost = $130k
Your actual salary to be employed directly $100k
My agency gets about 35% of what the company pays to hire me :/ hmm that does sound a bit steep.
It sure is very steep. Did they tell you up front on their take?
No, i think they wouldnt want us to find out how much they are actually getting from us. But I looked up the purchase order for my services and saw their rate. Geez and they are so stingy about pay rises too when they could easily just take off a few dollars from their commission..
Pay rises??? I had none since I started nearly 2 years ago.
@AceIsMe: haha my first job at a very big mining company i was on $27 the whole time and never asked for one. Then i found out that other people in my position were getting 90k, and i was doing much more than them. Decided to just leave as i needed a break anyway ._.
Did I hear pay rises??? Do contractors get one?
Bull****. This is standard.
COLA or no COLA……….Mostly will be non COLA with "if you don't like the rate go some where else"
Academic question. You are not in a position to negotiate what they keep. Only the rate they pay you. Same as with anything you buy. You cant negotiate anyone's margin, only what you pay and this is rarely negotiable. Man there are some dumb, time wasting posts here sometimes and this is one of them.
Really? So why waste your time reading it then? Looks like this discussion has attracted a lot of recruiters in here trying to defend their own scummy turf.
Just because there are people on here with a different perspective to yours you claim them to be recruiters?
Really? I've never worked in recruitment but have worked in finance and payroll.
The recruitment industry is cut throat just like most sales industries.
If you're having problems with the amount you're making best for you to ask for what you want and if you don't get it walk. simples.
You have a very closed-minded approach to this.
I am not, and have never (ever!) been a recruiter, nor would I ever wish to be.
However, like others, I have knowledge of that industry and can simply present you facts. Yet, you do not appear to be receptive to a greater understanding, merely seeking people to say "yep, they do nothing, they just place an ad and enter a number into payroll and all the rest happens by magic and at no cost."
You do realise the labour hire organisation that placed you is actually your employer, right, not the site you are working at? You should discuss your grievances with them.
Their percentage is really none of your business. It is negoatioated (in bigger cases, set by) with the employing company. Once costs are taken out (super, workcover etc), the % left for the recruitment agency is likely be less than 10% to cover their overheads… Well, this was the case when I was dealing with them (from a contract management perspective).
Main cost of running a recruitment company is (in this order)
Revenue comes from temp workers (margin ranges from 5% - 20% depending on length of engagement). Also permanent placement fees, ranging from 7 - 15% of permanent salary.
Most big companies have strict preferred supplier deals, these are very low margin but offer volume… to make money the agencies employ more jnr staff that cost less. The smaller boutique businesses tend to employ better staff but will charge more. If you want a better service, look for these as a general rule !
Highly competitive & a "success only fee" business in most cases… only being paid if the client hires the person, otherwise all work is for nothing.
Completely agree with the above.
Also you can't look at it as that the recruiter/agency is taking the remainder of 'your' pay.
Generally, the hiring company pays more overall for contractors and temps then they would otherwise for a perm full-time role. This allows them the convenience and luxury of not having to directly employ you, allowing greater workforce flexibility. This is the case in particular for the Banking and Telco industry, as they can easily downsize/offshore or remove workers and teams without substantial costs and with much greater ease.
Recruiting Companies are all scams