Recruitment refers to the process of attracting, screening, and selecting qualified people for a job at an organization or firm. For some components of the recruitment process, mid- and large-size organizations often retain professional recruiters or outsource some of the process to recruitment agencies.

The recruitment industry has five main types of agencies: employment agencies, recruitment websites and job search engines, "headhunters" for executive and professional recruitment, niche agencies which specialize in a particular area of staffing and in-house recruitment. The stages in recruitment include sourcing candidates by advertising or other methods, and screening and selecting potential candidates using tests or interviews.

Compensation to agencies take several forms, the most popular are:

A contingency fee paid by the company when a recommended candidate accepts a job with the client company (typically 20%-30% based and calculated on the candidates first-year base salary – though fees as low as 12.5% can be found online[2], which usually has some form of guarantee (30–90 days standard), should the candidate fail to perform and is terminated within a set period of time (refundable fully or prorated)

An advance payment that serves as a retainer, also paid by the company, non-refundable paid in full depending on outcome and success (eg. 30% up front, 30% in 90 days and the remainder once a search is completed). This form of compensation is generally reserved for high level executive search/headhunters

Hourly Compensation for temporary workers and projects. A pre-negotiated hourly fee, in which the agency is paid and pays the applicant as a consultant for services as a third party. Many contracts allow a consultant to transition to a full-time status upon completion of a certain number of hours with or without a conversion fee.

[Source: Wikipedia]