Why are recruitment agents free?

Sign up with a recruitment agent and you're assigned a consultant who introduces you to openings. They fix your résumé, run practice interviews, and even negotiate your salary.

And yet the job seeker doesn't pay a cent.

It's natural to wonder, "What's the catch?" The answer is simple: the hiring company pays.

(This article describes the system in Japan, where I live. The basics are similar in many countries, but the numbers and laws differ.)

The fee is paid by the company when you join

Most recruitment agents in Japan contract with companies on a contingency basis. When a candidate they introduced joins the company, the company pays the agent.

The fee is generally said to be around 30–35% of the new hire's annual salary (it varies by type of job). If someone earning 5 million yen joins, the company pays the agent roughly 1.5 million yen.

Also, Japan's Employment Security Act, which governs job placement, in principle doesn't allow agents to charge job seekers fees. That's why it's free for job seekers.

The agent's "habits" that come from this structure

This isn't a bad system. Companies can hire faster than searching on their own, and job seekers get support for free.

But the flow of money affects behavior. The fee structure tends to create tendencies like these:

• They tend to push openings that are easy to fill: the fee is only paid when someone joins, so openings where offers come easily get priority
• They want you to decide quickly: the longer one person's search drags on, the more work it is for the consultant
• Higher salary, higher fee: they tend to be keen on negotiating salary, which is also good for you
• They don't want you to quit right away: contracts often require the agent to refund part of the fee if the hire leaves soon after joining. So they also want to match people with jobs where they'll stay

Most consultants genuinely try to help. Even so, knowing these forces are built into the structure helps you take the openings and advice you're given with a cool head.

Five ways to be the one using them

1. Decide your priorities first: salary, the work, working style, location. Decide what you can and can't compromise on before you talk. If you haven't, you'll be pulled along by whatever you're shown
2. Use two or three agencies: the openings they have, and the quality of consultants, differ by company. Comparing also gives you a sense of the market
3. If your consultant isn't a good fit, ask for a different one: most agencies let you request a change
4. Ask, "Why are you recommending this job to me?": an introduction they can't explain may just be filling a quota
5. Check their license: in Japan, fee-charging job placement businesses need a license from the Minister of Health, Labour and Welfare. You can look up whether an agency is licensed on the ministry's official database

Agents aren't the only way to change jobs

Talking to an agent before you've decided whether to quit is fine. Gathering market information just gives you more to decide with. But if you feel rushed, stop for a moment. You decide, not the consultant.