Direct Hire

How does direct hire differ commercially from contract placement?

Direct hire produces a single invoice and then the relationship with that worker ends for the firm. Contract placement produces recurring revenue for the life of the assignment but requires the firm to fund payroll ahead of client payment. The two models therefore have opposite cash profiles: direct hire is lumpy and unpredictable but needs little working capital, while contract revenue is smoother but consumes cash as it grows. Firms that run both usually treat them as separate businesses with separate targets.

Why do direct-hire fees vary so widely between roles?

The fee reflects difficulty and risk rather than a standard rate. A role with a deep local candidate pool, a clear specification, and a decisive hiring manager takes far less work than a scarce specialism requiring direct approach into competitors. Exclusivity, guarantee length, and payment terms also move the number. There is no universal percentage that applies across markets and role types, and treating any single figure as the going rate misleads both sides of the negotiation.

What does direct hire look like from inside the employer's process?

It should look identical to an internal hire from the point of submission onward: the same interview structure, the same scorecards, the same decision meeting. Firms supply candidates into the process, not a parallel process of their own. Employers that run agency-sourced candidates through a shortened or different loop lose the ability to compare them fairly against direct applicants and lose the record that would justify the decision later.

What triggers the fee, and why is that the most important clause?

Every other term follows from the trigger. Common triggers are the moment an offer is accepted and the moment the person actually starts. The difference is not theoretical: candidates accept offers and then withdraw, counteroffers land after acceptance, and background checks come back late. An agreement triggered on acceptance leaves the employer holding an invoice for someone who never appeared unless a separate clause deals with it.

The base the fee is calculated from matters just as much. Whether it is computed on base salary alone or on a package including a guaranteed bonus, allowances, or a first-year variable target changes the amount materially, and the two sides will not naturally read an ambiguous clause the same way. Naming the exact components in the agreement removes an argument that otherwise arrives with the invoice.

How do guarantee and rebate periods actually work?

A guarantee period is a window after the start date during which, if the hire leaves or is dismissed, the firm owes something back. Two forms are common: a replacement, where the firm runs the search again at no additional fee, and a rebate, where some or all of the fee is returned, often on a sliding scale that shrinks the longer the person stayed.

The exclusions are where these clauses live or die. Most agreements carve out redundancy, a role that is changed substantially after the start, or an exit driven by the employer's own circumstances rather than the hire's performance. A firm that agrees an unqualified guarantee is underwriting the client's management decisions, which is not what the fee was priced for. An employer that accepts a guarantee riddled with exclusions has bought very little.

Who owns an introduction, and how do duplicate submissions get settled?

Ownership disputes arise when two firms submit the same person, or when someone submitted months ago is hired later through another route. The workable answer is a written rule: a candidate belongs to whoever first submitted them with the employer's acknowledgement, for a stated number of months from that submission, and only for roles the submission was made against.

Making that rule operable requires the employer to acknowledge submissions promptly and to record them somewhere both sides can point at, which in practice means the applicant tracking system rather than an inbox. Employers that let submissions accumulate unacknowledged end up arbitrating between two firms with equally sincere accounts, and whichever way they rule they damage one relationship.

Contingency, engaged, or retained: what is being bought?

On a contingency basis nothing is paid unless a hire is made, so the firm carries all the risk and rations its effort accordingly. Roles released to several firms at once on this basis get worked in whatever order each firm judges most likely to pay, which is a rational response to the incentive rather than a service failure.

An engaged arrangement takes a smaller up-front commitment in exchange for exclusivity and priority, and retained search takes staged payments for the search work itself. Employers frequently want retained-level attention on contingency terms; the honest framing is that exclusivity and paid commitment are what buy predictable effort, and a role that has failed repeatedly on contingency is usually signalling that it needs a different arrangement rather than another firm.

What should an employer put in place before releasing a direct-hire role?

A firm cannot represent a role it does not understand. Before release, the employer should be able to state the salary range it will actually pay, the interview stages and who runs them, the turnaround it commits to on submitted profiles, and the two or three requirements that are genuinely non-negotiable as opposed to preferred. Roles released without these get filled slowly regardless of how many firms are working them.

It also helps to agree in advance how many candidates each firm may submit and what feedback will be given on each. A submission limit forces firms to send their strongest work rather than volume, and a feedback commitment is what lets them correct aim after the first round instead of repeating the same miss.