Recruiting Agency Agreement Template
Four documents and three sheets, including the one number that decides which agency you keep and that no invoice will ever show you.
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One metric, four decisions
Fees over surviving salary, not fees over placements
Effective rate = fees paid, minus cash actually recovered, over the combined salaries of the seats that agency filled which are still filled at twelve months.
Cash Actually Recovered
Not cash owed. A guarantee clause that fired and produced a credit nobody used is worth zero and goes in as zero. Three of six departures in the worked example landed inside a guarantee window; one produced money.
Seats Still Filled
Not placements made. A free replacement who stayed keeps the seat filled and counts. Somebody who left with nothing coming back bought an introduction, not a seat.
Salaries, Not Headcount
The correction that makes the comparison honest. An agency working general manager roles places at 128,000 and one working banquet managers places at 64,000. Cost per seat punishes the first for reasons that have nothing to do with performance. Dividing by salary removes the mix and lands in the same units as the headline rate.
Twelve Months, Fixed
Not the guarantee window and not the fiscal year. Long enough that a bad hire has surfaced, short enough that you are still measuring the placement rather than the job. Anything younger is shown separately as in-flight, because counting it flatters whoever placed most recently.
Agencies get chosen, compared and renewed on a fee percentage. Fifteen is cheap, twenty is normal, twenty-two is expensive, and that number is on the front page of every agreement. It is the price of an introduction. What you are buying is a filled seat, and those are the same thing only if nobody leaves. So this pack computes one number instead, and the agreement template exists to make that number negotiable rather than to be filled in and filed.
Brightmoor Hotels used three agencies across eighteen months. Fifteen placements, 1,313,000 of base salary, 263,820 in fees at a blended 20.1 percent. Six people left inside twelve months. Once the departure dates land next to the invoices, the effective rate reads 22.0 percent for the agency charging 22, 28.3 for the one charging 20, and 67.0 for the one charging 15. The ranking inverts, and the cheapest agency is three times the price.
Nobody at Brightmoor was wrong about the percentages. Fees live in accounts payable, departure dates live in the human resources system, and no report in either one joins them. Two smaller findings fall out of the same join. One agency's 15 percent was charged on base plus target bonus, so 16.5 percent on base, and of the 89,370 in fees sitting on people who left, 4,640 ever came back. This sits after the interview loop and beside the offer.
What is in the pack
Agency Register
One row per agency with the five clauses that decide the effective rate pulled out and made comparable. Headline rate, fee base, guarantee window and the date it runs from, the remedy classified rather than quoted, who holds the election, and the exclusions listed individually rather than summarised as standard.
Placement and Fallout Tracker
Every external placement with start date, base salary, the fee base actually used, and the departure date. Plus a last-verified date, so a blank departure field means somebody still employed rather than somebody nobody checked on. Those are different facts.
Submission Quality by Agency
Submissions, returned unread, first interviews, onsites, offers and placements, with two ratios kept side by side. Then review hours at twelve minutes a submission, and each agency's share of submissions beside its share of placements.
How the Effective Rate Is Built
The definition, the four decisions inside it, and the three variables that decide what a guarantee is worth: window, remedy, exclusions. Also what the metric does not measure, which is quality of hire, speed, and whether an agency is worth using at all.
Engagement Terms
Nine clauses with the reasoning under each, and the three worth negotiating before fee percentage named as such. Clause three carries the election, the no-exclusions position, and the refusal to accept a credit against a future placement as a remedy.
Submission Rules
Seven things a submission must contain, what gets one returned unread, and a section on what you owe the agency in return. Three business days to a decision, a specific reason on every decline, feedback within two days.
Performance Review Note
Seven sections, sent before the conversation rather than during it, with the group range included so the argument is about the requisitions rather than the metric. Notes cover leading with the ask that is not about money.
How it works
- 1
Send the agreements, all of them
Including the ones you think are identical. Five fields get pulled from each: fee base, window, remedy, who elects, and the exclusions. That is why documents rather than a summary.
- 2
Then eighteen months of placements
Agency, role, start date, base salary, fee invoiced. And the departure date for anybody who has left, which is the field that will be missing.
- 3
The rate gets computed, not estimated
Fees net of cash actually recovered, over the salaries of surviving seats. Anything younger than twelve months is excluded and reported separately as in-flight.
- 4
The review note goes out before the call
Their number, the blended number, and the full range across every agency on the same requisitions. Plus your own turnaround times, whether or not they flatter you.
Frequently asked questions
Why divide by salary instead of counting seats?
Because cost per surviving seat punishes whoever places your expensive roles. One agency here worked general manager and director roles at 128,000 and 102,000; another worked banquet managers at 64,000. Dividing by salary removes the mix and lands the answer in percent, directly comparable to the headline rate it is replacing.
Is a 40 percent fallout rate unusually bad?
No, and reading it that way leads to the wrong conversation. Separations run high everywhere and higher in hospitality: monthly rates ran 5.2 to 6.1 percent through the first half of 2026 against 3.2 to 3.4 percent across all nonfarm employment. You cannot make fallout rare. You can decide in writing what happens when it does.
Which clause should I actually negotiate?
The guarantee remedy, then who holds the election, then the fee base. Each is worth more than a point or two of fee, and each is easier for an agency to concede because none of them costs anything unless they place badly. Fee percentage is fourth, and it is what the whole meeting is usually about.
What is wrong with a credit against a future placement?
It is worth zero unless you were going to use that agency again, which converts a refund into a retention device. In the worked example a departure at day 26 fell inside a thirty-day window, the clause fired exactly as written, and the resulting credit of 11,220 expired unused. The tracker records that as zero.
Our departure dates are not in the recruiting system. Now what?
They rarely are, and that is why nobody has this number. They sit in the human resources system or in payroll, keyed on employee rather than on candidate. Join them on name and start date, then confirm the still-employed names explicitly rather than reading a blank as a survivor. Those are different facts.
Where does this sit against the rest of hiring?
After it. The interview loop decides who gets hired, pipeline analysis covers your own funnel rather than an agency's, and the offer prices the number an agency fee is calculated on. Four documents and three CSV sheets, free.
Put the departure dates next to the invoices
Send the agreements and eighteen months of placements. The first thing back is whether your rate ranking and your outcome ranking agree, and which clause is worth more than the percentage you have been negotiating.
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