When I've worked with recruiters I appreciated the fact that they would negotiate on my behalf. That said, don't forget that when it comes to salary, a recruiter's interest and yours are not really aligned. They don't care about how high a salary they get for you as long as they you get hired.
These examples are specific to contingency recruiting, which is not the focus of my business (more retained/engaged search).
If a client's house sells for $310k vs $300k, that's an extra ~$10k for the client. On the other hand, spending the additional time negotiating only nets the agent $300.[1]
Typically agents will sell additional houses rather than negotiate prices on sure sales. However their behavior changes when selling their own houses.
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[0]: From Freakonomics as mentioned by vitalique and roel_v below.
[1]: Real estate agent fees are typically 6%, equally split between buyer / seller agents.
"Our central finding is that, when listings are not tied to brokerage services, a seller’s use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which indicates that agency costs exceed the advantages of brokers’ knowledge and expertise by a wide margin."
Whoa.
Recruiting is a sales job with a commission typically tied to salary of the hire (similar to commissions for selling houses that are related to sale price) - but where it gets interesting is that the brokered item in 99% of sales situations has no say in the matter. In recruiting, the candidate is to some degree the product of the transaction, and the product can reject the sale. It's an interesting dynamic that makes recruiting unique.
This explanation is rudimentary and hopefully recruiters don't treat candidates like some common 'product' for sale, but it gives some insight into why analogies between recruiters and realtors or other sales/commission jobs are not entirely relevant.
Also, "selling additional houses" isn't as easy as it sounds. There's a lot of unpaid effort involved in acquiring clients and getting to an offer, before any of the negotiation starts. Time spent negotiating and baby-sitting an existing offer at least has a high likely-hood of being paid time.
When I bought my current property the seller used a listing only service and pretty much screwed up every part of the transaction that was possible to screw up (missed deadlines, filed the wrong papers, failed to show up for closing for 3 days...) - I nearly walked away, in retrospect I should have, this is basic stuff that even a sucky realtor will get right.
The problem with having different incentives is when one party doesn't recognize that there is a mis-alignment. If you're selling your home and you don't realize that your Realtor's time is not an endless, worthless resource at your disposal, then you may be inclined to insist on your Realtor spending endless hours of aggressive negotiation, potentially putting the offer at risk of closing at all, for an amount of additional money to you that's not really going to make much of a difference to you. (My wife's been involved in deals where one party or the other has risked a deal that's been in the works for 2-3 months over less than 0.1% of the house's value.)
Admittedly, not spending 2-3 months to work out another deal is worth quite a lot of money as well. But this behaviour doesn't seem obviously irrational.
For a half-million dollar home, which would be a relatively nice house for most of the country, you're talking about $500. For any party on that transaction (buyer, seller or their respective agents who each stand to make $15k on a normal 3% commission), that's not a lot of money and is almost certainly not worth arguing over if you're in all but the earliest stages of negotiation.
I now do very little marketing to new clients or candidates - I post some jobs on my site, but very little advertising and very few cold calls. The value of acquiring a set of very specific and useful information (market rates, info on companies, etc.) and providing that to your network when asked is rewarded down the road.
This is long obsolete. Only a fool pays more than 4% these days.
I'm also transparent with my candidates. If they have two offers and my fees are different with the two clients, I think it's my duty to let the candidate know so they can make an informed decision if they feel I am showing any hint of bias towards one client (of course the difference in fee is usually nominal at best).
Being retained or engaged by a client, as opposed to contingency, really minimizes the incentive to encourage a bad deal for either side in the transaction. I know I'm going to get my fee eventually, so I don't need to try to talk both sides into a marriage that isn't good for either.
The real estate example is a very good analogy for most contingency recruiting models though.
That discounts the value of time. If it takes, say, 40 hours of work to sell your home for $300K, and another 40 hours of negotiations to bump that to $400K, it is not in the realtor's interest to pursue the $100K - he/she can simply pursue another $300K sale in the same time.
A commission based structure tends to have weird cliffs like this subject to the details of the field.
Recruiters are good for one thing: to make introductions. Good recruiters are good for that, and deserve the SALES commission for their SALES job. Recruiters aren't your lawyer.
Get two job offers, auction yourself off. That's how you negotiate.
I'm not sure where you are located, but in the US most recruiting is done on a contingency basis, meaning a fee is paid only if a hire is made. That fee is almost always based on a percentage of the employee's starting salary (could include bonus as well). Fees have a wide range, but during my career I have seen them everywhere between 15 and 33%.
The counter argument is that contingency recruiters want to close the deal, otherwise they don't get paid at all. Is the easiest way to close a deal, and to make sure the deal stays closed (see "counteroffer"), to get the candidate his/her minimum acceptable level? No. You are doing both parties a disservice if you do that.
You are doing the candidate a disservice by only trying to achieve the minimum. You are doing the client a disservice because although they may get the hire, the deal is not as secure as it would be at a higher number (again, see counteroffer), and if your goal as a recruiter s to help clients both attract and retain (key is retain) talent, they are better off paying a bit more to make the hire happy on start and less likely to be poached by someone else.
If I know a candidate's minimum, achieved via some proxy ('Dave, I'll accept at 120 and start May 15', it is fulfilling to call that candidate and say 'Remember when you said I could accept at 120? Well I got you 128. Congrats!' Happens all the time, and feels good every time for the candidate. On the other end, I'm coaching clients about retention and not just getting someone on board.
The biggest benefit to a recruiter (or any intermediary) in negotiations is a buffer. I've seen candidates do some incredibly dumb things in negotiation, such as asking for 150% of what they really are worth and expect to get, just to 'start off negotiations' - as if this were a good tactic. What happens if the recruiter isn't there as a buffer? The candidate makes the proposal, and the company says no thanks and let's just pretend we never met.
Other side is a client will call and say 'your candidate was making 80 at the last job? I'll go as high as 90, but offer 60 just do see the reaction.' My response would be 'the reaction is going to be an annoyed candidate who now feels lots of time has been wasted. Lets not screw around, get serious about this.'
Without a buffer, neither of these deals happen, yet both parties were willing to accept the terms of he other. If you think this is rare, you haven't been involved in enough deals with enough people yet.