Do you understand how Adecco generates revenue?

The interviewer wants to see that you understand how Adecco or at least staffing agencies in general, generate revenue. Depending on your region, this response could vary as there are different rules and regulations surrounding staffing and recruitment around the world.

For the most part, a staffing agency makes a profit in three ways:

1. Permanent placement fees
2. Temporary placement fees
3. Retainer based searches and their fees

Permanent placement fees are typically based on a percentage of the ideal candidate's annual salary. For instance, Adecco is asked to recruit a chemical engineer for their client (the hiring company). Adecco finds a chemical engineer who is perfect for their client. The chemical engineer is asking for an annual salary of 100K. The hiring company pays Adecco a flat fee, which is usually 18-25% of the candidate's annual salary. So, in this example, a one-time fee between 18-25K. The chemical engineer still receives their full annual salary of 100K.

Temporary placement fees are a surcharge that goes to the contracting company, in addition to the temporary contractor's hourly wage. Let's pretend that the same chemical engineer agrees to work on a 12-month contract for an oil and gas company. The oil and gas company does not want to add this chemical engineer to their permanent payroll or pay the person's employment insurance and other government-required fees. In this case, Adecco would take on the role of 'employer' and charge these additional costs plus a commission to the oil and gas company. Let's say the chemical engineer is asking for 40/hour. Adecco would then charge the oil and gas company 55/hour, giving 40 to the chemical engineer, and taking 15 in fees for every hour the engineer works.

Another option is for a staffing agency to charge a retainer fee. Just like a lawyer schedules their payments, with a retainer-based search, the client (the hiring company) pays Adecco an upfront fee for their services. This could be 50% upfront, with 50% due once a candidate is sourced and hired. Retainers are typically only requested on high-end executive searches where the hunt for the best candidate might be longer and more complicated.

Chances are, Adecco generates most of its staffing services revenue from permanent and temporary placement fees; however, if you aren't sure - you can ask for clarification. Speak to the interviewer briefly about fee structures, showing that you come from a place of research and understanding.