In my experience, when you pay recruiters by the hour you very often end up with recruiters that achieve nothing. When you pay recruiters for each hire you get better recruiters and better candidates.

I agree there'd be a winnowing out of the lower quality folks, and a flight to established brand quality. But in theory you could say your accountant or attorney doesn't achieve anything for their billable hours- doesn't kill the professional services model.

Also, 20 hours of a recruiter's time at $50 an hour is not a major expense for a company. If they underperform, just don't use them next time

Why doesn't everyone pay sales this way? If you can easily incentivize the thing you care about, you do it.

Recruiting is sales, and closing a hire is like closing a sale. It takes a lot to find the right candidate and even more to close the deal. This is why they make their money with commission - it’s “eat what you kill”. As a hiring manager I simply refuse to hire someone that isn’t a good match, so the incentives line up perfectly for recruiters to waste minimal time and only bring the best to the table.

A recruiter is the first person a candidate interacts with, so you want someone who actually knows how things work at the company/etc. A rotating group of contractors would probably result in a bad impression.