Agency Recruiter Commission Structure

Good afternoon!

I know that this topic has been covered in the past, however my particular situation is a little different. I would like the communities help on this.

I took a job as an agency recruiter 6 months ago. Their commission system is as follows:

40k (base)

5% of Gross Margin

Example: $100k placement w/ 20% margin = $20k. My commission: $1k

I've had a lot of great success, however, I've been an HR and Recruiting consultant in the past. I realize that there are stark contrasts between W-2 Agency Recruiters and those who are 1099 Contractors. However, looking back, 5% strikes me as paltry, at best. I've made over $160k in gross margin for this Agency, and have received just over 8k in commissions.

Am I completely off-base?

Thanks to everyone in advance for their comments.

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Permalink Reply by Amber on August 12, 2011 at 2:57pm

I have always been an independent recruiter, so I don't know if this is any kind of a standard in the industry. There would have to be a lot more factors to know, I guess. In addition to your base, is there other compensation such as medical benefits, paid vacation, performance bonuses, etc.? Also, do you have to do your own business development,or are all the job orders/search assignments given to you?

It sounds like 5% is low to me, was the compensation explained this way when you took the job? I don't know what kind of pay structure is common, but I'm sure there are a lot of different models. And you could make more probably on commission only or as an independent, but those options carry different risks.

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Permalink Reply by Sandra McCartt on August 12, 2011 at 3:10pm

Here is the question , if you have a month where you don't make a placement do you still get paid your base of 40K. If you want a higher commission rate talk to the boss and tell him/her that you will give up the base go straight comish of 30%. At 30% of gross you would make 48K. Interesting what numbers do isn't it.

If you have health benefits paid or 401K with any matching you might be closer to 40% of gross. The alternative is to go out on your own cover all your own overhead and make 100% of gross..put a pencil to what your overhead would be and see how the % shakes out. It's a fun drill.

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Permalink Reply by Amber on August 12, 2011 at 3:18pm

@Sandra - thanks! I could not word some of what I wanted to say as clearly as you did in your 1st paragraph.

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Permalink Reply by Sandra McCartt on August 12, 2011 at 3:33pm

comes from years of doing that math for folks who think they are underpaid. :) I'll give them 75% of gross if they want to cover their part of the rent, use their own computer, pay their own internet and job board expense, pay for their own phone and office supplies. I'll even cover the light bill and the water bill and the errors and omissions insurance and the liability insurance and the workers comp and my part of the FICA and medicare and provide a desk and chair. And they can source out of the company database built over years.

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Permalink Reply by Amy Ala Miller on August 12, 2011 at 4:08pm

also is the 40K guaranteed base or recoverable draw? I've been in situations where I earn anywhere from 10-50% of my fees but the base is actually a draw.

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Permalink Reply by Leona Johnson Willener on August 12, 2011 at 6:00pm

Are you talking 5% of Direct Hire fees? If so, Industry standard is 25% of the Direct Hire fee anywhere you go. For regular commission 5% of the Gross Margin is average.

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Permalink Reply by pam claughton on August 12, 2011 at 7:21pm

Does that percentage go up with your billing? If you factor in your base of 40k plus 5% you're actually getting 45% of that first 100k you bill. Once you get into the second 100k of billing your base has been covered so your percentage should go up to at least 45-50% of what you bill.