Commission, the right way!

There are so many different staffing/recruitment agencies out there that vary in a multitude of ways. A big component is compensation and how recruiters are going to be properly compensated for services rendered.

For anyone out there, I have a couple of intriguing questions that have kept me wondering what recruiters really do want or consider attractive for retention.

1) Would you rather have an increased base salary and less commission OR lower base salary with a higher commission? (All other perks not included or in the equation) It's probably different for a lot of people and some very powerful arguments can be applied to both sides, but what are your thoughts?

2) What do you consider to be a fair commission structure? For both contract and permanent placements. What have you seen work in the past?

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Replies to This Discussion

Permalink Reply by pam claughton on December 4, 2012 at 10:47am

Just my opinion, but if you are on the agency side it should be all about higher commmission and ability to earn what you are worth. If you want a higher base salary, go on the corporate side.

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Permalink Reply by Jerry Albright on December 4, 2012 at 11:16am

Pam is correct. (As usual)

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Permalink Reply by Daren J. Mongello on December 5, 2012 at 9:38am

Commission the right way?

A win-win (IMHO) is a progressive / tiered model.

A flat plan at any % is unrewarding for commission-driven recruiters.

So it could be something as simple as:

Dollars earned between:

Start with: $0-$100K = 35%

$100-$200 = 40%

200-250 = 50%

250-300 = 65%

Billings over: $300K+ = 70%

This is the model that recruiters should want.

You want recruiters to have a carrot to chase.

The more deals they make...the more of the pie is theirs.

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Permalink Reply by Robb Norris on December 5, 2012 at 12:41pm

You would think a strong commission based plan would be most attractive. Sometimes not. With corporate gigs now paying some very strong base salaries, many good recruiters are opting for that side - reason? In a recruiting firm it can take you a few months to get up to speed and start billing at the levels where you actually earn good money - Immediate gratification seems to be the name of the game in our society now. That being said, I still champion a strong commission plan with a livable draw, somethin like:

$0 - $100K - 45%

$100 - $200K - 50%

$200 - $300K - 55%

$300K+ - 60%

our firm also offers a ton of benefits and perqs on top of all of that. Good package but you have got to do the work!

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Permalink Reply by Gabriel Evans on December 6, 2012 at 9:15am

I find this debate very interesting as it is one that I am going through presently. Can either Robb or Daren explain your plan a bit further? Are your % being paid out based on monthly billings, and if so, what are you calling billings exactly? And, is this on top of a base? The way I read your plan and the numbers I added it based on the GP (gross profit) that our recruiters bring in currently would have everyone making 100K plus a year, and we are an independant agency. So, I think I am looking at it wrong.

Thanks!

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Permalink Reply by Jerry Albright on December 6, 2012 at 9:18am

Gabriel - might I ask (respectfully of course) what would be wrong with everyone making 100K? Sounds like you've got some top billing recruiters. They should be rewarded.

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Permalink Reply by Gabriel Evans on December 6, 2012 at 9:20am

Jerry,

Absolutely nothing! I would love nothing more, but again I think I am reading the numbers wrong.

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Permalink Reply by Jerry Albright on December 6, 2012 at 9:25am

I think you're reading it correctly.

If a recruiter bills 210K then they would make $100,500.00.

On the first 100 they would be paid 45K.

One the second 100 they would make 50K.

Then they would be paid 5500 on the final 10K billed.

This is based on a quick scan of Robb's reply.

Now - this can only happen when the recruiter is a "full desk" recruiter and filling only their own openings. Once there is an inner-office split (Job Order recruiter and Candidate Recruiter) each of them would receive "credit" for 1/2 of the fee. So if the placement was 15k, then the J.O. recruiter is credited with 6K and the Candidate Recruiter is credited with the other 6K.

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Permalink Reply by Daren J. Mongello on December 6, 2012 at 9:42am

Jerry has the concept right.

If your recruiter is billing $300K and not earning $150K.....better lock him/her up cause I'm gunning for them. :)
Or....they'll say ""f you" I'm going out on my own!"
IMHO.....the tiered model works best because there ALWAYS a raise to be had every year.

And that's what you want.

As just so we're clear: billing is *** CASH IN *** not invoiced

Thanks for playing. :)

And for those thinking that corporate recruiting is ALL THAT.
Here's a clue: it's NOT.
its LESS recruiting and MORE admin. (nothing is more enjoyable than trolling taleo for hours at a time or trying to manage 30-40 roles at once. HAVE FUN!) it's admin. it's paperwork. it's THANKLESS. Hiring managers breathing down your throat. It's taking work home with you.

In the end.....3rd party recruiters source the better talent. PERIOD

We pick up the phone and pitch! Corporate recruiters POST, SIT AND WAIT for the inbox to fill up. AMIRITE?
Yes, yes, yes......I know...some of you on the corporate side might actually do some sourcing.
:clap clap clap:

Ok.....back on the phones !!!!

ALL OF YOU !!!!
(yes...you too)

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Permalink Reply by pam claughton on December 6, 2012 at 9:58am

I agree with Jerry, except that it is the same scenario when you have inner-office splits. Billing is billing. It stacks up more quickly possibly when you get 'double-bubbles' as we call them when your job is filled by your candidate. In our office it's at least 50% splits though, which allows us to do more placements and if you split half of a 20k placement, each recruiter throws up 10k toward their total billing.