Seeking input on good commission structure for contract placements

We are a small boutique search firm that has started doing more contract technical and marketing staffing in the past year. I'm curious to learn what others generally pay out when to their recruiters when they fill a contract opening, what their percentage is and how it's calculated. In a large office, that has more overhead, I know the percentage may be smaller, but I have a feeling we are paying much more than the norm.

Second part of my question, if that is confirmed, and we should be paying a lower commission rate on contract placements, is there a way to adjust that without ruffling feathers? Or are we stuck with what we have in place now?

I'd welcome thoughts on this!

Pam

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Permalink Reply by Paul Alfred on July 4, 2011 at 12:32pm

Hello Pam, This is the payout model we use ...

If the recruiter provided the candidate only - using a $20/hr margin example $5/hr goes to the Recruiter if the Recruiter has a minimum of $10k in billing per month. $2.50 /hr if they are less than $10k billing a month.

If the Recruiter owns the candidate and the client $10/hr goes to the Recruiter if the recruiter is less than $10k billing per month $8/hr.

The second part of your question is tricky you may have to deal with recruiters individually base on their production history and or month to month value they bring to the company. If you are not afraid of losing recruiters you can just announce a new commission structure...

My 2 cents ...

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Permalink Reply by pam claughton on July 5, 2011 at 8:30am

Hi Paul,

Thank you! I really appreciate your response and examples. I really like the difference per month in billing. That is something I could implement in my office.

~Pam

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Permalink Reply by Jerry Albright on July 5, 2011 at 8:39am

I see no reason why the commission should be any different than for direct placements. Once you know what your actual profit is (which should be easy to pinpoint) you simply figure your commission based on that.

I worked for a company way back when - and the owner felt we were making too much money and would cut our percentages from time to time to keep us "hungry". Well - I don't work there anymore.....

Let them make some money. You are. :)

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Permalink Reply by pam claughton on July 5, 2011 at 9:20am

Jerry,

I agree, but as it turns out I'm way overpaying and it actually works out to more than the perm commission. I'd like to set it to the same as the perm share, but that would mean a cut from what I'm doing now.

~Pam

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Permalink Reply by pam claughton on July 7, 2011 at 7:35pm

Hi Jill,

Thanks, we already use a great similar service, ECS (Employer Contract Services) handles all of our payrolling, funding, invoicing, etc. and best part is unlike many other similar services, they pay us up front before they are paid by the client, which means that each week when our contractor is paid, we are too, and receive a profit report and monies are automatically deposited into our account. They've been fantastic to work with.

~Pam