Referral Bonus

I'm trying to figure out what the general standard is within our industry for referral bonuses.

What do you typically pay someone for referring you to a prospective company that then goes and uses your recruiting services? I was thinking of giving a % of the commission but that could be to revealing.

What are your thoughts?

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Permalink Reply by Cathy Trinh on December 8, 2008 at 3:20pm

We give a $1000 referral bonus to individuals refer candidates to us that we are able to place. We don't pay it out for at least until after the guarantee period is up, which in most cases are between 60-90 days.

Giving a percentage of the commission is too confusing when it comes down to payout day. Good luck to you!

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Permalink Reply by Bill Ward on December 8, 2008 at 3:21pm

I don't believe in referral bonuses. Good will goes a long way !

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Permalink Reply by Dawn Williams on December 8, 2008 at 4:58pm

I don't believe in paying for a candidate referral. I believe in goodwill. I prefer to work referrals with other recruiters as a give and take . When that does not work I will pay them a % of the fee. It will be about 25%. If that is the case then, I will take control of the client relationship. I recently had a bad experience with a recruiter in Toronto who collected the cheque from the company and did not pay me. In this case, he referred the company to me, I did all the work and he collected 100% of the fees and now dodges my calls. We are in collection now and the lawyer's letter goes out at the end of this week.

Choose your partners wisely.

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Permalink Reply by Craig Evans on December 8, 2008 at 5:25pm

I have always felt that referral fees should be avoided altogether. I agree with the comment on good will going a long way. I think that the quality and reputation of a firm should stand on its own, and that when you start paying outsiders, you are risking that hard earned reputation to outside influence, whose motives may be purely monetary. I think it also shows that we are not doing our job right and that our motives might also be purely monetary and even desperate. I am not opposed to professional relationships or strategic partnerships with others that I trust. You want to be the person that individuals and companies want to come to with leads because they respect you and see you as a profesional who they like and trust.

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Permalink Reply by Jason C. Blais on December 8, 2008 at 6:09pm

I think the replies you've been getting are speaking to referral bonuses for candidates. If you're interested in referral bonuses for people who refer businesses to you, I think that's different from the others.

However, I would agree in avoiding the % of commission model. As you stated, it is a bit revealing, and as was mentioned in one of the other replies, it gets too difficult.

I'd suggest, if you really want to motivate people to refer businesses to you, or you to businesses, you pay a flat placement fee for the first year only. That is, for each person you place with the company, you pay out a set dollar amount to the referrer. This gives the referrer a bigger bonus for helping you land bigger accounts. I would strongly suggest the cap, though, whether it's a period of time or dollar amount.

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Permalink Reply by Kevin Kerkering on December 9, 2008 at 3:35pm

I am not sure of prospective company referral plans but in terms of IT candidate referrals, we give a $500 bonus providing the consultant works a full 3 months of their contract. I have seen candidate referral bonus from $250-$1000 in the IT industry however I would not know what referring a client that you are able to do business on an ongoing basis would net.......I would think it would pay well depending on the frequency of the opportunities that you have with them.

Kevin

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Permalink Reply by Steve Foreman on December 9, 2008 at 4:35pm

Referrals go a long way with contract recruiting of engineers... We use a tiered program and include a retention bonus for both the employee and the referred candidate if they are still working for us after 12 months.

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Permalink Reply by Trace Williams,BF on February 23, 2009 at 3:47pm

Hi,
My name is Trace Williams,BF. I am a retired IT Director and have been doing recruiting for a number of years now. I usually work for the mainstream recruiters on a referral bonus/bounty basis. They usually pay me anywhere from 500-1000 per active placement (those that really stay & are great employees), the first year. The next year the amount is raised to 800-1200. I do all the leg work for them, and really try to furnish them with quality candidates. So far the recruiting industry has responded favorable to my efforts. I believe that is the correct answer, reward for quality and honestness. I keep my cost down and work very efficiently and effectively.

Thanks,
Trace Williams,BF
mc.recruiting@gmail.com