Recruitment is largely seen as a sales role, and similar to any sales role commission and bonuses typically make up a large part of a recruiters package. Now, you can agree or disagree with this principal, and some would question whether in fact this is the right approach or is actually the thing that drives bad operators and poor service (ever thought it was a bit of a conflict of interest for a recruiter to have a vested personal financial interest in the outcome?). But commission and bonuses are, and will continue to be a big part of recruitment.
When I first started in recruitment, commission structures were fairly standard across the industry. If you moved from one agency to another you could expect your commission structure not to change that dramatically. Nowadays however, we are seeing more and more weird and wonderful schemes. This is probably reflective of an industry that has continued to evolve and adapt…. although looking at some of the commission structures out there I suspect it is also reflective of some people having too much time on their hands and too much knowledge of Excel!
The myriad of different commission schemes out there now is a potential minefield for any recruiter. Being paid different commissions on existing business versus new business, or billings generated from a PSA versus a non-PSA account. Deficit models. Commission calculated on invoice or collections. Team bonus versus individual bonus. Discretionary bonus. Bonus payments on top of commissions. Paid monthly, quarterly or annually? Thresholds v no thresholds. Payments on placements made, not revenue. Different commission level depending on whether you are using a resourcer or not. No commission scheme. Different commission level depending on if it is the second Thursday of the month, you are wearing pink socks and your client begins with a letter from the second half of the alphabet…and so on.
I appreciate that not one size fits all and different commission schemes need to exist depending on what type of recruitment you are involved in, the business you are working in etc. But, regardless of how you splice and dice it, I think there are a few very basic concepts that should be at the heart of any scheme:
It has to be simple to understand….the simpler the better. Yes, we are all intelligent enough folk, but some of the schemes I have seen are so bloody complicated that you need a Masters in Advanced Mathematics and a nuclear powered calculator to get your head around it.
It must genuinely want to reward. When you really break down some of these schemes you can tell that they are really designed not to reward that well. A sort of fool’s gold.
It needs to be consistent and fair across the business so that everyone has an equal opportunity to earn commission regardless of their desk.
Often what seems like a good thing on paper turns out to not to be quite such a good gig in reality. So, whether you are moving jobs and considering a new scheme, or just reviewing how your current set-up compares to other recruiters, make sure you really understand how it works…including the small print. !!! A simple test is to ask yourself this question…if I bill $X this year what will I make in commission? If you cannot get an accurate answer then maybe it is not a great scheme.
And now for something different…
You may have noticed a new section of our blog, Agency in Focus. We have been asked by some agencies if they could somehow promote their agency and internal opportunities to the 2500+ recruiters who read this blog every week (thanks by the way). And we guessed that you wouldn’t mind hearing about them. So we are delighted to bring you the first of these, Kinetic Recruitment, who we are currently helping find a new Manager for their Melbourne office…check out what their Managing Director has to say here…. minus all the usual corporate bull.