Are you getting your piece of the pie?

ImageRecruitment 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.

Luke Collard

3 thoughts on “Are you getting your piece of the pie?”

  1. The fundamental flaw in the vast majority of remuneration structures for recruiters is that it rewards the result and not the quality of the result. Essentially many commission schemes actively encourage many of the things that lead to issues. Such as trying to push a deal through to meet a deadline, twist a candidates arm to take a job, submit more candidates than necessary to hedge your bets, cover the odds, limit the impact of a competitor and so forth.

    The whole emergence of Preferred Supplier Agreements and similar also actively encourage all the practices that are wrong with the industry. They reward recruiters who take short cuts, don’t follow process, fail to interview, screen or prepare their candidates correctly. The race to place embraces the concept of sending every conceivable candidate on the database as quickly as possible before one of your fellow PSL competitors sends them, to scour the CV Landfill sites like CV Library and just send everyone and anyone that even remotely looks right for the job as quickly as possible.

    I’ve said for a long long time that recruitment businesses need to be totally re-invented. They should become the ‘Talent’ version of Professional Services / Management Consulting companies. They should offer Talent Acquisition / Recruitment Services alongside or as part of an overall Talent Solution including Talent Management, Management Coaching, Development, Talent Attraction, Succession Planning and so on and so forth and therefore become specialists across the board. Then they could charge in a similar way on a project basis, on an hourly or daily rate based upon the actual work done and time allocated to the actual project not on some whimsical notion of a fee for a CV. We would then avoid the following scenarios:

    A) Recruiter Pete works hard all week sourcing, screening, interviewing and preparing and briefing 5 excellent candidates for an organisation that he has spent time to truly understand. Pete is ethical, professional and focused.

    B) Recruiter Alan digs a CV out of CV Landfill and briefly interviews the candidate (why are you looking, what location and how much money do you want type of interview) about the role without telling the candidate who the company is. He send the candidate he found by doing a 10 minute CV Landfill search across to the same client as Pete. He places the candidate and earns a fee and earns commission on that fee.

    Its simple, its simply wrong.

  2. In principle you are right, Darren but until clients of recruitment agencies reward recruitment agencies for a quality service, regardless of whether they submit a candidate who is hired, the current commission/reward system will never go out of fashion. I’d be interested to know of any recruitment agencies who are being financially rewarded by a client for their ‘quality of service’ rather than ‘results’. Anybody? Hello? Hello? Hello?

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