With up to 20% growth for recruitment companies predicted in 2022, the importance of an appealing commission structure has never been higher. If you’re looking to succeed within this highly competitive sector, you’ll live and die by your recruitment commission structure. Get this right, and you’ll attract the best, motivate them to deliver their best results and retain their services. Get it wrong – and you’ll soon know about it.
The importance of creating a competitive recruitment commission structure cannot be overstated. Of course, this process is not without its challenges – the need for extreme market awareness and sensitivity, as well as a dependable method of communicating and managing your ever evolving scheme – but the opportunities unlocked once a winning model has been outlined are undeniable.
In this article we’ll explore a few of the ways in which you can successfully create a truly impactful recruitment structure.
1. Get Familiar With The Different Recruitment Commission Structures
When defining your recruitment commission structure, your first order of business will be to assess the various standardized models, and select the best fit for your organization’s goals and objectives. There’s no perfect formula when it comes to making this decision – different structures hold various advantages, and the ideal solution will be dependent on a range of factors unique to every business.
In the broadest terms, you’re likely to be selecting from three core structures: contingency, retainer and container. Whichever you select, within recruitment your model is likely to be non-discretionary. This means that your offer will be completely transparent and predictable to those who are signing up – your agents will know exactly what they can expect to earn in relation to the results that they achieve.
When formulating the ideal recruitment commission structure, it is important to spend a little time thinking through the various different models and considering the way that they might apply to your business as it scales. How much flexibility will you need to build into your system, and how will this be implemented in the way that your commission payments are calculated and managed? How will you know when the time is right to switch things up and make a different offer?
2. Consider The Competition
Once you’ve armed yourself with a good degree of knowledge regarding the various recruitment commission structures that you might wish to implement, it’s time to start looking at the way your competition is playing the game.
A commission-based payment structure is, of course, designed to promote a performance-based culture – but ironically, it will also place a greater pressure on your business to be competitive in the incentives that it offers. What benchmarks will you set for competitiveness? Your structure needs to work internally, but external appeal is also going to form a crucial part of its ongoing success, if top recruiting talent is going to stay engaged and loyal.
Key aspects to consider include the balance of salary vs commission that you decide to offer. You’ll also need to pay close attention to the breakpoints for percentage tiers, and crucially, think about how often you will revisit and assess these to ensure you’re remaining an appealing prospect to recruiters. Will they be based on revenue (most common) or discretionary (and if so, what metrics will you be valuing?)
3. Focus On Positive Reinforcement
With so many detailed performance elements to factor in, recruitment commission structures can quickly become overly complicated – and if you suspect that this is starting to be the case, it’s worth returning to the most basic principals, remembering that at its heart, your scheme simply needs to reward the behaviors you’d like to see established and perfected.
It sounds reductionary – but keeping positive reinforcement front of mind as you craft and refine your recruitment commission structure is absolutely essential to your success. Take time to ensure that your scheme encourages the strategies and values that you truly want to see reflected within your business.
Look at the metrics that you’re choosing to reward, and carefully consider the conflicts that you might be creating as a result. If your leads are remunerated based on their own billings, but also expected to coach, where will their interest and true application be likely to lie? Ask yourself if you’ve achieved the right internal balance of competition and collaboration – a truly supportive and productive working environment will achieve this.
4. Prioritize Recruiter Relationship Through Better Commission Management
As previously mentioned, it’s very easy for recruitment commission structure to quickly become overcomplicated. This can do much more than impacting the efficiency of your own internal operations. Consider the importance of the clear communication of your scheme. If you’re going to leverage maximum motivation, your recruiters should have complete clarity on their incentives and expectations at all times – especially as your scheme evolves and improves.
Your ability to manage your commission scheme effectively behind the scenes to get sharable insight and see when your recruiters might be struggling is also important. Better visibility and control of your payouts can be highly advantageous in terms of future forecasting. Not only does this help in terms of internal revenue predictions, you’ll also be able to better incentivize your recruiters with a clear view of what’s possible and the likely trajectory they could be following in terms of their own earnings.
Similarly, it’s important to have a dependable process in place for clawbacks. When it comes to reclaiming commission linked to placements that didn’t work out, nothing should feel unexpected or poorly timed to your valued recruiters.
5. Consider Your Payment Cadence
Finally, when designing the ideal recruitment structure, you’ll also want to consider the cadence of payment that you implement. Within the sector, monthly pay-outs are commonplace, but it’s still worth thinking about whether this represents the best fit for your business’s unique objectives.
There are certain advantages to be gained from a longer (for example quarterly) payment cycle, as some argue that this encourages “bigger picture” thinking, enabling recruiters to plan for the longer term instead of seeking quick results within smaller timeframes, that may not necessarily facilitate the best outcomes. By creating a longer window, candidates can be ethically and reliably placed (i.e. into the best roles, not the role that needs to be filled that particular month to make the billing.) It’s also argued that longer payment cadences can help to avoid fraudulent “back out” situations (where a candidate only says a few days after commission has been paid.)
Ready To Create A Winning Recruitment Commission Structure?
Creating an impactful recruitment commission structure is essential – but it’s important to remember that it should be seen as mutable – being in a constant state of improvement and evolution.
Keep lines of communication open. Talk to your recruiters – regularly survey them and finetune your offerings accordingly. Show your respect and commitment to serving them with a dependable, optimized opportunity by investing in commission management tools that can help you better manage their ongoing experience and ability to earn.