While commission is not the only incentive that matters, it's fair to say that it's probably the most important. It is likely the most important factor that motivates recruiters to perform their best. As an agency recruiter, the commission structure you sign up for will impact the size of your check at the end of each month.
THE NUTS & BOLTS OF RECRUITMENT COMMISSION STRUCTURE
When it comes to commission structures, there are several key components to keep in mind. First, the structure you choose should be easy to understand, clear, and concise. It should align with your goals and incentivise billings, developing major client accounts, or increasing profitability.
Secondly, ensure that everyone has skin in the game, and the structure is fair to both you and your employer.
Thirdly, the commission structure should be flexible, allowing for changes as the company grows and evolves.
FLAT RATE VS PERCENTAGE INCREASE
With a flat rate commission structure, a recruiter is paid a set fee for each placement made. A percentage based commission structure pays a percentage of the fee charged to the client for each placement made. For example, 20% of the first year salary.
The type of commission structure you choose will depend on a number of factors, including the type of role you are recruiting for, the industry you are recruiting in, and the size of the fee you are charging. But in the main, flat fee seems to work best if you're charging your client a flat fee. Commission is much more common, and arguably a much greater incentive. The Doherty Group have interviewed hundreds of Recruitment Professionals from all levels to get insights into the salaries, commissions, and benefits across the industry.
In the images below, you’ll find the most common percentages for flat rate commission with and without threshold as well as how much it increases depending on the billings for UK Recruiters.
CAPPED OR UNCAPPED COMMISSION?
A capped commission structure limits the amount of commission that recruiters can earn in a given period. For example, they may only be able to earn up to 10% commission on each placement made in a month.
An uncapped commission structure, on the other hand, has no limit on the amount of commission you can earn. So, if a recruiter makes 8 placements in a month, they will earn commission on all 8 placements. The incentive here is obvious.
A threshold is the minimum amount of billings or placements a recruiter needs to make in order to start earning a commission. For example, a recruiter may only start paying commission once they've billed $5k in a month. This is a great way of avoiding mediocre performance. Commissions are a reward for excellent performance. The base salary is there to take care of your staff in a lull. The threshold makes sure that if a recruiter wants a great bonus, they work for it!
MOST POPULAR COMMISSION SCHEMES IN THE UK
The more placements you make, the more you earn. This is the most common commission structure for UK recruitment professionals, according to our recent salary survey. The second most popular option is a similar structure with a threshold. See the examples below for more details:
REAL RECRUITMENT COMPANY COMMISSION STRUCTURE EXAMPLES
When considering the recruitment commission structure you choose, it's important to remember that commission is not the only incentive and many of these companies offer a different mix of benefits and perks. To help you get a better idea of how much you can potentially earn as a recruitment professional, we've included a chart below that shows the potential earnings based on the amount you bill.
Keep in mind that this is just an example gathered from our UK Salary Survey and your actual earnings will depend on a variety of factors, including the commission structure you choose and the mix of benefits and perks offered by your employer.
How Much Commission do Recruiters Make?
As you can see, there are a variety of commission schemes to choose from, and each one has its own unique set of variables. As recruitment experts, we strongly recommend that you thoroughly analyse the commission structure you're offered, taking into account your base salary and benefits.
There's no one-size-fits-all solution, so if you want to explore what the best companies in the UK, Ireland, US, Australia, Dubai, Cayman Islands, and Canada are currently offering to recruiters like you, don't hesitate to contact us! We'd be happy to help you find the best role for your professional and personal goals.