There are 3 main things your commission scheme must deliver on:
- It must motivate the right behaviours for your business, in your market sector(s), in the prevailing market conditions.
- It must be attractive enough for recruiters to actively work to gain commission.
- It must be affordable to your business.
Do you recognise any of these?
- I regularly meet new business owners who have simply replicated their previous employer’s schemes
- It’s common for recruitment leaders to leave commission schemes untouched for years (in a very changeable environment), and
- Several just roll their eyes when big billers collect big commissions despite their unhelpful behaviour.
Let’s just inspect why those situations persist:
💣 The first is because of a lack of understanding about all the possible variables. The new business owner might also be thinking “This motivated me, and I want to recruit people like me, so it must be right”.
💣 The second is out of a lack of wider, data-led assessment of the market conditions (what I frequently refer to as “periscope up” moments).
And, let’s face it, reluctance to face the upheaval and protests of the team. Because people’s natural first response to changes to monetary reward is always “What will I lose?”
💣 The third is usually because so many schemes are tied wholly and exclusively to billings. What’s wrong with that? It’s the billings that pay for the commission, right?
If the billings are tied only to invoices, and not other required behaviours, smart pragmatists will do the least they have to do to get their commission.
If that means NOT recording info on your CRM that would aid future BD, then so be it.
And if you are heavily rewarding job fulfilment at the expense of business development, then people will expand the time they spend trying to fill B/C jobs, rather than going out to find A jobs.
This year I’ve advised at least 10 business owners on changes to their schemes. In some cases, we have had to unpick badly drafted contracts, collect masses of data, and implement split fees for the first time.
And every one of those schemes is now different from all the others.
In my book, The Seven Behaviours of Successful Recruitment Leaders, I describe eight headings to consider when reviewing schemes:
- Perm/temp balance
- Size of fee/frequency of invoicing
- Point of recognition of placements
- Desk cost and thresholds
- Current main business drivers
- Level of reputation/brand/data
- Clarity on KPI expectations
- Payout frequency
I have to be explicit about a ninth heading, which is “What can my business afford? And how much am I paying contractually?”(See my previous blogs on payout ratios here). Why?
A few businesses have gone to the wall this last month due to overcompensating people for their performance. They have allowed that situation to run on, eating into their reserves. Others have invested heavily in tech without clarity on the expected ROI.
Couple that with increasing expectations for flexible working, four-day weeks, incentive trips abroad and so on, and it could be many more.
But you can get on the front foot with this.
To discuss your scheme and how it can be improved, and how to manage that change, as part of a holistic advisory service, get in touch with Alison…
Recruitment Leadership are also undertaking an anonymous survey on commission schemes.
Designed to gain insight into how a variety of recruitment business leaders are currently structuring their commission schemes, the results of this survey will be shared with recruitment business leaders through Alison and Recruitment Leadership’s mailing list and social channels to provide guidance and advice.
Take part in the survey below!