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On so many fronts; congratulations on making the leap & starting your own recruitment agency, congratulations on creating a recruitment business that is allowing you to grow, congratulations on creating a loyal client base & a results-driven candidate procurement strategy that makes you feel both confident & capable to start growing your recruitment business, & congratulations on having the personal freedom to be able to hire, grow & expand your recruitment business with talented, capable & like-minded recruitment consultants who will (we hope) bring direct & indirect value to you & your recruitment business.
Congratulations.
But I’m sure you find yourself in a little bit of a pickle. You’ve always known you’ve wanted to grow your recruitment business, you’ve always known you’ve wanted to hire top-talent into your startup & you’ve always known that you would want the team around you to be as driven & as fixated on the longer-term goals of your recruitment business as you are.
You therefore know how important the commission structure you put in place now, at the start of your growth journey, is. After all you want your consultants to feel incentivized to achieve, driven to succeed & valued in your new recruitment startup. &, of course, while we all know you must (just must) ensure members of your team feel an overwhelming sense of value for their position in your business in ways other than simply financial, but you’re a recruiter – you know what the tangible product of all your hard work & passion is & you know those consultants joining your startup will be no different.
So, you have to make sure that you’re commission structure is attractive.
But the pickle you’re in is that you know what else your commission structure needs to be. You know that you need a commission structure that is both attractive, progressive & a reflection of the belief you have in your new hires, but also realistic. You’re a cost-sensitive, nimble startup & you need a commission structure that will grow with the business & that will also not place your recruitment business in a vulnerable position.
Over the many years of Isotope being fortunate enough to support & work with so many exceptionally talented recruiters & in supporting them & their growing agencies; we have built (& rebuilt!) commissions structures for every business you could imagine; from a two-consultant strong agency within the construction market to an internationally focussed IT recruitment agency to everything in-between.
What has become abundantly clear is that there is simply no “one size fits all” structure; every structure has its (slight) shortcomings & every structure has its moving parts that are hard to manage. Some structures have worked out famously, others have fallen a little short of expectations & therefore if you’re looking at creating a winning commission structure, one that will not only reflect the agency that you are creating but also ensure a balance among your team as they grow – it’s our feeling that you ought to keep the below points at the forefront of your mind.
Like my economics teacher used to say to me, KISS KISS – Keep it simple stupid, keep it short & sweet.
You’re creating a commission structure, you’re not placing a recruiter on the moon – we’ve spoken with exceptional entrepreneurial recruiters over the years that have toyed with commission structures that require a PHD in maths, a Masters in English & the patience of a saint; thresholds, tiered structures, credit commissions, bonus pre-requisites – we’ve seen it all.
Keep it simple stupid (KISS), keep it short & sweet (KISS).
As a recruitment startup – but really, as any recruitment agency – stability & consistency is key. If you were to look at the performance of your recruitment business like you would a Sunday afternoon walk, you want a gentle incline over a prolonged period of time (with the occasional dip, perhaps – after all, that’s always going to happen) not an erratic peak then trough then trough then peak.
When you’re growing your recruitment business, you want a team around you that are long-term visionaries, rather than those with a month-to-month mindset that is not in keeping with the longer-term plans of your recruitment agency. Creating a commission structure that is quarterly, can do a lot to eliminate this short-term mindset that can (& perhaps we’re catastrophising a little bit here) lead to candidate abuse, poor client management, over-engineered start dates, ‘drop your dignity’ fee agreements & even a phantom placement or two that coincidentally disappears just days into the next month.
There can be monthly landmarks, of course there can – but why not be slightly different to your counterparts & adopt a quarterly commission structure that further echoes the ethos & the culture you are working so diligently to create as you grow your recruitment startup.
It might sound simple but you have a genuine opportunity with your commission structure to create a tangible indication of the ethos & culture of your recruitment business.
Yes, you need your recruitment agency to be profitable & yes you hope that by physically growing your recruitment team you will do this but you also want a collaborative, communicative & united team (remember that pickle we were talking about at the start of this blog?).
Your commission structure can do just that.
The infamous ‘hype’; it’s trapped the best of us over the years & its allure & promise of success will be a forever present temptation as you grow & scale your recruitment agency. & by that, we mean that you must (albeit hard) avoid creating overly-favourable packages for ‘superstar recruiters’ who promise you the world, but have the delivery capabilities of Hermes (sorry, Hermes).
We get it, we really do – you talk with a ‘superstar’ recruiter who is promising you the world & therefore making you feel a responsibility to create a package (a combination of a hefty basic, a more than favourable commission structure & maybe even perhaps a few “landmark” bonuses) that secures you a talented recruiter who promises to take your business to ‘the next level’.
Our gut feel, rooted deeply in an unwavering desire to support you & your recruitment agency is that you should not succumb to ‘the hype’; not only has history shown us that those ‘superstars’ unfortunately tend to under-deliver but it always upsets the balance & equilibrium of your team as your scale – you have a mediocre biller on a hefty basic & a commission structure that is not only economically impacting your business but also upsetting those genuine superstars in your business.
Cash flow is King.
As a recruitment business owner you will know the power of that sentence; it’s been drummed into your very entrepreneurial DNA since the day you started thinking about your new recruitment business. & therefore why should it not be in the forefront of your mind when you look to grow your recruitment startup?
The answer is, it should.
There is a very strong argument to suggest that every commission structure should be payable upon when the end client has paid, no sooner, no later; once the end client has paid you – commission is payable. This is a fantastic mindset to adopt if you want a business of high-performers, if you want a business of people that understand the journey that you are on together & that don’t succumb to mediocre standards that are subconsciously developed by creating arbitrary commission structures that are never (& will never be) a reflection of what is actually happening in your recruitment business.
This is not about paying your team less, about deceiving recruiters out of well-earned commission, of course not. This is about paying your team genuinely what they are worth, creating genuine value & a genuine belief in their performance. You live their highs & lows with them & so too do they, with you.
This is a tough one though, we know.
There is no failproof secret sauce when it comes to a commission structure for your growing recruitment business. & so, like everything, we hope you take the elements of this that make sense to you & are in line with your recruitment business & apply them to your growing recruitment team.
& if you’re an Isotope client, a superstar recruiter who has started their own agency with the assistance of the Isotope team, you can access a webinar focussed solely on growing your recruitment business over on iSOConnect. Just ask one of the superstar team here if you’ve perhaps mislaid the information, & they’ll happily ensure you have access to the wealth of knowledge & information over on iSOConnect.
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