I used to avoid Tom Cruise films, post-Jerry Maguire of course. I’ve watched Going Clear a couple of times and let’s just say he doesn’t come off well (1:23:00). Then I realized, having a prejudice against someone because they belong to a particular group is the literal definition of bigotry, so I relented. I was a late watcher of Top Gun but to quote Eddie Murphy in Raw, “great fuc*ing movie!” People may have skipped over the delicious pun in the title and wondered why I’m talking about TC but I thought it tied in pretty well. I’ve been taking a lot of briefs in the 2.5 weeks and have been squeezing into the shoes of my candidates in the process. I ask the questions that I imagine are important to them, to use an oldie but a goodie recruitment term, their ‘hot buttons’ mainly progression, flexibility money-making potential, location, security, and stability. One thing that candidates and clients are eager to find out about is commission schemes, who’s giving/getting what? What are the models and current schools of thought. As followed are some of the most common ones out there.
The Sliding Scale
The model favoured by the big boys. If your agency is pushing 15+ Consultants, then chances are you have something like this. A close cousin is the group-commission model but that's only really used by one of the big guys, since Page left the market. Plus, it only really benefits consultants at the beginning of their careers and frustrates consultants who are doing the majority of the billings. A traditional sliding scale looks something like this.
Up to $17,500 (Threshold) 0%
Over $17,500 and up to $25,000 20%
Over $25,000 and up to $50,000 30%
Over $50,000 and up to $75,000 40%
Over $75,000 50%
No Threshold
You may have noticed the T word just before. Price of seat to you old heads out there. A no-threshold model provides the ability to earn commission from the first placement. However, the percentage is low, typically starting at around 10% commission. There is a risk of recruiters plateauing when there isn’t the driver to push further which is why additional percentages are added on in most cases quarterly. This model is great if consultants have previously worked towards with a convoluted comm model.
Starting at 10% of placement
$70K+ additional 5%
$120K+ additional 10%
$145K+additional 15%
And so on…
Threshold & Flat Fee
The flat fee post threshold is becoming more of the norm. Typically used in agencies of a small to medium size. It’s clear, concise, and pretty easy to understand. Thresholds are there to protect the agency so they’re not just paying your wages out. Commonly calculated on the consultant’s salary to try and keep some semblance of balance when people are asking for the world. It’s typically calculated between 2-3 times the base salary, usually 3. Divided up so you get a quarterly/monthly target. The low end being 25% and the high end being 33% Some go higher but it comes with a price.
But what about Candidate Managers!? Great question planted audience member! It seems the favoured model is a flat fee per placement. In previous years we would see this being between $200 - $300. This has largely been replaced with a gradual increase model, mirroring the consultants with their own threshold. Something like…
1st Placement - $0
2nd Placement - $500
3rd Placement - $750
4th Placement - $1000
Every placement after that an additional $1000
The key to every comm model is striking that balance between the Consultants feeling motivated to firstly, earn their cut and secondly, keeping them incentivised to push further. There is always the model were you forgo an income for the foreseeable future and get 100% of the fee but, that one comes with some sleepless nights and fairly frequent discoveries of grey hairs.
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