QUESTION: What is your approach to compensation and training up a new recruiter for success? No experience as a recruiter, but great on the phone and tech-savvy. What is your recommendation and direction on providing medical benefits for full-time employees for a small business? – Michael
ANSWER: I always teach that you do not want to hire recruiters with recruiting experience. Number one, you are on the right track.
All of our coaching clients get access to complete training on recruiter compensation. There is no way I can go into the nuances in a blog post, but here is the compensation plan I used in my firm.
When I hired a new team member, I started 99% of them in a sourcing role, either on my desk or on one of my team leaders’ desks. The new recruiter got a base salary. We were located just outside of Hartford, Connecticut, so today’s competitive base salary would probably be $35,000 to $40,000 per year. Then they got 5%, 10%, and 15% of their searches, 100% of the fee, but if they closed a $20,000 deal with their salary, they would make $1,000 in addition, and it was 5% of the first $30,000 per quarter, 10% of the next $15,000 per quarter, and 15% over $45,000 in the quarter of 100% of the fee.
Many recruiting firm’s high-end rate is between 40% and 50%. My high-end rate was 35%. With that kind of compensation plan, even when they transition to full-cycle recruiting, I never lost big billers because I did not payout at the top end. I also never lost a big biller because I made sure I provided more than enough value to bridge that gap. If somebody paid 40%, I did not keep the 5% for my 35% to 40% as profit and stuff it into my pocket. I reinvested pretty much all of that block into things like medical and dental insurance.
Investing in medical and dental insurance was very important to me. The main reason is that when somebody interviewed with me, that person left the interviewing knowing that I would provide them training on how to become excellent in the business and they would have a real job. A real job meant that it had a salary and benefits.
When you engineer your compensation plan the right way, you do not have to throw it all in that commission bracket. You can take some of that. Instead of investing it in commissions, you can invest it in perks because, trust me, it means more to somebody to come onto a company with benefits than making an extra five percentage points in commissions. If they are not from the profession, they do not know what “everyone else pays in commissions.”
A lot of companies that pay 40% to 45% commissions have very high turnover. We were the second largest recruiting firm in the greater Hartford area, and the one that was bigger than me was hiring all of the time. That firm was managed by good people and was significantly larger than us. However, they had an incredibly high turnover. They would hire people, pay them a couple of thousand dollars a month and train them using videos. After viewing the training videos, the new recruiter would be thrown on a desk, sink, or swim.
We lost very few, as a percentage-wise, of our new hires because we had a nurturing process and onboarding process. It is the same process that we now teach our clients. That process allows you to identify within two weeks if a new hire is going to be successful or not. That way, if we did hire somebody and they did not work out, we are not waiting six months for them to make a placement. We used the metrics to tell us if they are going to be successful or not.
I hope that helps.
P.S. Whenever you’re ready… here are 4 ways I can help you grow your recruitment business:
1. Grab a free copy of my Retainer Blueprint
It’s the exact, step-by-step process of getting clients to give you money upfront. https://get.therecruiteru.com/lm
2. Join the Recruiter Think Tank and connect with firm owners who are scaling too It’s our Facebook community where smart recruiters learn to make more money and get more freedom. https://www.facebook.com/groups/there…
3. Join me at our next event
3x a year, I run a 3-day virtual intensive, sharing the 9 key areas that drive a 7-figure search firm. Click here to check out the dates of our upcoming event: https://get.therecruiteru.com/emerge
4. Work with me and my team privately
And if you ever want to get some 1:1 help, we can jump on the phone for a quick call, and brainstorm how to get you more leads, more placements, and more time. https://get.therecruiteru.com/scale-now
Photo by AllGo – An App For Plus Size People on Unsplash
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