QUESTION: Would you discuss your experience and knowledge on hiring recruiters on a base salary plus bonus plus the bonus incentive is progressive, if there is a commission plan incentive at some predetermined objective goal that would move them to straight commission. – Jim, Houston, TX
ANSWER: Commission structure is a hot topic for anyone growing their firm. I discuss the nuances of a great compensation plan in depth in the Platinum coaching program and at our live events. With that being said, I can give a brief outline for a recruiter than ran a 360 desk, meaning they marketed and they recruited.
The base salary would be anywhere from $25,000 to $30,000, occasionally $35,000. In Houston, you know your market better than me. I was in Hartford, CT. Then they got 10% of the first $10,000 cash in every month and 35% over that. It was that simple. I would actually tell people when I interviewed them that they could get more if they went to work for another firm in the area.
However, they would make more working for me because we really had a process that embedded them with high activity levels early on, and we brought them on as associates. It was rare that I hired somebody as a 360 recruiter. Usually, I brought them on as an associate, because they were working on someone else’s searches, their bonus level was 5% of the first $30,000 each quarter, 10% of the next $15,000 each quarter, and 15% over $45,000 in the quarter. So base salary plus that.
I had zero motivation to take somebody to straight commission because once you migrate them to straight commission they are already performing. If you are going migrate them to straight commission you have to pay them a higher commission rate. So as an entrepreneur my goal was to keep my cost of sales to a minimum. At 35% I had to provide tremendous value in training, development, and mentoring, because they could make more elsewhere and they could definitely make more if they went off on their own. I only had one guy in all my time ever go off on his own, and he did it in a very ethical way with me.
But if you get somebody producing, I do not want to take them off the base because if I take them off the base then I have to give them more of a commission. I just would not recommend it. I have never done it. Usually it is the opposite. Usually the recruiter asks once they are up and running. They do not need the salary anymore because they are making $100,000 to $150,000 a year as a lot of the people that worked for me did. The $25,000 base salary was no big deal if they could give that up for a higher commission rate, but I had no motivation to do that.
In answering that question, I apologize. I do not have a definitive answer because I have never done it.