We are a small boutique search firm that has started doing more contract technical and marketing staffing in the past year. I'm curious to learn what others generally pay out when to their recruiters when they fill a contract opening, what their percentage is and how it's calculated. In a large office, that has more overhead, I know the percentage may be smaller, but I have a feeling we are paying much more than the norm.
Second part of my question, if that is confirmed, and we should be paying a lower commission rate on contract placements, is there a way to adjust that without ruffling feathers? Or are we stuck with what we have in place now?
I'd welcome thoughts on this!
Hello Pam, This is the payout model we use ...
If the recruiter provided the candidate only - using a $20/hr margin example $5/hr goes to the Recruiter if the Recruiter has a minimum of $10k in billing per month. $2.50 /hr if they are less than $10k billing a month.
If the Recruiter owns the candidate and the client $10/hr goes to the Recruiter if the recruiter is less than $10k billing per month $8/hr.
The second part of your question is tricky you may have to deal with recruiters individually base on their production history and or month to month value they bring to the company. If you are not afraid of losing recruiters you can just announce a new commission structure...
My 2 cents ...
Thank you! I really appreciate your response and examples. I really like the difference per month in billing. That is something I could implement in my office.
I see no reason why the commission should be any different than for direct placements. Once you know what your actual profit is (which should be easy to pinpoint) you simply figure your commission based on that.
I worked for a company way back when - and the owner felt we were making too much money and would cut our percentages from time to time to keep us "hungry". Well - I don't work there anymore.....
Let them make some money. You are. :)
I agree, but as it turns out I'm way overpaying and it actually works out to more than the perm commission. I'd like to set it to the same as the perm share, but that would mean a cut from what I'm doing now.
You're certainly not alone in trying to figure out the best approach to temp staffing. I read recently that a third of the U.S workforce is now made up of contractors and from what I've seen, staffing firms are still trying to figure out how to maximize profit and reduce costs in the industry as it shifts towards a temp workforce model.
My company - Emergent - helps lower the costs and risks of supplying contractors by becoming the employer for the contract worker. We handle things like W2 processing, payroll processing & funding, worker's comp, HR, invoicing &billing and claims management at a low percentage of the worker's pay rate. Please feel free to e-mail me back at firstname.lastname@example.org or give us a call on 855 250 5000 if you think we could help you out.
Thanks, we already use a great similar service, ECS (Employer Contract Services) handles all of our payrolling, funding, invoicing, etc. and best part is unlike many other similar services, they pay us up front before they are paid by the client, which means that each week when our contractor is paid, we are too, and receive a profit report and monies are automatically deposited into our account. They've been fantastic to work with.
Yes, Emergent offers those services too - it's a shame that most other services don't since it's a nightmare when clients are late paying and nobody gets paid on time!
Good luck with your business and please share your findings on commission structures on the thread if you find any that work well.