What Is A Contract Recruitment Commission?

How does a contract recruitment commission work?

Companies depend on recruitment agencies to source their best talents for vacant positions. Recruiters working for staffing agencies have an extensive network of candidates who would be the right fit for the organization.

The best part of recruiting agencies is that you will only pay the commission you have agreed on depending on the outcome you have set prior to your collaboration. That is why it is important to spend your time finding the best recruitment commission structure so that you guarantee the best result in the end.

What Is The Reason Behind a Contract Recruitment?

First, define the goal behind seeking the help of recruiters. You need fully envision the outcome you aim to achieve so you can work out the best commission for hiring the required candidate. You can then define the metrics with which you can assess the success of the recruiters.

You might want a certain number of qualified screened candidates or you may agree with them to source for these positions in a certain time. For each metric, you can structure the commission to be fair for both parties.

What are the Types of Recruitment Commission Structures?

There are various commission structures to implement with your recruitment agency.

Contingency

This type of commission is agreed to be paid after recruiting the candidate. It can take many forms such as fixed commission or a percentage of the salary of the employee. The contingency commission motivates the recruiter to finalize the recruitment cycle early on and reach the right candidate so that they can receive the agreed commission.

Retainer

This type of commission is paid before finishing the recruitment process. After the first attempt with the recruitment agency, the retainer commission can be suitable as you have already collaborated before and now you can make sure they will meet the metrics provided to them.

Paying the commission upfront for your recruiter can encourage them to finish their recruiting process as early as possible to help you and start on a new talent hunt.

Container

It is a combination of the two methods. Container commission will be split into two parts, the recruiter will receive the first half before starting the hiring process. Once the candidate is hired, they will receive the new half. This ensures the urge of completing the hiring process and the efficiency of the screened calibres to choose from them.

The Best 4 Tips to Develop the Commission Structure

According to the needs of your organization, you might want to combine commission structure or you might want to set some rules or regulations. There are some best practices to follow to ensure you have a complete commission structure that attracts top recruiters who in return will recruit top talents on your behalf.

1- Compare Percentage and Flat Rate Commission

The recruitment commission can be in the form of a percentage of the employee’s package or a fixed flat rate. Providing a percentage commission is motivational for external recruiters as you might be recruiting for different positions and not all positions have the same benefits.

If you are recruiting for the same position, you may provide a flat rate based on your calculation of the return on investment of the position. You may also consider structuring a different rate for each position or department to encourage recruiters to fill in the vacancies faster and more efficiently.

2- Reach a Commission Maximum Cap

You can control the commission structure by offering a cap or maximum amount that you can pay. This is an effective method to guarantee that the staffing agency will find the right candidate and you can know ahead of time how much the whole recruitment process cost your organization.

3- Determine the Best Time to Pay the Commission

If you have tried collaborating with recruitment agencies before, you can analyze past results to decide which commission type you should follow. If paying the commission after recruiting the candidates worked well before, stick to it and if paying ahead has proven its success then it is better to follow the same method.

Moreover, you can attempt different methods for different positions if you are partnering with HR agencies for the first time. You need to reach the best method that guarantees the highest ROI and a nurtured relationship with your HR partner.

4- Consider a Hiring Bonus

Your ultimate goal is to find the best candidate that fits your company, the culture and the position you are hiring for. How quickly and efficiently the recruiters will help you reach that candidate is key in determining any bonuses besides the commission.

You might encourage them by providing a bonus if they manage to fill the position in a certain period or if they manage to source a certain number of qualified calibres.

What Are The KPIs Should You Agree with Recruiters?

Any partnership in business has a common goal which is reaching a positive outcome that boosts the company’s success and revenues. In order to measure the success of any partnership, you need to set metrics which indicate how well it has benefited your business. Once you partner with a staffing agency, you need to agree on the metrics that will be the core of the final evaluation.

Time to Fill for Vacancies

You can agree on the deadline for the recruitment by providing the time expected for filling the vacancy. The shorter the better, however, you should also consider the quality of the hiring as well.

Recruitment Funnel Ratio

In addition, you should agree with your recruiter on a specific ratio to move between different stages of recruitment. You can set screening to interviewing ratio, interview-to-offer ratio and offer-to-job ratio, moving down the recruitment funnel you need your recruiter to maintain the quality of the whole process to end up with the right candidate.

Candidate Satisfaction

While this metric is measured in the long term, it can be beneficial to determine the success of your relationship with your HR agency in the long run. If your candidate is satisfied that means they are the right fit for the company. It also proves your recruitment agency has managed to determine a competitive package that suits your candidate’s skills and qualifications.

The Conclusion

Last, you need to frequently assess the success of your business partnership. Your staffing agency is your source to find and recruit the best talents in the industry to improve your company’s performance and success so you need to ensure it is always returning on your investment.