Companies looking to staff important roles often get help from a professional. These professionals can recruit promising candidates quickly because they know where to look. If they’re really good at their job, they’ll be compensated well for their work. Generally, a portion of what they’re paid is a cut of a new hire’s pay — or a commission.
According to Payscale, recruiters average $52,258 per year. A large component of that compensation is commission. High-performing recruiters can take home up to $24,000 in commissions each year. The way that commission is determined depends on several different factors.
Recruiters earn commission based on how well they can select a candidate for a job.
Internal recruiters are paid differently than those working on contracts. Recruiting for a niche industry can also impact pay. Whether you’re building a commission structure for an entire firm of recruiters or one or two recruiters working internally, there are a lot of pieces to consider. To get a better handle on how recruiter commissions are structured, we’ve broken it down in this guide.
Internal or External
Overall compensation for a recruiter often depends on who employs them. Recruiters who work directly for a company, fielding candidates for roles internally, primarily earn a salary. On the other hand, external recruiters get most of their wages through commissions.
When it comes to internal recruiters, companies want professionals who are thoroughly familiar with the business. They need to understand the culture, the people, and the unique requirements of the job. With a keen awareness of the organization, a recruiter can find the best fit for both the position and the team. Given the amount of training and experience this requires, companies want to hang onto these recruiters. So a reliable salary is a good way to do that. Often a bonus will be incorporated into their yearly income as well as long as they meet certain goals.
External recruiters often work for agencies or firms. For every candidate placed, the firm earns a commission — usually a percentage of the role’s yearly salary. A portion of that commission goes to the responsible recruiter. As an example, if a recruiter places an executive role with a salary of $75,000, the firm may earn 50 percent of that first year. That comes to $37,500. The recruiter then earns a portion of that commission. At times, they could take home up to 50 percent, or $18,750. In some cases, firms will also pay their recruiters a base salary.
If a recruiter specializes in a specific industry, they may come with a higher price tag. A recruiter with extensive experience recruiting in the technology industry knows the applicant pool better than one who’s worked in multiple industries. That gives them an edge when an organization needs to fill a role quickly.
Typically these types of industry-specific recruiters work independently or with an external firm. An organization may choose to hire a recruiter with this specialty but they’d need an entire team to represent their full organization.
As a recruiter in high demand for an industry with higher salaries, they can earn more money. A firm could benefit from having recruiters with this edge so they may offer more money or better benefits to secure them. Perhaps they’ll offer a higher portion of the commission earned. Additionally, they may get first pick when it comes to roles with larger salaries. That way they can earn more even if the percent of commission isn’t as high.
Goals in the Recruitment Process
For both internal and external recruiters, it’s wise to set quotas or goals for recruitment. Recruiters will need to reach these goals in order to earn a bonus or hold onto their commission.
Internal recruiters may be required to place a certain number of candidates in the company to earn their bonus. There may be an additional condition that candidates remain in the role for up to three months to get the full amount.
As for external recruiters, the firm or the company contracting them may have a similar time-related condition. For instance, the recruiter could earn the commission upon placement but if the candidate leaves before a certain threshold, they lose the commission. That’s called a chargeback.
However you structure commissions for recruiters, we can help you automate the whole process. Contact us for more information or schedule a free demo and we’ll walk you through the whole process. We hope to hear from you soon!