Talent Acquisition

Is the Bonus Culture Handicapping the Recruitment Industry?

I’ve worked in the recruitment industry a number of years and I’ve seen a whole range of different remuneration models and structures used by agencies to reward and incentivise their staff. But in the main they usually consisted of a low to medium base salary dependent upon experience and seniority and then a monthly, quarterly and yearly commission scheme on top. The variance tended to be how and when the commission was received.

During this time in the industry I’ve also seen or heard my fair share of bad practice performed by individual recruiters in pursuit of their commission. Some first hand from within the companies I’ve worked in and some second-hand from clients and peers.

This bad practice has included consultants raising and then getting paid commission for work not performed or not agreed with the client, fudging of costing proposals and then whamming the client with a hidden cost later explained by reference to the pressurising of clients to accept shortlists so a stage payment can be raised when even interviews are unlikely to produce a result.

Luckily, taken as a whole, such incidents within the industry are rare. But there still pervades an often cited feeling from client organisations that recruiters are sometimes just too damn pushy and seem to be more focussed on achieving a sale and not a hire. And that is the difference between a so-so recruiter and a really good recruiter: the really good ones (and this translates into long term career success in the industry) know to focus on making a good sustainable hire and not a quick and easy sale.

Clearly all the above malpractice can in theory be easily countered by the management within recruitment companies implementing the correct checks and balances on what individual recruiters are up to.

But I wonder if there might be a fundamental flaw in the industry basing its reward structures so heavily on individual bonuses. Like the much criticised bankers bonuses which seemed to incentivise excessive risk taking and sometimes fraud perhaps the reason third-party agents seem to get up so many people’s noses is because the culture they operate in is created by being driven to achieve month-end targets rewarded by short-term bonus?

The recruitment industry often bemoans the fact that they don’t achieve the same level of respect and status that other professional services partners such as accountants, solicitors, management consultants achieve. I sometimes think this is why we choose to name ourselves as recruitment “consultants” in a bid to align ourselves with the other guys we aspire to be peers with. This line of thought also leads me to wonder if this is why some many agencies use such archaic double-barrel surnames as company names so as to appear like an old-firm of solicitors and therefore achieve some sort of kudos and portmanteau of respectability. But that might be for another blog post another time.

However, the other professional services partners used by our clients don’t pay their staff big monthly bonuses as a default industry setting do they? Of course some salary incentivisation goes on but it tends to be done on an annual basis and often based on a mixed economy of individual performance and company profit. Why should recruitment be different? If it was different and an agency decided to pay a little bit more on the base salaries, a little bit less on the individual commission and base reward on medium to long term profit would that create a more professional and consultative industry?

For the record I’m not paid on an individual commission scheme and don’t have an individual sales target and I find it quite a release to be able to work with clients at a pace that suits them at a canter to meet my looming quarterly target.

Would this method also work for you? Do you think the industry is focussed too much on bonus culture and sales?

By Robert Wright

Robert Wright is a Man of Kent now living in York with two kids and with another in the oven. He lives in a bombsite and is working the NHS Leadership Academy to support Trusts recruiting at board level. You can find him on Linkedin, Twitter - @robmwright or in the kitchen at parties.