We’re not going to beat around the bush…recruiting commissions are bogus.
And we all know it.
It’s no secret that recruiters have a bad reputation. Even worse, a growing portion of professionals in the business world seem to be convinced that the entire industry is useless.
And yet, most people never stop to ask why recruiting doesn’t work for so many companies. If you ask me, commissions have broken our industry.
Good recruiters have a very valuable skill set that leaves them uniquely positioned to help companies hire the right people. Unfortunately, commissions screw everything up.
Why recruiting Commissions Are Such BS
The problem with commissions is that they put a direct conflict of interest between recruiters and their clients.
The organization wants to make the right hires. They want a pipeline of interested, qualified, and quality candidates. And they want as much information as they can get on these candidates.
But when a recruiter is paid by commission…all they want to do is make hires. Lots of hires. More often than not, it’s the only way for them to pay bills, because their base salary just isn’t enough. And there’s always the opportunity for more money if they make more hires.
That’s the problem in a nutshell, but let me expand on it.
recruiting Commissions Might Work in a Perfect World, But Not Ours
In a perfect world, recruiters would always find a perfect candidate in a timely manner. With a little elbow grease, making some calls and sending InMails, they’d find purple squirrels left and right.
But we all know this isn’t how the real world works. If you’ve worked in recruiting, you know that sometimes finding the right candidate is a very time-intensive process.
This is especially the case for highly-skilled or highly in-demand roles. For example, we all know there’s a huge skill gap in tech right now. That makes it harder to find great tech talent, and it can take weeks to find the right candidate.
However, the state of the economy has made it difficult to fill unskilled positions as well. With unemployment at a record low, recruiters have to work that much harder to fill every role.
Meanwhile, hiring managers and talent acquisition leaders often have unrealistic expectations for recruiters, demanding they complete large req lists and work themselves to the bone.
recruiting commissions Foster Unethical Behavior
I believe people are inherently good. However, when you put someone in a situation where they’re overworked, stressed, and have a monetary incentive to act against their own client’s interests…well, it’s a recipe for unsavory behavior. The society for Human Resource Management posted a great article on this topic recently.
Put yourself in the recruiter’s shoes. You’ve already worked 45 hours this week, but unfortunately, you’re just not finding the right candidates. None of that changes the fact that you have to pay rent next week.
You’ve got a candidate with some red flags – maybe they lied about something on their resume, or you found out they were fired from their last position.
You don’t want to submit a bad candidate…but how else are you going to put food on the table? So you send along their resume, and you conveniently “forget” to mention these concerns.
Maybe they get hired, maybe they don’t. The point is that these situations often force recruiters to gloss over a candidate’s flaws or submit candidates who don’t fit the client’s needs. Making any hire often takes precedence over ensuring the client makes a good hire.
Obviously, we’re not arguing that every recruiter engages in unethical behavior. However, it’s clear that commissions do reward that behavior.
recruiting commissions can lead to 40,000 Dollar Mistakes
Everyone knows a bad hire harms a company. But did you know that it can cost as much as $40,000? If you move past middle-managers to more senior level employees, that figure is only scratching the surface.
When a mishire is that expensive, businesses simply can’t afford to make mistakes. They need all the information, warts and all, on a candidate. Furthermore, they have to take their time so that they can get all the facts and make a careful decision.
There will always be some uncertainty in the recruiting process. However, in today’s competitive marketplace, it is essential that businesses eliminate commissions to ensure hiring is fully transparent and given due time and consideration.
We simply cannot afford to make expensive hiring mistakes because a recruiter didn’t share their concerns, or submitted a candidate without fully vetting them. Good thing there’s a better way forward…
Hourly Compensation – A Better Way Forward
Instead of using commissions, we strongly encourage recruiting companies to transition to paying recruiters hourly. This changes the whole equation – putting the emphasis on quality over quantity.
If recruiters are being paid at a fair rate, then it removes the pressure to make hires at any cost. They are already making good money, and there’s no incentive to rush through the process. Instead, they can take the time to make sure they feel confident in every candidate they submit to the client.
It’s a better way to compensate recruiters, but it also re-focuses the recruiting process on hiring quality candidates. It’s a win-win situation.
Hire the Right People
In Jim Collins’ classic book Good to Great, he wrote: “The old adage ‘People are you most important asset’ turns out to be wrong. People are not your most important asset. The right people are.”
That’s what hourly-based recruiting model is all about – hiring the right people.
Eliminate commissions and put the emphasis back on quality in recruiting. Trust us – it’s a game changer.