How recruitment agencies use commission to reward successful placements and drive consultant performance.
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The recruitment industry is fundamentally commission-based. Over 85% of all recruitment consultants work with a variable compensation model where commission typically represents 30-70% of total earnings. The staffing industry generates over $150 billion in revenue annually in the US alone.
This page explains how commission structures work in recruitment, which models are used, and how effective commission administration can attract and retain top consultants.
Recruitment agencies typically charge a fee of 15-30% of the new hire's annual salary. Placing a candidate with a $100,000 salary thus generates $15,000-30,000 in revenue.
The consultant receives a share of this fee as commission. The rate varies:
| Experience Level | Typical Commission Share |
|---|---|
| Junior (0-2 years) | 10-20% |
| Mid-level (2-5 years) | 20-35% |
| Senior (5+ years) | 30-50% |
| Partner/Director | 40-60% |
The industry uses several different models:
No base salary. The consultant lives entirely on commission, typically 40-60% of the fee. This model attracts experienced consultants with established networks and high risk tolerance. Top performers can earn over $300,000 annually.
Fixed salary of $40,000-60,000 combined with lower commission at 15-30%. Typical OTE of $80,000-150,000. This model is most common and provides financial stability combined with incentive.
Tiered commission where the rate increases with revenue. Example: 20% on the first $100,000, 30% on $100,000-200,000, and 40% above $200,000. This rewards high activity and consistency.
Some agencies work with team models where commission is split between research, sourcing, and sales. Typical distribution: 20% to researcher, 30% to sourcer, 50% to the closer.
Commission rates vary by specialty:
Executive search: Higher fees (25-35% of salary) and longer processes. Consultant commission is often lower percentage-wise but higher in absolute dollars. Typically 15-25% of the fee.
IT and tech: High demand drives fees up. Many agencies operate with accelerators on tech placements to prioritize this segment.
Temp and contract: Lower one-time fee but ongoing margin on bill rate. Commission is often calculated as percentage of gross profit over the contract term.
RPO (Recruitment Process Outsourcing): Fixed monthly fee combined with bonus per placement. Lower commission share but more predictable earnings.
The recruitment industry has several complex elements:
Studies show that recruitment agencies spend 8-12 hours monthly on manual commission calculation. Errors and disputes over splits are a frequent source of frustration.
Beyond base commission, many agencies use:
Quarterly targets: Bonus for achieving revenue goals. Typically 5-15% extra on all commission in the quarter at 100%+ attainment.
Billings milestones: One-time bonuses at annual milestones. Example: $5,000 bonus at $300,000 in billings, $10,000 at $500,000.
Team bonus: If the entire team hits target, everyone gets an extra bonus. This promotes collaboration and knowledge sharing.
Varies significantly. Juniors typically start at $50,000-70,000 in total compensation. Experienced consultants with good track records earn $100,000-200,000. Top performers in executive search can exceed $300,000.
Practices vary. Some agencies pay at invoicing, others at collection. Most have monthly payouts with possible holdback for guarantee periods.
Commission is divided by agency rules. Typically whoever wins the client gets 50-60%, and whoever finds the candidate gets 40-50%. Complex splits with multiple contributors can be negotiated.
It depends on the contract. Most agencies have clawback rules where commission is returned partially or fully if the candidate leaves within the guarantee period. Typically clawback decreases monthly.