Should Corporate Recruiters be Paid Like Agency Recruiters?

“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don’t have to manage them.”– Jack Welch

With the economy slowly recovering, companies are starting to hire again. Top employees, who were hesitant to switch jobs during the height of the recession, are now starting to jump ship for greener pastures and creating vacancies. This means corporate recruiting teams, cut down to the bone during hiring freezes, are now being built back up with top recruiting and sourcing specialists. And organizations competing for top recruitment talent are reevaluating compensation packages for corporate recruiters .

With the lucrative commission-based earnings available to agency recruiters, many in-house recruiters performing nearly identical functions often feel cheated with a straight salary. But should in-house recruiters responsible for a full recruiting life cycle, from pipelining, branding, sourcing, recruiting and hiring to onboarding and retention, be compensated with commission based on volume? How would commission-based compensation affect motivation, performance, quality of hires and retention?

Straight Salary

According to Indeed.com, the average salary of a corporate executive recruiter is $72,000. And the average salary of an agency recruiter is $93,000. There’s quite a disparity. But corporate recruiters benefit from employment stability, a dependable paycheck and a less pressure-packed environment. The workdays of agency recruiters are filled with high stress, and many high and lows. But the opportunities for lucrative performance-based compensation are limitless. Many organizations compensate internal recruiters with a straight salary. Since most in-house recruiting teams are lumped in with generalist HR functions, a pay-for-performance type of compensation structure is usually not implemented. Moreover, as corporate recruiters are tasked with a big picture approach to recruiting that includes a focus on quality of hires and retention, many organizations fear pay-for-performance would reward quantity over quality.

Salary Plus Incentive Bonuses

Although corporate recruiters are responsible for generalist HR duties in addition to their recruiting tasks, let’s face it, internal recruiters are expected to be just as driven as third-party recruiters. In fact, with multiple organizations competing for the same narrow pool of top talent, corporate recruiters must excel in sales, marketing and straight-out headhunting. Accordingly, a number of organizations are now rewarding top performers with a performance-based bonus structure paid out monthly or quarterly, in addition to year-end bonuses for company and team performance. The type of incentive bonuses vary with the type of positions being filled, the volume of positions and how soon the positions need to be filled. But the devil is in the details. Organizations need to develop the right performance metrics and benchmarking that would result in quality long-term hires. Standard agency recruiter metrics, such as sendouts per hire and number of hires should be balanced against quality-based metrics, including submission to fill ratio, retention and additional qualitative measures specific to each organization.

Salary Plus Commission

Some corporate recruiters are compensated with a competitive salary plus performance-based commission. The commission can be levied per head or once recruiters reach a monthly hiring quota. This type of fee per hire structure, based on volume and time-to-fill metrics, may work for large companies that frequently need to fill a large number of entry-level positions in a short amount of time. However, basing a significant percentage of a corporate recruiter’s compensation on a pay-at-risk structure may backfire later with high turnover rates. A fee per head model may motivate internal recruiters to aggressively deal in quantity, with less focus on the quality of hires.

Ultimately, recognizing dynamic top-performing corporate recruiters with a balanced incentive-based bonus or commission structure that motivates recruiters to add quality hires, adds positively to the organization’s bottom line, resulting in less vacancies, high retention rates and valuable human capital. Should internal recruiters be compensated just like agency recruiters? No. Corporate recruiters must live with their placements, unlike third-party recruiters. However, the time has come for corporate recruiters to be rewarded with some type of incentive-based compensation in recognition of their increasingly valuable roles as headhunters.