This blog affords me the opportunity to share my insights, experiences and lessons having worked in HR and recruiting. The value I really get is through helping others and serving as a platform for practitioner discussion often allowing them a voice anonymously. Just last week was one of those times as I received a reader question relating to compensation and common bonus structures for corporate recruiters. Here’s the gist:
Hi Jessica. I’m a recruiting manager for a large Fortune 200 company. I’ve worked at my company for a while and moved up the ranks quite nicely. I wondered if you had any data on average recruiter and recruiting manager bonus as a percentage of their of base. Is there an industry standard in how corporate recruiters bonus and are paid?
While I’ve oversaw bonuses and been responsible for explaining bonus packages to employees, I’ve never received of a bonus as a recruiter only as HR, and that’s a shame. I’m an extremely competitive person and have always been motivated through a little healthy competition, compensation and most importantly winning. Enough though about me.
Going Beyond Base Salary Compensation and Variable Pay
When it comes to compensation for recruiters and recruiting managers that goes beyond a base salary, there are typically three areas that fluctuate based on your performance, time in position and the success of the company. Compensation that fluctuates is called variable compensation because it changes based on different circumstances and goals set by your employer with regard to the specific performance of that employee.
- Bonus. Bonuses are payments you make to employees that are not regular but generally bi-annually, annually or quarterly. This form of compensation are based on if department, company or combination of goals which are met as outlined by your organization, department or company. Bonuses are given to company management or other employees who are not directly responsible for selling the company’s products or services.
- Commission. A commission is a payment arrangement where employees receive a percentage of sales they bring to your company. Whether you pay an employee a commission in addition to a salary or just a straight commission depends on the nature and demands of the job. This is a common practice among third party recruiters but not corporate recruiters generally. For the purposes described here, we are assuming that recruiters and recruiting managers receive a base pay/salary and other incentives as a corporate recruiter and not third party.
- Profit Sharing. Profit sharing refers to various incentive plans introduced by businesses that provide direct or indirect payments to employees that depend on company’s profitability in addition to employees’ regular salary and bonuses. In publicly traded companies these plans typically amount to allocation of shares to employees.
As you can see in the information provided below courtesy of PayScale as part of their 2013 Compensation Best Practices Report (download here), the averages for each of the three common types of variable compensation for recruiters and recruiting managers vary based on things like experience, location and company size. For the purposes of our example, I chosen to compare compensation differences between recruiters and recruiting managers companies both large, small and in between.
Corporate Recruiting vs. Third Party Recruiters
Keep in mind the larger the company, the more likely the compensation is increased. Pay bands are typically larger for companies with over 20,000 employees allowing for employees to be compensated for experience, performance and industry. It’s no surprise that the average bonus for a recruiter and recruiting manager depends widely on experience on geography as one would expect. Experienced recruiters based on the national average bonus as much as $10,500 per year versus a recruiting manager bonus of $20,500. A bonus differs from commission as I mentioned because corporate recruiters aren’t typically paid this way. The pay band variables for compensation in recruiting depend on things like city, industry and years experience. Commission is a third party compensation benefit which adds to the confusion in the industry. You can compare the differences between recruiter and recruiting manager by seeing the national salary data for recruiting manager, pictured below.
Bonus and profit sharing averages also vary based on position. This is common when discussing compensation as companies often have their own corporate language to describe positions as well as the company culture which is why using an algorithm can be a powerful way to cut through the noise when analyzing and comparing best practices between positions, industries or companies.
For the HR professionals and compensation experts out there, how do you pay your corporate recruiters? Do you offer bonuses, commission, profit sharing, all of the mentioned or none at all? Weigh in as I know this is a common question posed for recruiters and others in our industry.
Thanks to PayScale for access to their salary information. Download their 2013 Compensation Best Practices Report (click here).