Incentive rules start fights: in recruitment firms

Two desk heads in a mid-sized agency both claimed the same placement. One had worked the client for three years and taken the mandate. The other had sourced the candidate from a CV database and run three rounds of interviews. The invoice went out on the first of the month. By the third, the recruiter who sourced had gone to a rival. The incentive sheet had one name on it, and neither person could explain why. The fight was not about greed. The rule did not say.

• Candidate parking. A recruiter keeps a good profile off the shared tracker to claim it later.
• Client hoarding. An account manager refuses to share a requisition with another desk, even when the first desk has no fit.
• Late closing. Offers are held back to land in next month's slab.
• Quiet joiner chasing. After the offer is accepted, nobody owns the gap before joining, and the candidate vanishes on day one.
• Credit lobbying. Recruiters come to the manager at month end to argue their case, and the loudest wins.

Recruitment has several stages. Business development wins the mandate. A researcher or sourcer finds profiles. A recruiter screens and presents. A coordinator schedules rounds. An account manager handles the offer and the joining. Each does real work. Most incentive plans pay one person, usually the one named on the invoice. The rest watch from the side. The rule is simple, so it fails the people who do the unseen stages.

Money timing adds trouble. Fees are billed on joining and collected weeks later. Many firms offer a replacement period, during which a candidate who leaves is replaced or part of the fee returned. An incentive paid at invoice date can be paid on a fee that later shrinks. Staff feel cheated when it is clawed back, and owners feel cheated when it is not.

The cost is not only the quarrel. Good recruiters leave for firms with clearer slabs. Candidates are mishandled because no one owns the joining gap. Clients are annoyed when two desks call them for the same role. Management time goes to settling credit rather than to new mandates. Look at your own firm: how many manager hours went to credit disputes last quarter?

1. 1

   List the stages

   Write the stages from mandate to joining plus the replacement period. Name the role that owns each one.

2. 2

   Split credit by stage

   Agree a split with the desks. For example, the person who holds the client, the one who sources, the one who closes and the one who handles joining each get a stated share. Use shares, not guesses at month end.

3. 3

   Fix the trigger

   Decide when incentive is earned: on joining, on invoice or on collection. Say what happens if the candidate leaves in the replacement period.

4. 4

   Write the shared tracker rule

   A profile is credited to its first logged sourcer for a stated number of days. After that, anyone may present it, with the split rule applied.

5. 5

   Set a dispute slot

   Hold a thirty-minute meeting on the first Monday of the month. Disputes outside it are not heard.

6. 6

   Test on past closures

   Run last quarter's placements through the new rules and see who gains or loses. Adjust before announcing.

In retained search, fees come in stages: a retainer on mandate, a second part on shortlist, a final part on joining. Credit should follow those stages, and the researcher's work deserves a visible share. In overseas recruitment, the chain is longer: employer demand, trade tests, document processing, visa timeline and deployment. Credit may split between the sourcing agent, the trade-test coordinator and the documentation desk. See the permanent recruitment agencies page for ground on a plain contingent firm.

• Mandate. An exclusive or shared brief from a client. Say who may open and close one.
• Requisition and JD. The client's request and job description. The desk that logs it first owns the notes.
• Boolean search and database seat. The sourcer's tools, paid by the firm. Say who holds the login and who pays for lost seats.
• CTC, notice buyout and offer drop. Numbers recruiters negotiate. Define who may agree a buyout with the client and who answers when an offer drops.
• Shortlist, retainer and success fee. The three stages of retained search, each with its own credit.
• Replacement period. The window in which an early exit means a substitute or a partial return of fee.
• Bench and walk-in. Candidates already on file, and those who arrive unsolicited. Say whether they carry sourcing credit.

Keep a decent fixed pay so that recruiters do not live and die by one placement. Add a modest team element, such as a share of the desk's billing, so the sourcer is not hurt by the closer's luck. Give account managers an element tied to client retention and repeat mandates. Performance management design helps to line these up. Avoid sudden changes to slabs in the middle of a quarter.

• Print the plan and the credit table on one sheet.
• Review the tracker weekly for parked profiles.
• Publish the incentive calculation for each closure to those who share it.
• Review the plan yearly, with desk heads in the room.
• Keep the sector overview on the recruitment firms hub in the desk handbook.