How to Align Your Commission Scheme with Business Strategy

Introduction

A well-structured commission scheme is more than just a way to reward performance—it should be a powerful tool that aligns with and drives your business strategy. Recruitment agencies that fail to align their commission structures with their broader business objectives risk inefficiency, lack of motivation among consultants, and ultimately, missed growth opportunities.

In this guide, we’ll explore how to ensure that your commission plan actively supports your recruitment agency’s strategic goals.

Understanding Your Business Strategy

Before designing or adjusting your commission structure, you must first clarify your agency’s overall business strategy. Key questions to consider include:

• Are you focused on high-volume, lower-margin placements or low-volume, high-value retained searches?
• Do you prioritize new client acquisition, or is repeat business and long-term relationships your focus?
• Are you planning to expand into new markets or specialisms?
• Is your goal to increase consultant retention and engagement?

Your commission scheme should reinforce these goals. For example, if your strategy is to grow market share in a niche industry, you might offer higher incentives for consultants securing new clients within that sector.

Key Components of an Aligned Commission Scheme

1. Role-Specific Incentives

Different roles within a recruitment agency contribute to success in different ways. A one-size-fits-all commission plan can fail to properly reward key contributions.

• New Business Consultants (BDMs) – Should be rewarded primarily for client acquisition and deal generation.
• Delivery Consultants / Resourcers – May require a split or contribution-based model to reward successful candidate placements.
• Account Managers – Might be incentivized on long-term client retention and repeat business rather than just one-off deals.

By segmenting your commission structure based on role, you can ensure that everyone is incentivized to contribute to the agency’s broader objectives.

2. Performance-Based Structures

A strategic commission plan should drive desired behaviors. Consider incorporating:

• Tiered commission structures – Rewarding consultants who exceed targets with progressively higher commission percentages.
• Longer term accelerators – Consistent performance over longer periods such as a quarter, 6 months or full year are typically nirvana in sales roles. Optimised commission structures should align with this and avoid paying too much for a good month, but a bad quarter.
• Quality-based incentives – For example, consultants could be rewarded based on Net Promoter Scores (NPS) from clients and candidates.

3. Balancing Short-Term and Long-Term Goals

Your commission scheme should encourage both immediate performance (e.g., placements made this month) and long-term business stability (e.g., client retention). One way to achieve this is through a hybrid model, where consultants earn:

• Monthly commissions based on billings.
• Quarterly or annual bonuses tied to broader business KPIs such as client retention, deal size, or NPS scores.

Common Mistakes in Aligning Commission with Strategy

• Copying another agency’s model – Your strategy is unique, and your commission scheme should reflect that.
• Setting static commissions – Your structure should evolve with business growth and changing objectives.
• Focusing only on revenue – Consider profitability, client satisfaction, and consultant engagement in your plan.

Final Thoughts

A well-designed commission structure ensures that your incentives align with business strategy, driving both short-term success and long-term growth. Regularly reviewing and adjusting your plan will help you stay competitive in an evolving market.