There’s a barrier that is keeping corporate talent acquisition from reaching its highest levels of productivity. That barrier is incentive compensation, and the reason it’s a barrier is because no organization has figured out how to solve it. The main reason for this is there isn’t a one-size-fits-all solution.
The main problem is that most corporate TA leaders who attempt incentive compensation plans for recruiters want to make it super easy, super black and white. That’s really hard to do in most organizations because the workload of each recruiter isn’t similar enough.
Why does that matter?
Here’s how a normal recruiter incentive compensation plan works on the agency side:
- Recruiter gets the opening.
- Recruiter fills the opening.
- Recruiter gets a percentage of the total fee for filling the opening.
Easy. Black and white. On the agency side, the workload level per opening is fairly commensurate with the fee charged. More difficult opening, higher fee. Easier opening, less of a fee.
On the corporate side recruiting isn’t charging fees to departments for each opening (although that actually wouldn’t be a bad idea to show value!). Each opening filled is virtually valued the same amount, because each one has to get filled by your TA team. This makes incentive compensation very difficult because while each position has to get filled the workload to fill each one is very different.
So, you can’t just pay a straight ‘hire’ bonus for each position. You have some recruiters who fill many low-level jobs quickly, and you have recruiters who work your hard to fill openings who make many less hires, but probably work harder overall. This is the main incentive compensation issue in corporate talent acquisition.
So, what do you do?
Jim D’Amico, Head of Global Talent at Celanese, originally came up with a system to segment his team’s recruiting effort, while working in the healthcare industry. He had recruiters filling cafeteria worker positions, RNs, IT roles, etc. He and his team created three different buckets of positions (he actually called them swim lanes) based on effort. Easy to fill (high volume, easy to find candidates), mid-level fill (takes some work but there are usually candidates who apply, longer interview process, etc.), and hard to fill (hardly any candidates apply, high sourcing needed, much longer time to fill).
This is the first step because most organizations’ TA teams fail at this point. You have some recruiters on easy street, and some recruiters killing themselves. Jim knew to be successful he had to even out the workload and try to make it as even as possible. By doing this, you also put yourself in a position to start more clearly measuring performance across your recruiting team.
Given these three levels, you could then easily come up with a bonus incentive amount based on the level of each job. Maybe easy to fill jobs get a $25 bonus per hire, mid-level is $250, and hard to fill would get $1,000 each. These are just arbitrary numbers to show how the spread might look based on effort and workload level to fill each role. In the end, you want the incentive amount to match the workload and effort.
The easy to fill recruiter might have to fill ten jobs per week to get their incentive bonus, while your hard to fill recruiters might only fill one, but each will get roughly the same bonus level based on workload. You can see how this kind of corporate incentive compensation for recruiters is very adaptable to each individual organization.
The one thing to remember is that you also need to come up with your total compensation equation being what part of the total compensation do you want in salary, and which part will be incentive/bonus. I think the sweet spot on the corporate side should be 2/3’s salary, 1/3 compensation. This means you’ll be rolling out a new comp plan where recruiters’ salaries will be going down, but they’ll actually have an opportunity to make more if they fill more jobs.
If you truly want a high performing corporate talent acquisition department, you need to incentivize your team to reach its highest productivity levels. Most corporate TA leaders won’t do this, they’re afraid they’ll lose recruiters, and they’re right, you will. But, that might not be a bad thing if you truly want a high performing organization.
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