Pay rises are great aren’t they? A flasher car, a bigger house, nicer wine, hotter partner, stress, redundancy, unemployment, the inability to change jobs. They really are fantastic. And the great thing about a pay rise is that you never go backwards. Each year, and every time you move job or get promoted, you get more. And this is endless. The only thing stopping you reaching a Bezos/Musk level of wealth is that you’ll probably one day die. If it wasn’t for this inconvenience, there is no logical reason as to why you don’t deserve more money each year.
I’m being a silly-billy of course. Pay is an interesting topic here at Rice & Co currently. Firstly, we’ve just completed annual reviews, and unfortunately, I did not get a pay rise. I know, I know; the constant toil. Waking up, bleary-eyed at 9am each morning. Slumping, exhausted, onto my sofa at 3pm four times a week. Writing 700 words of nonsense every 7 days. You’d think I’d get something. Alas, here we work under a different system of remuneration. In essence, when we’re making less, we try not to pay more. It’s a revolutionary idea and seems to be at odds with most recruitment companies.
Getting paid too much as an agency recruiter has been touched on before. However, as the market slowly gathers momentum, we are seeing these overpaid chickens coming home to roost. For the last two years, being overpaid has made you a redundancy risk. However, if you have been wily enough to retain your job whilst your billings have dipped, you have been better off than your colleagues on lower basic salaries. When you’re not earning commission, basic is king. The lucky recruiters amongst us have managed to retain a high basic salary, and bill just enough to stay below the parapet when the redundancy MG08 Machine Guns fire into life. Those paid that little bit more get gunned down by the Kaiser. Those on the lower basic work just as hard but get trench foot and eat soil for dinner.
Now however, it is those underpaid recruiters who find themselves in a better position. Firstly, they have lower thresholds. This is both a financial and mental gain. They are now earning commission whilst their higher paid colleagues are still not there. In terms of pressure, all managerial eyes are on Billy-Big-Bollocks in the corner. Lower paid recruiters are safe. They can sleep at night as the $120k recruiters toss, turn, and message people on LinkedIn. And, if you don’t sleep at night and drink lots and lots of wine, you get high blood pressure. Trust me on this. As the market grows, lower paid recruiters will make just as much money, with a fraction of the pressure. They can also change jobs should the mood take them.
One of the biggest challenges we face as a Rec-to-Rec is that currently, good recruiters don’t bill good enough when compared to their basic salaries. It is as if the connection between what you bill and what you get paid has been severed. And if not severed, then at least severely distorted. If we go back 15 years, it was commonplace for a $60k recruiter to bill $400k. Hell, there were $60k recruiters getting close to a million. Back “when I were a lad“, Recruitment was a true sales job, with the majority of our earnings coming from commission. I knew a recruiter who bought a brand new TVR sports car on one quarter’s commission cheque. I doubt he was on £20k a year basic. In the post covid years, we’ve really lost our way in terms of this balance. We now speak with recruiters on $100k who didn’t bill $300k last year. The multiples are all wrong, and hiring managers (who probably started their career “when I were a lad“) know this. And hence we have ourselves a Mexican standoff. Recruitment Managers who want to hire good Consultants, but not at the salary level good consultants are currently at. The hiring manager won’t pay $100k, and the candidate won’t work for less.
There are a tiny number of wise (and brave) recruiters out there however. I remember one guy we placed who would preface any conversation about salary with “I’m on $120k, but frankly, that’s ridiculous“. This candidate has secured an awesome job. In the most part however, we see recruiters who’s basic is a third of what they billed wondering why no one is hiring them. Once established, we should all be billing four to five times our basic salary in slow markets, and six and above when things are booming. If you’re not doing that, then your life could get tough in a number of ways.
As the market shifts, and commission moves from the realms of fantasy to reality, I think that good recruiters need to back themselves and rethink their basic salary expectations. I also feel that hiring managers have to come to the party also. Telling you partner you’ve changed jobs and taken a $15k pay cut tends to go down like cat vomit. Smart businesses are guaranteeing the first quarter’s commission, or removing the threshold for three months, or making some kind of parachute payment to get that quality-yet-overpaid recruiter across the line. Remember, it’s often not the recruiters fault that their basic doesn’t match last year’s billings. They are victims also.
Anyway, talking of paying too much for recruitment Consultants, I’m actually down in Wellington on Tuesday and Wednesday next week. I’ve got a couple of slots in my diary if anyone wants to have a yarn over a beer or one of your fantastic Supreme coffees? Doesn’t matter if we’ve met before, just slide into my DMs.
^SW
