Salaries in the third-party recruiting industry didn’t rise much in 2007, but stock options and equity ownership played a bigger part in overall compensation. Those are two of the findings in a research report from staffing-software maker Bullhorn.
In a field where commissions and bonuses make up a large part of a recruiter’s pay, it appears that some firms and agencies are turning to other, non-traditional forms of compensation. The move isn’t widespread yet, but it mirrors what’s happening in other industries.
“Bonuses and commissions are very pervasive within the industry,” says Joe Cordo, Bullhorn’s VP of marketing. “But if you look at other industries with a large number of professionals, the trend across the U.S. economy is toward variable-based compensation.”
Twenty-six percent of the 346 U.S. professionals responding to a Bullhorn survey last fall said their firms offer stock options or equity in addition to base salary. More than half (56.5 percent) said they receive an annual bonus.
It’s not surprising that some companies are spreading the wealth, Cordo says, because staffing and recruiting is doing well. “After the last recession, employment started growing again and a lot of veteran staffing professionals moved out on their own. They want to parlay what they’ve built into an exit strategy.” The report indicates that if equity is going to be offered, it is more likely at a midsize firm of 50 employees or less.
For some employees, variable compensation can compensate for smaller salary increases. Salaries in 2007 rose less than 5 percent from 2006 in most job categories, with the largest jump in the $100,000 to $149,000 bracket. Those making less than $75,000 comprised the biggest group (34 percent) of survey-takers and were more likely to get smaller increases.
“The overall trend seems to be flat over the past two years, partially a reflection of the economy,” Cordo says. He adds that 2006 was a “very good year” for the staffing industry while 2007 was “OK, not great,” starting with a slow first quarter.
Bonus expectations were guardedly optimistic, but in some cases appeared to be below those of a year ago. Thirty percent of those who receive an annual bonus said they would get less than $10,000 (down from 34 percent in 2006) and a third expected $10,000 to $29,000. The number saying they would get a bonus of more than $100,000 dropped to 10 percent from 11 percent from the previous survey.
Bonus amounts hinged most on company financial performance, the survey said. The next most-cited factor (by 37 percent) was the number of placements. Other measurements such as time to fill or placement ratios figured in less than 5 percent of the responses.
More than half were offered matching 401(k) plans (51 percent), and only 3 percent of companies offered it based on performance. Just 13 percent were offered pension plans. Twenty percent were offered profit sharing. A third of were offered tuition reimbursement.
The survey was based on responses from employees of temporary and permanent staffing agencies and contingency and retained search firms. Most worked at companies of less than 60 employees.