The traditional staffing agency sales rep compensation plan has typically been directly linkedto influencing the hiring manager through a direct professional relationship. In turn, for this value-add the sales rep commission is earned based on a high-touch meaningful partnership based on direct communication with hiring managers.
However, the proliferation of Managed Services Providers and Vendor Management Solutions (MSP & VMS) has eliminated the staffing firm’s ability for direct communication. Removal of all contact with hiring managers is intended to provide an equal and level playing field for each supplier in a program. In the end, these programs drive greater competition among staffing suppliers and also typically result in dollar margin erosion for the staffing firms when they make a placement.
Justification for participating in an MSP / VMS program has to make sense from a profitability and return-on-investment (ROI) standpoint for the staffing firm. The staffing firm needs to understand what processes and players normally have a role where a sales rep can have direct communication with the hiring manager and when they do not add any value. Usually, after the Master Services Agreement (MSA) has been signed the selling is over and it now becomes an issue of recruiting and delivery. Essentially, the sales reps involvement with the customer is no longer needed when it comes to the day-to-day tactical ability to influence a hiring managers decision of their firms candidate submittals.
If the sales rep is not involved on a day-to-day basis tactically supporting the customer’s needs the staffing firm must implement new procedures that that will remove their involvement and not pay a commission to them for each placement. I know that this sounds like complete madness, but in order to make these programs profitable removing layers that are redundant or not necessary is essential.
The most ideal model to replacing the superfluous expense in paying a sales rep commission is to train the recruiters on how to prepare their candidates resumes for submission in the VMS tool and delegate all communication with the Vendor Management Office (VMO) to them. Who would know more about the candidates they qualified and recruited than the recruiter? The next best solution is to train a highly competent administrative assistant who is personable, has a friendly voice, and possesses a customer service attitude to assume the administrative and communication required in servicing these customers.
So, the big question now is why would I do this as the staffing firm owner?
- Offsets the reduced margins
- Frees up the sales rep’s time to sell your staffing services to new customers
- Streamlines existing internal processes creating greater efficiencies and eliminates outdated inefficient workflows
The need to adapt to how corporate America procures contingent contract labor from staffing agencies is greater than it has ever been. This ongoing need to maintain an efficient, streamlined, optimized and lean organization in the staffing industry reflects what our customers expect from their service providers. Paying commissions to sales reps for their real performance and contribution forces them to sell.
If you are incenting sales reps that sit on and service any program as described at the same commission rate as a customer that encourages and promotes a high touch direct relationship you are paying them free money.
All compensation, bonus, and commission plans that are not tied to sales activities that are crucial to driving near and long term scalable, profitable growth only incentivize the wrong behaviors.
If you want to learn more about best practices for staffing compensation please contact us at (904)-RECRUIT (732-7848), or email eyeonrecruiting@recruitingfactors.com.
