Staffing Agency Sales Commissions Plans: Are Your Reps Earning It?
Sales Commission Plans
Sales commission plans are a cornerstone of how staffing agency sales reps are incentivized to build relationships, drive revenue, and influence hiring decisions. Traditionally, these plans have been tied to sales reps forming high-touch, professional partnerships with hiring managers.
However, the rise of Managed Services Providers (MSPs) and Vendor Management Solutions (VMSs) has shifted this dynamic. These systems remove the ability for staffing firm sales reps to have direct communication with hiring managers, leveling the playing field for suppliers while driving down margins for staffing firms. This shift raises an important question: Are your sales commission plans still aligned with the value your sales reps bring to the table?
The Problem with Sales Reps in MSP/VMS Models
When staffing firms participate in MSP or VMS programs, they must carefully evaluate their return on investment (ROI). These programs are designed to streamline corporate procurement processes, but they also significantly reduce a sales rep’s role in influencing hiring decisions.
Once the Master Services Agreement (MSA) is signed, the sales process is essentially over. At this point, recruiting and delivery take center stage, and sales reps no longer add tactical value to the process.
If your sales commission plans continue to reward sales reps for placements they have no role in influencing, your staffing firm could face:
- Profit Erosion: Reduced margins in MSP/VMS programs make unnecessary commissions a costly inefficiency.
- Misallocated Resources: Sales reps may spend time servicing clients instead of prospecting for new business.
- Inefficient Workflows: Paying commissions for nonessential involvement creates inefficiencies that slow your firm’s ability to adapt.
To remain profitable, staffing agencies need to rethink how commissions are tied to actual value creation.
How to Optimize Your Sales Commission Plans
Staffing firms must adapt their sales commission plans to reflect the reality of MSP/VMS environments. By eliminating unnecessary expenses and streamlining internal workflows, agencies can maximize ROI.
Here’s how:
Train Recruiters to Manage Submissions
Recruiters are the experts on the candidates they source. Train them to prepare resumes for VMS submissions and handle communication with the Vendor Management Office (VMO). This reduces the need for sales rep involvement and streamlines the process.Delegate Administrative Tasks
Assign a skilled administrative assistant to handle customer service tasks, such as submitting resumes or following up with the VMO. This approach saves money while maintaining a high level of service.Free Up Sales Reps to Focus on New Business
Adjust your sales commission plans so sales reps are incentivized to acquire new clients. This ensures they remain focused on high-value activities that drive long-term growth.
Why Staffing Firms Must Adapt
Corporate America’s reliance on MSP/VMS programs has fundamentally changed the way staffing firms must operate. To compete effectively, agencies must optimize their workflows and focus on lean, efficient operations.
Here are three key benefits of revising your sales commission plans:
- Offset Reduced Margins: Lower MSP/VMS margins demand cost-saving measures to preserve profitability.
- Boost Sales Efforts: Reallocating sales reps’ time to business development ensures a steady pipeline of new clients.
- Improve Efficiency: Streamlined processes allow your agency to adapt quickly to evolving client expectations.
The Cost of Paying "Free Money"
Paying commissions for tasks that don’t add value is equivalent to handing out free money. Compensation plans should always reward activities that directly contribute to growth and profitability.
Outdated sales commission plans can incentivize the wrong behaviors, such as sales reps staying focused on servicing existing accounts rather than securing new opportunities. Revising these plans ensures your team remains aligned with the long-term goals of your agency.
Final Thoughts: Incentivize What Matters
The staffing industry is constantly evolving, and agencies that fail to adapt will struggle to compete. Revising your sales commission plans to reflect true value creation is essential for profitability, growth, and maintaining a competitive edge.
Are your sales reps earning their commissions, or are you paying them free money? The answer lies in creating compensation plans that incentivize the behaviors that matter most.
If you want to learn more about best practices for staffing compensation, contact Recruiting Factors today at (904)-RECRUIT (732-7848) or email us at eyeonrecruiting@recruitingfactors.com.
Learn More
