Category: Recruitment

Some recruiters move to other agencies because they want to, some move because they have to. These two reasons are commonly referred to as pull and push factors.

Sometimes it can be tough to pin down the key motivations behind why you’re thinking about making a move, but it’s crucial to flesh these out so you can make sure that the next agency you join is the right fit for you.

In this article, we explore the 5 common signs that it’s your time to make the move.

You’ve hit a glass ceiling 

A glass ceiling occurs when a recruiter hits a point in their role or agency where they feel that growth or development is stagnant or has stalled. There are a few different reasons why a recruiter might start feeling this way.

They could be part of an agency that doesn’t have the platform, reputation or experience working at a very senior level or on the other end of the scale, a colleague may have the remit to focus on senior roles whilst you’re focussing on junior to middle. They may identify that they would prefer to focus on lower volume but senior roles in the long-term.

They may be part of a team that has grown exceptionally, which is of course a positive, but when the desk grows too big, some recruiters may feel limited to a niche area that they previously covered, whether it’s restricted by the practice itself or the geographical coverage.

Another common one is where a manager has been in their position for a while and that prevents the recruiter from advancing further in the hierarchy.

Often there are no qualms when it comes to the business itself and the recruiter might be happy in their current environment, but they have recognised that change is necessary in order to progress their careers. Sometimes this is one of the hardest decisions to make, but it’s a sign.

An issue with your manager

A recruiter’s relationship with their manager is arguably the most crucial factor influencing happiness and performance at work. A manager can play a huge part in the recruiter’s motivation levels and career development.

The interview process is the point where recruiters meet their managers and assess their suitability as a role model, mentor and leader. Can this person provide you with the knowledge, tools, motivation and direction that you need to be successful?

90 – 120 minutes of interviews with a future boss should give a good indication of this, but unfortunately it’s a limited amount of time considering that this is someone you’ll be working with for the next 2 – 5 years, or even longer. You have to take the plunge. Make that decision and analyse how things are tracking a few months or years down the line.

A good manager will lead from the front, provide direction, training and promote a healthy internal culture within the team. Recruitment can be an emotional business at times, so having a manager with a high EQ is also crucial.

Potential issues that might crop up in the future are a straightforward clash of personalities or style of recruitment, subtle favouritism within the team, a feeling that a manager has been promoted too quickly (a tricky one as everyone has to start somewhere), feeling overlooked or under promoted and lastly a specific incident that has soured the relationship.

Change is inevitable within every agency and, unfortunately, this means that managers will come and go. Recruiters who have a strong relationship with their departing manager sometimes move with them.

The first port of call to any management issues, of course, is to try and resolve the issue with the manager. Transparency and honesty are the pillars of any relationship, and this is no exception in a professional capacity. If you feel like you have exhausted all avenues trying to repair the relationship and it hasn’t worked out, then it’s time to look at either transferring desks or moving to a new agency.

Misalignment in recruitment styles

Similar to the above, hopefully the recruiter will have obtained an accurate and truthful insight into the way that their agency practices recruitment during the interview process. Most of the time recruiters can suss it out, but in a few unfortunate cases, there can be a misalignment.

Examples of misalignment in recruitment style could be a disagreement in the targets and KPIs set, if a manager has a different vision or if business is conducted in a way that is deemed to be morally questionable or unethical.

If the agency doesn’t deliver on their core values or expectations, or if any major changes are made, this may be a sign that it’s time to move on.

Shift in company culture and structure

It goes without saying that recruitment is no easy game, so company culture helps to keep motivation levels high. If there is a shift in company culture, this can drastically affect a recruiters’ drive.

Structural changes that cause a drastic shift in day-to-day operations, such as a change in reporting line or a change in hiring strategy, can count as some of the factors that shift company culture. Another one could be a change in leadership, such as the departure of an MD and the entrance of a new one that brings a new style of recruitment. Sometimes the shift can be gradual and can happen over the period of 2 to 3 years rather than immediately.

On the flip side, a change in the recruiters’ lifestyle or a life event may also create a preference for a different type of culture.

Remuneration

Money talks. It’s rarely the sole reason driving a move, but it’s still an important factor to consider.

A common sign is when there is an adverse change in commission structure or word going around in the market that your commission structure is not as attractive as others. The maturing of a recruiter and the realisation that they can make more money in other agencies may happen after 1 – 2 years in their first recruitment role.

Recognising these signs

There are a number of clues which indicate that it’s time to seek new opportunities, whether it’s for career development reasons or misalignments with your current agency. 

Some of these signs may arise immediately, but some may arise over years of tenure and the agency you once joined is no longer the same.

Whatever sign it is, it’s crucial to identify them when they start happening. You can look at the reasons and determine if the problem can be solved, which obviously saves the hassle of resigning, or if the move is needed to advance your career.

Recognising the signs will help you answer the crucial question around your reasons for leaving your current firm in interviews, as well as helping you to determine if you’re the right fit for the new agency.

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How does a commission scheme work? As a recruiter, are you making enough money with your scheme? As an agency, how competitive is your commission scheme in the market? You’re a recruitment entrepreneur starting a new business, what scheme should you use?

In this complete guide to commission schemes in recruitment, we answer these questions and much more.

Here’s a summary of what we’ll cover:

1. Two common types of commission schemes
   1. Non-discretionary
   2. Discretionary
2. Understanding the components
   1. Qualification period
   2. Threshold
   3. Percentage tiers
   4. Deficit
   5. Payment
   6. Retaining commission
3. What is a competitive return

1. Types of commission schemes

Non-discretionary

A non-discretionary commission scheme is black and white. The components are transparent and laid out before you join. You’ll know exactly what you’ll be earning depending on the revenue you generate for the organisation. Non-discretionary commission schemes are more common than discretionary in the recruitment market.

Discretionary

A discretionary commission scheme is when your commission is paid at the company’s discretion. Whether you’ll get paid or not depends on a number of factors; a majority of these factors are related to your own performance and perceived contribution.

More often than not, you will be paid if you perform to or above agreed targets. However, if the company as a whole is not performing, other consultants’ performances may be taken into account and this may reduce the amount of commission you receive.

A discretionary commission scheme may also be built around your perceived contribution towards a particular placement. For example, if you were involved in the process flow management and closing of a placement, but the successful candidate was identified by one of your colleagues, then the proportion of commission allocated to you could be decided by your manager, at their discretion. In this case, commission would probably be distributed between yourself and your colleague involved in the identification of the candidate. 

Discretionary schemes are less common in the recruitment market.

2. Understanding the components and how competitive they are

Qualification period

The qualification period is the time in which a recruiter’s commission is assessed.

The most common qualification period is a quarter, although some companies have a monthly or annual qualification period.

A qualification period is not related to the period that you’re paid, which is covered later in this article.

Threshold

The threshold is the amount of revenue a recruiter must generate before commission becomes payable.

A threshold is commonly calculated as a percentage multiplier of your base salary. The standard multiplier in the market is 9 x your monthly base salary for the quarter (the qualification period). For example, if you’re on 5k per month, the calculation would be 5k * 9, which equals a threshold of 45k for the quarter. Some firms offer lower thresholds, such as 7.5 x your base salary per quarter, or if you’re very lucky, 6 x your base salary per quarter.

The advantage of this calculation is that when you’re on a lower base salary, your threshold is lower and on the flip side, as your base salary increases, so does your threshold.

A threshold can also simply be a flat revenue figure rather than the percentage multiplier structure above. The standard revenue figure for this type of threshold is between SGD 30 – 60k.

The advantage of this calculation is that, as your base salary increases, your threshold remains the same. The disadvantage is that when you’re on a lower base salary, your threshold is more challenging to surpass.

A handful of firms offer a no-threshold scheme, although there is a trade off as percentage tiers (discussed next) are often lower.

Less common variations of a threshold include calculating commissionable income from your total revenue for the qualification period first, and then subtracting base salary. Whilst this still yields competitive returns, it shouldn’t be confused with a scheme that offers a threshold of simply just your base salary, as the calculation is different.

Percentage tiers

When you surpass your threshold, you’ll be eligible to collect commission on the amount above your threshold (total revenue – threshold). How much depends on the percentage pay-out of the scheme.

A majority of firms operate a tiered percentage structure. In this structure, percentages will start at a specific amount and increase in tiers as you generate more revenue. Percentages commonly start at 20 – 35% and increase in tiers until 40 to 45, and even 50% in some companies. Some firms offer above 50% but it may be extremely challenging to generate enough revenue to earn that yield.

Some firms operate a simple flat percentage structure. In this structure, you’ll earn the same percentage on any revenue you generate above your threshold.

In some rare cases, some firms offer a tiered percentage structure, but rather than the percentage being based on the revenue you generate, it may be based on other factors at the discretion of the company, such as how many clients you’ve brought in or how you’re performing in comparison to your expectations.

Deficit

Some firms have a deficit. If your firm has a deficit and you don’t achieve your sales target, you will go into a deficit. The amount by which you missed the sales target in the previous qualification period will roll over to the next qualification period. This means that you’ll have to make up for the revenue that you fell short of in the previous qualification period before earning commission.

Whilst deficits are less common these days and unfavourable for obvious reasons, there’s a reason why companies still use them and it’s important not to overlook this. Schemes with deficits offer a high risk, high reward option. You’ll find that with these schemes the threshold may be lower and percentage yields may be higher. As the firm is taking a risk in losing money based on a highly lucrative scheme, they need to protect themselves if sales targets are not met.

Certain firms wipe the deficit clean from time to time if non-revenue related performance has been strong.

Payment

Different firms write revenue on the board at different times. Revenue is commonly recognised on the start date of a candidate or when the invoice is settled by the client.

Once revenue is recognised, your commission becomes payable. Commonly the payment will be made at the start of the upcoming qualification period. For example, if you’re due $30k for placements in Q1, you’ll be paid the 30k at the start of Q2.

There are some firms who don’t relate the qualification period to the payment period. For instance, take the example of a firm who has a qualification period of a year but pays monthly. If you’ve earned 10k in Feb Q1 under the scheme, that will be payable in March, even though the qualification period concludes at the end of December.

In the market, firms often pay on a quarterly basis, a handful of firms pay on a monthly basis and some firms also pay on an annual basis.

Retaining commission

Some firms in the market retain a percentage of your commission over a qualification period or over a year. The average amount retained can range anywhere from 5 – 20% and upwards to 50%. To collect that commission, the firm will often set additional targets, the most common being to surpass your threshold for three out of four quarters of the year.

If you hit the target and collect the commission back, some firms return the same amount and others will offer interest on top of the collectable amount as a reward. If you don’t hit your target, the company retains the commission.

This mechanism is strong for retaining employees and encouraging consistent performance, however it receives mixed opinions from recruiters.

Retaining commission is a newer addition to schemes and has become more common in recent years.

3. What is a good commission scheme?

Now that we’ve looked through the various standard components of a commission scheme, what’s a good one and are you being paid enough?

When it comes down to it, a majority of commission schemes in the market, although varied in structure, end up returning a similar percentage return on your billings.

The percentage return of your billings, including base salary and commission, is considered to be competitive around 32%.

If you’re earning less than 32%, it doesn’t necessarily mean you have a bad commission scheme. You may be working with a large global player who offers access to established relationships with clients, allowing you to maintain a strong pipeline without the pressure of business development. Although your percentage return is lower, you could be earning more money than a recruiter who’s yielding 35%, but taking home less. If that’s not the case, you might not be billing enough to hit higher percentage tiers.

If you’re earning more than 32%, you’re earning a competitive amount in the market.

In the early stages of your career, finding a platform with established relationships that has a good percentage return is the sweet spot. When you become more experienced and you’re ready to step into a new environment where the risk of starting or building a desk is higher, you’ll have the opportunity to reap the rewards with higher percentages.

The recruitment industry in Singapore has grown exponentially in recent years and, despite increased market saturation, it’s easy to see why when there’s so much opportunity coupled with limited barriers to entry.

But how much do recruiters in Singapore actually bill?

In this article, we share our findings on what recruiters bill on a permanent desk within an executive recruitment consultancy (mid to senior level recruitment and a mid volume model) during normal market conditions.

The numbers in this article have been gathered after working in the recruitment to recruitment industry for over 4 years. The numbers reflect the successful and positive trajectory of a recruiter as they develop their recruitment career. Naturally, recruiters develop at different speeds and certain factors such as the practice a recruiter is covering, how many people a recruiter is managing or the type of agency they work for, create diverse results and a large range. We try to explain the variation in each section.

We also talk about how COVID-19 has affected individual revenue at the end of the article.

Entry level recruitment consultant with 0 – 1 years of experience

SGD $100,000 – 200,000

Being a fresh recruiter is all about learning the recruitment process, your niche market and building a network within it. The first year is crucial to building a solid foundation and platform that you can leverage to increase your revenue in the years to come.

Learning the ropes is arguably one of the most challenging periods of being a recruiter. If you’ve achieved the numbers above, you’re in a good position to build a positive trajectory for the future.

Entry to mid level recruitment consultant with 1 – 3 years of experience

SGD $150,000 – 300,000

Now that you have a good understanding of recruitment, a growing foundation and a brief track record of success, you can now leverage on your relationships and referrals to increase the quality and volume of your leads.

Mid level senior consultant with 2 – 4 years of experience

SGD $200,000 – 400,000

You’ve been in the industry for a few years now and you’ve developed strong relationships with clients who come back to you for repeat business. Your candidates have had a similar experience and are referring their colleagues or friends to you. You’re getting better at matching candidates and clients and conversion rates are increasing.

Mid level principal or manager with 3 – 6 years of experience

SGD $300,000 – 600,000

A few of the clients that come back to you for repeat business are now very impressed with your consistency. They release more senior roles and some even on an exclusive or retained basis. Your access to senior level positions and the elimination of competition puts you in a good position to continue improving your numbers.

You’re also at a stage in your career where you have proven yourself as a highly capable individual contributor (IC). It’s now your decision if you want to continue your path as an IC, increasing your billings year on year, or move into a manager position.

By choosing the IC route, every day is dedicated to billing and you can get up to the higher end of the range, achieving numbers between $400,000 – 600,000.

Taking up the manager route requires more time for training and management, but by using the foundation you’ve built over the past few years, you can continue to bill between $300,000 to 400,000 whilst managing a small team of 1 – 3 recruiters.

Senior level associate director or director with 5 – 10 + years of experience

SGD $200,000 – 800,000

As an individual contributor, provided you’re continuing to build relationships and deliver a superior service, your billings will grow. You are however getting to the point where you are operating at absolute efficiency; you have no more minutes in the day and your revenue will eventually start to plateau. You’re one of the most well-known recruiters in your niche and everyone knows your name. These numbers can be between $400,000 to 800,000.

As a people manager, you’re taking on more responsibilities and your team could be up to 5 to 10 consultants, or more. Your focus may shift from closing deals to bringing on board new clients and delegating roles to your team. You’re so busy ensuring the profitability of your team that you have much less time to close roles yourself. You could be billing between $200,000 to $400,000. Of course, the more consultants you’re managing, the less time you’ll have to bill.

The next step in your career could see you even moving away from billing completely and into pure people management.

Outliers

The numbers above reflect the successful and positive trajectory of a recruiter as they develop their recruitment career. There will certainly be outliers on both sides of the range for one reason or another.

Some recruiters develop at lightning speed and have the ability to bill up to SGD $1.5 million in certain years and in good market conditions. Other recruiters may be working on a slower desk, market conditions might be adverse and the agency may not have a strong enough platform to achieve desired numbers.

Market conditions

There are certain times where market conditions are adverse and revenue will no doubt be negatively impacted.

Last year, the US-China trade war had an adverse effect on the Singapore recruitment market. It didn’t necessarily cause a decrease or any decrease in recruiter billings at all, but there certainly wasn’t a significant increase either.

This year, COVID-19, the biggest health crisis in recent years and arguably the biggest economic crisis of all time, has majorly affected and decreased recruiter billings, to the point where billings are down by 20 to 70%. Technology is doing well in relative terms, whilst the worst affected industries such as Retail saw recruiter billings decline by up to 70% during the lockdown.

It’s near impossible to provide an accurate figure of how much recruiters’ billings have declined during COVID-19 given how different practices are affected more than others and certain lockdown restrictions cause immediate changes to this figure, but we believe it’s somewhere around 30 – 50%.

Your agency

Whilst a major contributor to the success of a recruiter is down to their motivation and drive to be successful, your numbers can be affected by the agency you’re working with. If your agency operates a model with lower fees and higher volume, you may not be able to hit the revenue figures that a recruiter is achieving in a higher fee, middle volume model. A recruiter that has accumulated a number of years of experience will learn this along the way and will then make a decision if they need to join a new agency to get to where they want to be.

Make sure you subscribe below to receive the latest recruitment articles direct to your inbox because we’ll be releasing Hong Kong’s billing statistics next week.

Last week, I wrote an article about how much recruiters in Singapore bill. This week, I’ll be sharing our findings on how much recruiters in Hong Kong bill.

The numbers reflect the successful and positive trajectory of a recruiter as they develop their recruitment career in an executive recruitment consultancy (mid to senior level recruitment) during normal market conditions. They were gathered after working in the recruitment to recruitment industry in Hong Kong for over 4 years.

Naturally, recruiters develop at different speeds and certain factors such as the practice a recruiter is covering, how many people a recruiter is managing or the type of agency they work for, create diverse results and a large range. We try to explain the variation in each section.

We also talk about how the 2019/2020 Hong Kong protests and COVID-19 has affected individual revenue at the end of the article.

Recruitment consultant with 0 – 1 years of experience

HKD $800,000 – 1,400,000

The first year in recruitment is focussed on learning the job, your niche market and building a network within it. This is arguably the make-or-break period; building a solid foundation that you can leverage to increase your revenue in the years to come is crucial.

If you’ve achieved the numbers above, you’re in a good position to build a positive trajectory for the future.

Recruitment consultant with 1 – 3 years of experience

HKD $1,200,000 – 1,800,000

Now that you have a good understanding of agency recruitment, a growing network and a track record of success, you can leverage your relationships and referrals to increase the quality and volume of your leads.

Senior recruitment consultant with 2 – 4 years of experience

HKD $1,400,000 – 2,400,000

You’ve been in the industry for a few years now and you’ve developed strong relationships with clients who come back to you for repeat business. Your candidates have had a positive experience and are referring their colleagues or friends to you. You’re getting better at matching candidates and clients and conversion rates are increasing.

Principal recruitment consultant or manager with 3 – 6 years of experience

HKD $1,800,000 – 3,600,000

A few of the clients that come back to you for repeat business are now impressed with your consistency. They release senior roles and some on an exclusive or retained basis. Your access to senior roles and the elimination of competition puts you in a good position to continue improving your numbers.

You’re also at a stage in your career where you have proven yourself as a highly capable individual contributor (IC). It’s now your decision if you want to continue your path as an IC, increasing your billings year on year, or move into a manager position.

By choosing the IC route, every day is dedicated to billing and you can get up to the higher end of the range, achieving numbers between $2,200,000 – 3,600,000.

Taking up the manager route requires more time for training and management, but by using the foundation you’ve built over the past few years, you can continue to bill between $1,800,000 to 3,000,000 whilst managing a small team of 1 – 3 recruiters.

Associate director or director with 5 – 10 + years of experience

HKD $1,200,000 – 5,000,000

As an individual contributor, provided you’re continuing to build relationships and deliver a superior service, your billings will grow. You are however getting to the point where you are operating at absolute efficiency; you have no more minutes in the day and your revenue will eventually start to plateau. You’re one of the most well-known recruiters in your niche and everyone knows your name. These numbers can be between $3,200,000 to 5,000,000.

As a people manager, you’re taking on more responsibilities and your team could be up to 5 to 10 consultants, or more. Your focus may shift from closing deals to bringing on board new clients and delegating roles to your team. You’re so busy ensuring the profitability of your team that you have much less time to close roles yourself. You could be billing between $1,200,000 to $3,200,000. Of course, the more consultants you’re managing, the less time you’ll have to bill.

The next step in your career could see you moving away from billing completely and into pure people management, although these roles are becoming less common as firms become more lean.

Outliers

The numbers above reflect the successful and positive trajectory of a recruiter as they develop their recruitment career. There will certainly be outliers on both sides of the range for one reason or another.

Some recruiters develop extremely quickly. The highest annual billing figure we know of in the contingent agency recruitment market in Hong Kong is HKD $10 million.

Other recruiters may be working on a slower desk, market conditions might be adverse and the agency may not have a strong enough platform to achieve desired numbers.

Market conditions

The last two years have been challenging for the recruitment industry in Hong Kong to say the least.

We observed a 10 to 20% decrease in billings throughout 2019 compared to the previous year. 2019 H2 was more challenging than H1, and Q4 saw the biggest hit of all quarters in the year.

2020 started positively compared to the end of 2019, until COVID-19 started. Recruiters in Hong Kong were hit twice in the period of a year. Markets such as Technology and Insurance remain stable whilst Retail, hit twice from the 19/20 HK protests and COVID-19, have been majorly affected to the point where some Retail recruitment specialists have gone out of business.

It’s near impossible to provide an accurate figure of how much billings have declined during COVID-19 compared to 2018 given how different practices are affected more than others and the effects of the third wave have yet to be recorded, but we believe it’s somewhere between 20 – 60%.

Hong Kong vs Singapore results

One thing we noticed in the Hong Kong market is that the range tends to be more diverse than the Singapore market. We also noticed that billings tend to be slightly higher than Singapore, perhaps due to higher salary ranges or the fact that Singapore is a more saturated recruitment market.

Your agency

Whilst a major contributor to the success of a recruiter is down to their motivation and drive to be successful, your numbers can be affected by the agency you’re working with. If your agency operates a model with lower fees and higher volume, you may not be able to hit the revenue figures that a recruiter is achieving in a higher fee, middle volume model.

A recruiter that has accumulated a number of years of experience will learn this along the way and will then make a decision if they need to join a new agency to get to where they want to be.

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Back in May, I wrote an article about whether now – during COVID-19 – was a good time to start your own recruitment agency. Since then, a number of startups have sprouted up across the Hong Kong and Singapore markets. The volatility in the market has stabilised as we head towards a long road to recovery and arguably there is no better time to start an agency than today.

In this guide, we explore the considerations and steps that you, a budding recruitment entrepreneur, need to take if you’re ready to launch a new firm from scratch. We cover the journey from both a planning and operational perspective, so you can take necessary action to get things moving.

In the past and in the present day, I’ve launched recruitment agencies in both Hong Kong and Singapore. I’ll be talking about my experience starting with Singapore first and Hong Kong next week.

Step 1: Business plan, financial and cash flow projections

Before getting ahead of yourself, writing up a comprehensive business plan is key to keeping your thoughts and ideas structured. With the amount of information you need to consider before you start to trade, there’s no doubt it will be overwhelming at times. Having a plan keeps you accountable and organised within a specific time frame.

Within your business plan, you should have your financial projections ready to go, including your cash flow document which I think is one of the most important documents of all. Cash is king when running a business, and when you’re battling time, keeping yourself honest with this document will help you sleep at night in the early days.

It’s highly likely you will produce less revenue than you project and spend more money than you forecast. My rule of thumb when it comes to cash flow is writing a 20% variance above your projected figures.

Whilst planning is essential, it’s important to avoid getting carried away by writing pages and pages of documents that you won’t read. Keep it short and sweet. Place emphasis on action to stop falling into the trap of over-planning. 

Step 2: Secure your funding

Once you have your plan ready to go, securing your funding is the next step to recruitment entrepreneurship. If you’re not completely self-funded or if you haven’t secured funding yet, then kick this off now.

You may be relying on a chunk of investment, a facility from a bank, crowdfunding or perhaps you and a partner have invested equal amounts into the business. There are lots of creative ways you can start to raise capital, but one thing is for sure: more often than not, it will take longer than anticipated to secure.

Keep in mind when planning your funding that a significant deposit of paid up capital in the bank account will certainly assist in any EP applications you may make.

When it comes to compliance with company formation and opening a bank account, you’ll need to provide back-up documentation. It takes time and will distract you from the important task of kicking off revenue generation. 

Step 3: Company formation

Singapore is renowned for its transparent company registration and formation process. You will need the services of a law firm or a company formation agency.

There are lots of options in Singapore at different price points. My advice is to shop around, but ideally you want to obtain references – preferably from individuals involved in the recruitment industry. 

The good news is that the cost is not astronomical. Forecasting the cost should also be very predictable thanks to the high level of transparency throughout the process. I know of a service that costs around SGD $4,000 for the basic company formation, and returned a successful EP application. I would happily recommend the firm I used if you want to contact me directly. You could pay a lot more, but you don’t need to in my opinion.

Step 4: Open a bank account

Opening a bank account is easy; the formation company is highly likely to include assistance in this step if you paid for it, as per your package. Formation agents will arrange everything for you and the bank representative will come to see you in their office. A formation agent I’ve worked with in the past recommended OCBC, and the process was speedy, simple and painless.

Step 5: Obtain a recruitment licence

You need to obtain a recruitment licence from the Ministry of Manpower (MOM) before you begin to operate as a recruiter. This is where things get a little more complicated as you need to appoint a Key Appointment Holder and determine whether you need a Comprehensive (all, local or non-FWD) or Select licence.

A Comprehensive (all) licence allows you to perform recruitment with no restrictions on the size of placements you make. On a Select licence, you can only place candidates who are earning more than SGD $4,500 a month.

Choosing a licence will determine if you need to take a CEI exam (if you haven’t already) and how much investment you need to make for the licence. A Comprehensive licence requires a SGD $60,000 security deposit, whilst a Select licence requires a Banker’s Guarantee of SGD $20,000.

In most cases, to keep costs low, you can start on a Select licence and see if you need to upgrade in the future.

This can seem quite daunting initially and if you dont research this properly, you won’t fully understand the differences between the licence types. The good news is that everything you need to know can be found on the MoM website which I would recommend investing some significant time into reading.

Step 6: Employment pass (if applicable)

This step only applies to non-Singaporeans or non-PRs. This is one of the trickier steps in the process because obtaining an EP, even if you’re the founder or the first employee of the business, is not guaranteed.

I would strongly recommend consulting with a company formation agent or lawyer, who will advise on the documentation that you need to provide to give you the highest chance of getting an EP approved. They do this for a living and will be able to guide you through the pitfalls and challenges of the approval process. 

To set the expectation, the application process will probably take longer than anticipated, especially taking into account the current economic climate. Consider the possible outcome of a rejection along with an appeal. Often you will be asked to provide additional information to support your application.

Preparation and research is the key.

Step 7: Find an office

You’ll find that almost every startup opts for a serviced office. In Singapore, there is a massive choice and you, as the consumer, have many options to look at including coworking and private office solutions.

Firstly, decide where you want to locate your business. Consider the needs of your future staff as well as the convenience factor for visiting clients and candidates. Both are vitally important, especially as we start heading back to the office over the next few months.

Flexibility and negotiation. Negotiate hard (especially now), retain flexibility and avoid longer term fixed commitments. If you are setting up on your own, consider coworking access at a WeWork or Spaces solution to keep costs low. You can even consider Compass Serviced Offices, founded by a former recruitment entrepreneur, Andrew Chung.

Step 8: Start billing!

Your company is formed, you have obtained your bank account, recruitment licence, your employment pass and you finally have an office. This is only the beginning. You’re now ready to get on with the important stuff and start your journey as a recruitment entrepreneur.

If you’re a recruiter, please subscribe below for future guides and how-to’s that will be sent direct to your inbox every Thursday.

Disclaimer: This article is written with an intention to provide basic advice, but we stress we are not legal professionals, so please seek advice from a formation agent or qualified lawyer.

When recruiters change agencies, the driving motivations behind a move are rarely solely due to a base salary. A combination of other factors, such as hitting a glass ceiling, an issue with a line manager or misalignment in recruitment methodology are more common.

Some would argue that as agency recruitment is a performance-driven role, there should be a bigger focus on potential commissionable earnings over the base salary itself.

Whilst many recruiters have this mindset, a competitive base salary still plays an important part when changing jobs and can sometimes be the key to the final piece of the puzzle. 

Are you being paid in line with the market average in Singapore? What is a competitive base salary in Singapore? What factors influence what base salary you’re offered? In this article, we answer these questions.

The salary ranges in this guide were gathered after working in the recruitment to recruitment industry in Singapore between 2016 to 2019. COVID-19 has created a shift in salaries. This shift has not been accounted for in this guide, but we have commented on the pandemic’s impact at the end of this article.

Associate Recruitment Consultant (0 – 1 years of experience)

SGD $2,500 – 3,500 per month

Fresh grads are paid a salary between 2.5 – 3.3k whilst professionals with 0 – 1 years of experience in another industry transferring into recruitment can leverage a higher salary between 3.3 to 3.5k.

Recruitment Consultant (1 – 3 years of experience)

SGD $3,500 – 5,000 per month

Newly promoted recruitment consultants are paid between 3.5 – 4k whilst recruiters with a few additional years are paid between 4 – 4.5k. Recruiters with niche market experience and a good track record can leverage a salary in the higher end of the range between 4.5 – 5k.

Senior Recruitment Consultant (2 – 5 years of experience)

SGD $5,000 – 6,000 per month

Newly promoted senior recruitment consultants are paid a salary between 5 – 5.5k whilst recruiters with a few additional years of experience or highly specialised niche market experience can expect between 5.5 – 6k.

Managing / Principal Recruitment Consultant (3 – 7 years of experience)

SGD $6,000 – 8,000 per month

Newly promoted managing/principal recruitment consultants are paid a salary between 6 – 7k whilst recruiters with a few additional years of experience or highly specialised niche market experience can expect between 7 – 8k.

Manager (5 – 10 years)

SGD $7,000 – 9,000 per month

Newly promoted managers are paid a salary between 7 – 8k whilst managers with a few additional years of experience or managers who are managing larger teams can expect between 8 – 9k.

Associate Director (7 – 13 years)

SGD $9,000 – 12,000 per month

Newly promoted associate directors are paid a salary between 9 – 10k whilst associate directors with a few additional years of experience, associate directors who are managing larger teams or associate directors with more P&L responsibility can expect between 10 – 12k.

Director (10 – 15 years)

SGD $11,000 – 15,000 per month

Newly promoted directors are paid a salary between 11 – 13k whilst directors with a few additional years of experience, directors who are managing substantially larger teams or directors with more P&L responsibility can expect between 13 – 15k.

Managing Director (12 + years)

SGD $14,000 – 19,000+ per month

Newly promoted managing directors are paid a salary between 14 – 17k whilst managing directors with a few additional years of experience, managing directors who are managing entire or regional offices or managing directors with regional P&L responsibility can expect 19k and upwards.

Factors influencing salary ranges

The salary ranges above should provide a rough guide of the general market rate. There are certain factors that may affect your salary or cause outliers:

• Billings can highly affect salary ranges. For example, if you start developing and billing ahead of others, you will be promoted faster where you could be earning a much higher base salary than someone with an equivalent amount of experience
• All agencies have a commission or bonus scheme that return earnings which vary vastly. If you have a lucrative scheme, as a trade-off, your base salary may be lower than the market rate
• Management responsibilities can increase salary. For example, the more recruiters a manager is managing, the more likely it is they will have a salary at the higher end of the range
• P&L responsibilities can increase a recruiters salary. For example, if a recruiter is at Associate Director level but managing a team as well as the entire office P&L, they could expect the higher end of the range
• Some agencies use different titles for the same level of experience. In this case, you can refer to the brackets containing the years of experience for each salary range

Typical salary increments

Typical increments we see when changing jobs in the market are between 10 to 15%.

Achieving an increment above 15% is possible but can only be leveraged in a few select situations. Hypothetically: 

• You have a solid track record of billing success in the same practice you will be transitioning into with your new employer
• You have a rare skill set in a candidate-short market such as a contracting recruitment manager

Matching your base salary also happens in the market in certain situations:

• You have changed your practice to a market you’re passionate about, your new employer is happy to make an investment in you but you require a longer runway to become profitable
• You have relocated internationally, your new employer is happy to make an investment in you but you require a longer runway to become profitable
• You have only recently joined your current firm (< 6 months) and have not managed to achieve your strive yet
• Your billings are not outstanding in your current firm but you have good potential in your new firm
• You’re moving jobs in adverse market conditions, your employer wants to make the hire but can only get budget approval for a matching or lower base

COVID-19 impact

COVID-19 has impacted salaries across the Singapore market. During the circuit breaker, there were a number of firms who cut employee salaries by 10 – 20% to adjust to the decline in revenue.

For recruiters changing jobs, the salary increments mentioned above were challenging to secure, especially during the circuit breaker. During this period, we saw offers being made that matched the candidate’s last drawn salary or in some cases offering a lower salary (with a custom commission scheme to adjust for lost fixed income).

Post-circuit breaker, there is still a level of caution when it comes to hiring but we have certainly seen an improvement. Salaries that are offered in today’s market are determined on a case-by-case basis. Firms that are performing well in less affected markets are able to offer salary increments to attract great talent in a cautious market.

All in all, a recruiter can always increase their earnings through commission but having an attractive base salary is not something they would turn their head away from.

Interested to know what the average billings of a recruiter is? Find out what they are in Hong Kong here and in Singapore here.

Next week, we’ll be publishing Hong Kong’s base salary ranges. If you find these recruitment insights useful, please consider subscribing for exclusive articles like this one direct to your inbox every Thursday.

Are you on a competitive base salary in Hong Kong? What factors influence your base salary? How much of an increment should you expect when moving to a new agency?

In this article, we answer these questions with our salary guide for agency recruiters in Hong Kong.

The salary ranges in this guide were gathered after working in the recruitment to recruitment industry in Hong Kong between 2016 to 2019. 2020 has seen a shift in salaries due to COVID-19 so we have decided not to account for this year in this guide, but we have commented on the pandemic’s impact at the end of this article.

Associate Recruitment Consultant (0 – 1 years of experience)

HKD $15,000 – 20,000 per month

Fresh grads are paid a salary between 15 – 18k whilst professionals with 0 – 1 years of experience in another industry transferring into recruitment can leverage a higher salary between 18 to 20k.

Recruitment Consultant (1 – 3 years of experience)

HKD $22,000 – 27,000 per month

Newly promoted recruitment consultants are paid between 22 – 25k whilst recruiters with a few additional years of experience are paid between 25 – 27k. Overall, the standard go-to salary for most agencies at this level of experience is 25k.

Senior Recruitment Consultant (2 – 5 years of experience)

HKD $27,000 – 33,000 per month

Newly promoted senior recruitment consultants are paid between 27 – 30k whilst recruiters with a few additional years of experience are paid between 30 – 33k. Overall, the standard go-to salary for most agencies at this level of experience is 30k.

Managing / Principal Recruitment Consultant (3 – 7 years of experience)

HKD $35,000 – 40,000 per month

Newly promoted managing/principal recruitment consultants are paid a salary around 35k whilst recruiters with a few additional years of experience are paid slightly higher at 40k.

Manager (5 – 10 years)

HKD $40,000 – 55,000 per month

Newly promoted managers are paid a salary between 40 to 45k whilst managers with a few additional years of experience or managers who are managing larger teams are paid between 50 to 55k.

Associate Director (7 – 13 years)

HKD $50,000 – 70,000 per month

Newly promoted associate directors are paid a salary between 50 – 60k whilst associate directors with a few additional years of experience, associate directors who are managing larger teams or associate directors with more P&L responsibility are paid between 60 – 70k.

Director (10 – 15 years)

HKD $60,000 – 85,000 per month

Newly promoted directors are paid a salary between 60 – 70k whilst directors with a few additional years of experience, directors who are managing substantially larger teams or directors with more P&L responsibility are paid between 70 – 85k.

Managing Director (12 + years)

HKD $80,000 – 125,000 + per month

Newly promoted managing directors are paid a salary between 80 – 90k whilst managing directors with a few additional years of experience, managing directors who are managing entire or regional offices or managing directors with regional P&L responsibility are paid between 100k – 125k and upwards.

Factors influencing salary ranges

The salary ranges above should provide a rough guide of the general market rate. There are certain factors that may affect your salary or cause outliers:

• Billings can highly affect salary ranges. For example, if you start developing and billing ahead of others, you will be promoted faster where you could be earning a much higher salary than someone with an equivalent amount of experience
• All agencies have a commission or bonus scheme that return earnings which vary vastly. If you have a lucrative scheme, as a trade-off, your base salary may be lower than the market rate
• Management responsibilities can increase salary. For example, the more recruiters a manager is managing, the more likely it is they will have a salary at the higher end of the range
• P&L responsibilities can increase a recruiter’s salary. For example, if a recruiter is at Associate Director level but managing a team as well as the entire office P&L, they could expect the higher end of the range
• Some agencies use different titles for the same level of experience. In this case, you can refer to the brackets containing the years of experience for each salary range

Typical salary increments

Typical salary increments we see when moving to a new agency are between 10 to 16%.

Achieving an increment above 16% is possible but can only be leveraged in a few select situations. Hypothetically:

• You have a solid track record of billing success in the same practice you will be joining with your new employer and you play a crucial part in the long-term vision of the business
• You have a rare skill set in a candidate-short market such as an experienced technology director of a contracting recruitment manager

Increments are not always guaranteed and matching your current salary does happen in these situations:

• You have changed your specialisation to a market you’re passionate about, your new employer is happy to make an investment in you but you require more time to become profitable
• You have relocated internationally, your new employer is happy to make an investment in you but you require more time to become profitable
• You have only recently joined your current firm (< 6 months) and have not managed to achieve your strive yet
• Your billings are not outstanding in your current firm but you have good potential in your new firm with your drive and motivation
• You’re moving jobs in adverse market conditions, your employer wants to make the hire but can only get budget approval for a matching or lower base

COVID-19 impact

COVID-19 has impacted salaries across the Hong Kong market. During the circuit breaker, there were a number of firms who cut employee salaries by 10 – 20% to adjust to the decline in revenue.

For recruiters changing jobs, the salary increments mentioned above were challenging to secure. Between April to July, the limited offers that were made matched the candidate’s last drawn salary or in some cases offered a lower salary (with a custom commission scheme to adjust for lost income).

Today, there is still a level of caution when it comes to hiring but we have certainly seen an improvement. Salaries that are offered in today’s market are determined on a case-by-case basis. Firms that are performing well in less affected markets are able to offer salary increments to attract great talent in a cautious market.

All in all, a recruiter can always increase their earnings through commission but having an attractive base salary still plays an important part when it comes to securing great talent.

If you feel that you’re being underpaid, please feel free to reach out to me by connecting on LinkedIn or email at cameron@vocay.io.

Interested to know what the average billings of a recruiter in Hong Kong is? Find out here.

If you find these recruitment articles insightful, please consider subscribing for exclusive articles like this one direct to your inbox every Thursday.

Managers are on the constant lookout for top billers. It’s fair to say when you come across one, it’s easy to get excited. We are all equally guilty of this. It’s highly likely that you know the names of the top recruiters in your specialisation and I’m sure you are constantly tracking and approaching them to join your team.

In Vocay’s ‘Money’ publication, we recently published a list of what the top recruiters in Hong Kong and Singapore bill. In Hong Kong, the top billers are generating revenues around HKD 4.5m – 6.0m whilst in Singapore, they’re generating SGD 750,000 – 1,000,000. These individuals are very rare and I’d imagine they represent less than 1% of recruiters.

As we all know, most top billers are angels! Sometimes, however, hiring top billers can come at a cost. In this article, we explore some of the adverse habits exhibited by top billers and their resultant impact on the agency.

Where possible I have delved into my personal experience to cite examples but in such a way that no one can possibly be identified. After all, it’s worth repeating that most superstars are angels and a pleasure to work with.

Overly aggressive and arrogant behaviour

I remember working with a recruiter some years ago. We hired him out of London, where he was the top biller in his agency, to join one of our offices in Asia. When he moved to Asia, he brought with him an aggressive style of recruitment which was successful in London.

His levels of aggression, combined with a belief that he (and his billings) were infallible. A huge cultural clash and sky-high arrogance led to an extremely bad tempered individual. That said, he continued to be an outstanding producer.

It’s pretty obvious that this general behaviour is overwhelmingly negative and the obvious consequence of negativity is demotivation. For the team, for everyone. In the example I gave above, it would be fair to say that team output dropped. From a tight, happy and motivated team, we began to see a real reduction in productivity and, of course, revenue. This scenario will also inevitably lead to resignations. Can’t be a good thing. Nip it in the bud. If you don’t, you will lose your team.

Territory grabbing and stepping on toes

By territory grabbing, I refer to a biller demanding or acquiring an increasing and often exclusive share of candidates, clients, coverages and regional locations.

This is extremely common and often it is approached sensitively, keeping colleagues and team members in mind. However, if it’s approached without consent from the affected individuals, the recruiter may be stepping on toes and it can create a problem that divides the team, spiralling out of control over time.

I knew a recruiter who would delete a candidate from the ATS and keep them in a hard copy folder so only he had access to that top quality candidate.

Territory grabbing can take on many manifestations. The recruiter who requests that no one touches their clients, the recruiter who refuses to share ownership of candidates or the recruiter who keeps on entering a ‘grey area’ close to a colleague’s patch.

If territory grabbing leads to a caustic environment, with recruiters working in grey areas and working without a collaborative approach, then it can lead to outright hostility. On the rare occasion, I have witnessed big arguments erupt in an open plan office.

The same impact will be seen on the team’s motivation. If you, as a manager, concede ground then your team may see you as ‘taking a side’ and you risk losing them.

Increasing or unrealistic demands

It’s understandable that as a recruiter bills more and becomes a top biller, there will be an increase in demands – that is obviously justified. There are some situations, however, when demands can put a manager in a tough position if they’re unrealistic.

One of our top billers back in the day argued, successfully, that as he was hitting thresholds no one else was hitting, that he should get a higher percentage of that tier. It was a reasonable request, but increasing the percentage tier for one individual could affect the team’s motivation. I remember agreeing to the request, but the increased commission was offered to the whole team. I still miss that guy.

Demands are not always that reasonable. A 30% increase in salary simply because a recruiter had a record Q3. Is that reasonable? Would that same recruiter take a salary reduction  if they had a terrible Q4? Nope, not a chance.

Another tricky demand is keeping up with a top biller’s aspirations to constantly progress, sometimes too quickly ahead of their level of experience. Numbers are not the only consideration when it comes to promoting someone to Manager or Associate Director level to lead a team. A recruiter deals with new and challenging situations every day and it’s this experience that can’t be replaced by hitting numbers.

Other demands I have seen include a personal data inputter to input into the CRM, a private office when we were open plan and a PA! I am exhausted just recalling all of these, and there are many more, believe me.

I intentionally introduced a positive spin on what can also be a negative factor. Sometimes there can be sensible and reasonable commercial arguments for certain demands and, if approached sensitively, then no problem. If, however, the demands are propelled by arrogance and a sense of entitlement, then it will end in tears. I have had recruiters ask me to make ‘private’ deals with them and ‘don’t worry, no one will know about it’. I’m proud to say that I never would do something like that. Don’t be tempted. It will come back to haunt you. I promise you that.

In my experience, it’s all about finding a healthy balance where you can meet demands and incentives without going overboard. If you give someone everything, others will feel left out and you will find it more challenging to manage expectations in the future.

The rule of 2

So where does this lead us? Well, neatly to ‘The rule of 2’.

Everyone reading this, I am certain, will have seen some evidence of the disruption above and I suspect the nodding of heads is akin to an ACDC concert audience!

Disruptive recruiters, for all the dollars they bring, will cost you money. That is for certain. You may not see it in that gleaming Q3 you just had, but if the above behaviours are in play, then you will feel it in the prevailing year. You may have a demotivated team and an increasing turnover rate.

That brings us to the rule of 2. Hire a positive top biller, of course. But my belief is that 2 billers who bring collaboration and a good attitude to the team will bring you more revenue than a disruptive top biller. If the top biller is disruptive, you may lose team members.

I’m very interested to hear about any comments or your experiences managing recruiters with some of the habits above. Please let me have your thoughts on LinkedIn and I’m looking forward to an interesting debate!

If you are experiencing some of the disruptions above, have a straight forward chat with your manager or director. If you’ve exhausted all avenues, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities or follow our LinkedIn company page to be kept in the loop about new articles like this and new opportunities.

In our entrepreneurship publication, we have explored whether now is a good time to start your own agency, how to start your own business and what potentially could attract top billers to your brand new startup.

You now have an agency licence, a home or serviced office, a CRM and a website – it doesn’t sound like much, but it’s everything you need to build the foundations of what could be the next big brand in your recruitment market.

It’s going well: you’re two months in with interviews scheduled, your first few clients and you’ve projected your first placement by the end of month three. You’ve now closed it with a sigh of relief whilst you wait 30 days to be paid.

It’s at this point where your mentality starts to shift. Your client hasn’t paid within 30 days and you are getting slightly nervous about your cash flow as you enter day 40. The client pays on day 50 and you’re already experiencing some of the first planning challenges of being an entrepreneur. It’s an exciting evolution and you are starting to talk to recruiters about joining you on your journey.

How do you take your expansion from the stage of a 3-man band to over a hundred people over the next decade? Find Recruiter reports that 94% of agencies in Singapore employ less than 10 people. Of course, there are a number of lifestyle businesses but why is it that some businesses never grow beyond this point and why do some grow extremely quickly?

I will draw very heavily from my personal experience. I have built a recruitment business from one person, to over 150 recruiters across 5 offices in 4 countries. I have no problem admitting that I got a great deal wrong and hopefully my lessons learnt can help you in your journey.

Here are 4 important ways you can scale your business:

Cash is king and balancing risk with reward

Having cash to scale is a prerequisite to building a recruitment business. You may start with close to nothing in the bank, or you may start with a small investment from a private individual or PE fund. Either way, you will need to build a model where you are able to generate enough cash in order to hire the best people in the market.

I started Robertson Smart (known as Charterhouse today) with a relatively small level of investment, and it’s fair to say the prevailing months were a rollercoaster. I had two choices: take the safe route of hiring a few recruiters and wait until they became profitable, or take a risk and scale faster. I did the latter. I won back the initial investment within 9 months and we were well on our way, scaling far quicker than many of our competitors.

Have a crystal clear vision

Looking back, I never imagined that having a clear vision would be one of the most important ways you can scale a business. I’m not sure if I had a vision on day 1. Rather more of a desperation to focus on the things in front of me, making my first placement so I could pay my rent in Dubai and taking things one step at a time.

Over time, I began to grasp how important having a vision was. It became very apparent to me that a business needs a strategic plan and people need to buy into what you’re looking to achieve together. You will look back in ten years and recognise the seeds of your business were sown on day one. What you do in year one will impact you in the future. Most of my war stories come from the very early days of setting up from scratch and some of the decisions I made then stuck with me until my last day at the firm.

I’m suggesting that in your first year, you look into the future. What do you want the business to look like in three years, five years and even ten years? Focus on where you want to be on a personal and commercial level, and work backwards from there. You don’t necessarily need this on day one, but as you begin to expand and attempt to attract the best or right people in the market, it’s crucial.

What are your ambitions? Do you want to build a business with over 100 recruiters and 5 offices? Do you see yourself as a fee earner forever, or do you want to hire people better than you to replace yourself as you progress?

There are, of course, no wrong or right answers here, but having a clear vision will help you make decisions today. These are the decisions that will realise your ambitions and stick with you as you grow.

Training & leading from the front

Training begins at induction, no matter how experienced a recruiter may be. In the early Robertson Smart days, it was common for us to hire industry professionals, such as lawyers or bankers, who had zero recruiting experience. It was vital then that we adopted a ‘big company’ approach even if we were just 6 recruiters.

At Robertson Smart, we developed a personal induction and training program. I’m sure there are a few recruiters out there who remember the RS-TIM! The training and induction manual was given to every new starter and accompanied them throughout the first three months of induction. As we began to open additional international offices, we shot a series of training and induction videos that could be accessed by a company PC. It sounds normal now, but back then any access to internet and video content was very limited. I don’t mind saying that I think our training materials were quite exceptional at the time, and one of the important factors behind helping people develop into great recruiters eventually leading to scale.

Naturally, a founder is the ground zero of a business, a mentor that should lead from the front. All of that is vitally important as the business expands. However, once you get to a certain size in an office, or you open up an international office, then you begin to get spread very thin. Training then disseminates the message of the founder across the growing business which assists in maintaining cultural consistency. It’s a great economy of scale.

Motivation, people & culture

I had motivation, people & culture top of mind. It was extremely clear to recruiters why they would join Robertson Smart or Charterhouse over other firms. By having a consistent and clearly communicated culture, an agency will begin to attract a team who are equally similar in motivation, attitude and outlook. This will most certainly assist greatly in being able to scale. If your cultural values are inconsistent and all over the place, then don’t be surprised that your business is too.

Hiring the right people with motivation and commitment is a vital component of any recruitment business. If the recruitment leaders are hugely passionate, constantly positive and the business appears to be on the up, then this is the fuel in the engine. At this point, you are beginning to grow. You have hired fifteen recruiters in Dubai, the same number in Singapore, so it’s time to tackle Hong Kong. Tell me that is not an exciting story to share with your current and potential team members.

I think we very effectively used motivation to scale the business. Monthly, quarterly and annual incentives and trips made it a fun place to work. We weren’t shy in spending money but it was always connected to achievement. To celebrate achieving SGD 1 million from the launch of Singapore, we took the whole team and partners to an island resort in Bintan for the weekend – all expenses paid. People began to hear that we were a fun place to work and that we paid very competitive commissions.

How far I scaled

We managed to scale from just me to 150 people in Dubai, Singapore, Hong Kong, Sydney & Melbourne. We were driven by a clear strategic vision coupled with the development of a positive and healthy culture backed up by huge levels of enthusiasm, ambition and motivation.

This perhaps makes it sound far easier than it actually was. We hit many road bumps along the way. We had recessions, as well as booms. We had the 1997 Asia financial crisis, the tragedy of 9/11 in 2001 and, of course, the SARS epidemic in 2003. All of these events hit us very hard but the 4 factors above remained consistent throughout.

I hope this has been useful to any recruitment entrepreneurs considering expanding their businesses and I’m very interested to hear about any comments with regard to the factors above. Please let me have your thoughts on LinkedIn and I’m looking forward to an interesting discussion.

If you’re exploring recruitment opportunities in Asia, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

Our industry adopts a number of varied solutions in order to solve a client’s recruitment needs, the most common being contingent and retained search, amongst others.

A popular comment in recruitment is ‘well, it’s not rocket science’. It’s true, it’s not, but some hard-to-fill searches are complex and recruiters have to consider all options when proposing a solution to a client to ensure successful delivery.

Simply explained, contingent search is a model whereby the fee is only payable upon the successful execution of a mandate. If they’re not engaged on an exclusive basis, the risk sits squarely with the recruiter as they may be up against internal teams or other agencies.

Retained search is a model whereby a client pays a portion of the fee prior to the completion of the search process. The most common structure would be a third of the fee payable upon the instruction to proceed, the second third upon the successful presentation of a shortlist of candidates and the final tranche is paid on the start date of a candidate.

Is one model better than the other? Absolutely not. They are simply different recruitment solutions. It’s all about proposing the most appropriate approach for the search you’re about to undertake.

I have not forgotten a question an early recruitment mentor of mine, Tony Seager, asked me. He said, “why don’t most recruiters win retainers?” I pondered but I had no idea at that early stage. The answer was pretty simple in the end: “because they don’t ask”.

So, when should you propose a retainer over contingent? In this article, we will focus on the situations where you should propose a retainer to a client, as opposed to the usual contingent option. There has to be very solid reasons and you must be able to demonstrate to the client the clear benefits they will receive from this approach.

On the back of a failed contingent search

Can that be true? Would a client trust and retain you if you had not delivered? Yes, is the answer.

Using my existing relationship with a UAE based international tobacco company back in the day, I leveraged the work I had done with them in the Gulf in order to continue the relationship in South East Asia.

To kick things off, they asked me to identify the country managers for, if I recall correctly, Indonesia, Vietnam & Cambodia. This sounded pretty exciting. I identified so many good candidates but I couldn’t get this one to come together. We have all been there too many times. It sometimes happens, however good you may be. You put your all into closing the assignment, but things just don’t go smoothly and you’re not sure whether you should risk more time and effort with something that is looking less likely to pay off.

I had to pull out of the search so I called the client and told him. He was far from happy, but he understood and asked me what I suggested. I felt the roles could be filled, but due to the complexity of the markets, it would be extremely difficult and risky for me to dedicate much more time without some form of guaranteed payment. This converted to my first ever retained assignment.

The absolute key to winning retainers on the back of a failed search is relationship and trust. If you demonstrate that you have done everything you possibly can, the client sees less risk in paying for a retained search. This is especially true if you have a tremendous amount of goodwill and trust with the client and they want you to go out of your normal specialisation or geographic area. 

If you’re happy to do the search and you know you can deliver, but the assignment attracts a significant investment in time, just ask.

Market and research mapping

A contingent recruiter is nimble and moves very fast. One of the huge advantages to practice and geographic specialisation is economy of scale. If you are an expert in your field then your response could be immediate. Speed undoubtedly is an advantage in the contingent world, and more often than not, it can be the difference between a fee or no fee.

If a client comes to you and requests that you, not only to find suitable candidates, but also requests that you do a full market map and perhaps some competitor research in the process, then you are perfectly positioned to go down the retainer route.

A Robertson Smart market strategy was to win retained business utilising market mapping. We identified a very specific industry, Equity Research in Hong Kong. for instance and simply produced organograms of all the banks in the country. Armed with this information printed, we could quickly refer to it when sitting in front of a client. 

We would then use this information internally to very quickly identify the relevant candidate in a contingent situation, but if the client wanted more access to our research, then we would ask for a retainer. In the example above, we converted a contingent search discussion into a retained search assignment to identify a Head of Equity Research for a well known Dutch investment bank.

I do feel that many recruiters have little idea of just how knowledgeable they are about their specialisation and the key players that work in them. All too often, we get so absorbed in our day to day work that we don’t stop to think about how knowledgeable we actually are and how we can leverage retained fees from clients.

Confidentiality and control 

Some years back, I remember a client asking us to do a 100% confidential search. We were to identify a replacement where the current incumbent had no knowledge that a search had been ordered. Not pleasant, but it happens.

In this instance, the candidate source network was very tightly knit. This meant that if we were to reach out to the candidate base and reveal the client’s name, then the current incumbent would have found out very quickly. 

We discussed it internally. The potential fee was lucrative, the candidate base easily identifiable, and frankly we already knew them all. The client could not make any form of direct approach as then it would have revealed their identity very quickly.

It actually was a very easy retainer to win. We explained to the client that there has to come a point where you reveal, in complete confidence hopefully, just who you are recruiting for. Sometimes that is even in an initial screening call, or perhaps you hold it back until you have managed to set up a face to face meeting with the candidate. 

Our rationale for selling the retainer was that this was a complicated assignment and the approach would significantly slow things down. We argued, successfully, that it would be better to take a step by step approach, and not dissimilar to the three stage payment model as outlined above. 

The additional benefit we sold the client was control. This is a significant shift in the nature of the relationship between a client and a recruiter. A contingent recruiter carries most of the risk. Not so in a retained scenario as the client shares the risk with you. This gives the client a lot more say, a lot more control over the process and the recruiter. In this example, the client seemed to feel more comfortable gaining more control by taking some of the risk.

The most important factor

In my experience, these were the three most common ways to convert a contingent assignment into a retained one.

I do say, however, the most important factor up and above all of these situations are the trust and relationship you have built up with the client.

As you build that trust, why not simply approach the subject with the client in an appropriate manner when the situation calls for it, and just ask for it?

Won your retainer? Now it’s time to deliver to secure the remainder of the fee.

Lastly, if you’re exploring recruitment opportunities in Asia, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.