When it comes to moving to a new agency, although salary isn’t commonly a primary driving factor, it still plays a critical role in enticing a recruiter to make the final decision and accept an offer. Let’s face it: no one wants to move for the same or less money whatever the opportunity.
How much of an increment you get when you move to a new agency depends on countless factors and every situation is different, but these are often the three most important factors: your billing track record, desk experience and current salary.
Unless you are majorly over or underpaid (find out in our salary guide for Singapore and Hong Kong), the average salary increment when moving to a new agency is between 10 to 16% but what exactly should you ask for in your situation?
In this guide, I will share some of the ways you can determine whether you should be looking for more or less than the typical 10 – 16% increment.
*Junior recruiters will receive higher percentage increments even if their salary increment is the same as more senior recruiters. See the end of this article for a disclaimer on the percentage increase calculation.
Your billing track record
Your billing track record is the first thing an agency will look at when it comes to figuring out whether they’re going to offer you your desired salary and it’s one of the best ways you can determine whether your offer is fair or not.
The golden rule to running a profitable recruitment business is ensuring your recruiters are billing over 3x their base salary, also known as the third rule. A third of your revenue is used to pay you (we recently calculated the exact figure was 32% on average including commission), a third is allocated to operating cost and the final third goes into a pre-tax profit.
As a recruiter, that means if you’re billing above 3x your base salary, which is typically when commission starts to become payable, hypothetically you’re earning a profit for the company.
If you’re billing above 4x your base salary, you’re a strong performer and it’s very likely you should be aiming for an increment in the 10 – 16% range.
If you’re billing over 5x your base, you’re an exceptional performer and you may be able to leverage a salary increment above 16%.
If you’re billing less than 3x your salary, whether it’s because you’re new to your agency, the environment just isn’t for you or you feel you don’t have a strong enough platform, it will be challenging to secure an increment based on the third / third / third rule. This is quite common.
There are many recruiters working for agencies where they are unable to release their potential for one reason or another. Your next agency will hire you if they believe in your drive and ambition but you will need to prove yourself before you secure a decent pay rise.
There will be exceptions to the above. Some agencies explicitly offer an option to take a below market rate base salary but with an improved commission scheme and in this scenario the above would not be applicable.
The practice you’re joining
If you’re moving to specialise within the same practice you already have experience or a network in, in theory, you will be able to make a placement faster than someone who doesn’t have that, leaving you in a stronger position to secure a higher salary increment.
Additionally, if you’re recruiting in a practice where recruiters are scarce, you will also be in a stronger position to leverage an even higher increment. Examples of these practices are specialised Data Science Technology recruiters, Finance Insurance recruiters, Private Practice Legal recruiters, SAP Contracting recruiters and so on.
If you’re in a fortunate position to have earned the experience as well as specialising in a niche practice, combined with a strong billing track record, then you have more bargaining power and there’s a good chance you can negotiate an above average increment (above 16%).
If you’re changing practice to a market you’re passionate about, your new agency might be happy to make an investment in you, but naturally you will need more time to become profitable. In this case, if your billings are between 3 to 4x your base salary, there’s a chance the agency may not want to offer an increment above 10% or at all. If your billings are 4 to 5x your base salary, you should still be able to secure an increment.
Your position in the new agency
If your new role in the agency plays a crucial part in the long-term vision of the business, you’ll be in a stronger position to secure an increment above 16%. Most of the time, this position will be in management where you are leading a team of recruiters or if you have some level of P&L responsibility.
It’s harder to find specialised managers than it is individual contributors (IC) because of the number of candidates available in the market, so if you are an IC, you may find it more difficult to secure an increment above 16%.
With that being said, going back to the earlier point about having experience in a scarce practice – as an IC – although you’re not managing, your network is such a rarity that agencies would go head to head to compete. Secondly, as more agencies become more lean, ICs are in higher demand. Some agencies even overpay to secure the best in the war for recruitment talent.
Your current salary
This is a controversial topic. Some people believe that employers should not look at a candidate’s current salary when drawing up an offer. Instead, it should be determined by their track record and experience.
In reality, the above is not practiced by many companies and the agency will 9 times out of 10 ask what the current salary is of a candidate so they can get a better understanding of what they will put forward as an offer.
In a situation where you are underpaid in your current role, by say 30%, most agencies will recognise this and they will offer you a salary that is more in line with your experience.
Additional situations where an increment is typically not offered
There are some additional situations where an increment is not offered or perhaps a reduction in base salary is offered.
International relocations, for example. It’s similar to when you change practice – you’ll need more time to build a network to generate revenue to justify your salary. Unless your track record is very strong, matching your base salary when moving internationally is common.
Short tenure in your current role (<6 months) is another example. An employer will not want to offer an increment if you’ve been in your current role for less than 6 months and you haven’t had a chance yet to showcase your potential.
Lastly, adverse market conditions is another common situation. Your new agency wants to make the hire but they can only get budget approval for a matching or lower base.
Combine two or more of the above, such as an international relocation during a recession, and there’s a good chance you’ll have to take a salary cut for the time being.
Make sure your demands are ‘morally’ appropriate
Whilst it is a good thing to aim for slightly above what you’re worth for negotiation purposes, there is nothing worse for an employer when receiving a highly unrealistic salary expectation demand from a candidate.
Of course, there will be some rare situations where a 30% increment is highly justified. For example, if you were billing 6 – 7x your base salary or if you are massively underpaid. If you’re billing less than 3x your salary and you’re looking for a 30% increment – sure, it’s very likely you have the potential, but the employer will need to invest time and money into developing you as a recruiter. Your expectation may come across as uncommercial.
On the contrary, the same goes for agencies when they lowball a recruiter. An unretractable sour taste is left in the recruiter’s mouth and more often than not the process is unrecoverable.
All in all though, you should be transparent and realistic about the figure that you share. The best way to approach this, whatever the situation, is to pick a figure that you’d be quietly surprised about getting if you were offered it, but realistically you’d expect that figure to get knocked back once. Be slightly ambitious but not outrageous.
This way, the figure you end up with is going to be fair to both parties and either way, you’ll be happy with the outcome.
Knowing what is right in your situation
There are so many factors to take into consideration when it comes to determining what you’re worth. Every situation is different and must be analysed separately but by looking at your billing track record as the number one factor, your experience as the second and current salary as the third in that order of importance, you should be able to come up with a figure that is fair on both parties.
It’s a tricky one to get right. My parting advice would be to be slightly ambitious but not outrageous. Never sell yourself too low!
Are you unhappy with your current salary? Please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.
Next, it’s time to figure out if your commission scheme is competitive enough!
It’s important to note that the more junior you are, the higher the percentage increment may be, even if you receive the same increment as someone who is a Manager.
For example, an increment from Consultant to Senior Consultant in Hong Kong could be from HKD $25 to 30k per month which equals a 20% increment, whilst a Manager going into Senior Manager could be from 50 to 55k per month which equals 10%. The amount has increased by 5k in both situations, but the percentages are quite different.
For the sake of this article, we calculated the average increment for all seniority levels, from Associate Consultant to Managing Director.
The percentage increases discussed are also relative to normal market conditions.