Category: Recruitment

As agency recruiters, we all encounter KPIs in some shape or form throughout our daily professional lives. Agency culture is often driven, and sometimes even defined, by the extent to which it’s considered to be a ‘KPI focused’ environment.

KPIs are Key Performance Indicators. A quantifiable measurement of actions undertaken by a recruiter on a daily, weekly or monthly basis. They are designed to measure and evaluate a recruiter’s activity, performance and success.

Deploying a KPI-driven strategy works well with some recruiters. It helps them stay structured throughout the day, making sure they’re completing the right level of activity that will lead to success in that specific model. Other recruiters associate the acronym with negative connotations. Some recruiters don’t work well following one specific set of targets and would prefer to conduct the activities autonomously that they feel will lead to more revenue.

In recent years, the small to mid-sized agencies – especially startups – have moved towards a culture that is more focused on revenue generation over other intricate measures such as phone hours, but can a recruiter really be successful with zero KPIs?

Common KPI measurements

KPI measurements can vary depending on what the firm wants to measure, but these are the common ones. Our focus here is on permanent contingent recruitment.

• Phone calls – the total number of outbound calls a recruiter makes
• Candidate interviews – how many candidates a recruiter meets
• CVs sent – a measurement of the number of CVs sent out to clients
• First interviews – the number of first interviews conducted between a candidate and a client
• Subsequent interviews – second and subsequent interviews between a candidate and a client
• Placements – the number of physical placements made over a period of time

There are others, such as time spent on the phone, but from my experience these are the ones employed by the majority of contingent recruitment firms. This is the case for Hong Kong & Singapore, but equally applicable to New York or Sydney. 

What circumstances are likely to lead to a greater emphasis on management by KPIs?

The question is: can recruiters achieve success without having KPIs?

I thought it would be a useful exercise to explore which environments see the highest focus on KPIs.

The recruitment model

The most common one. Some firms are simply KPI-orientated. Robertson Smart was overtly KPI focused. I am sure there are those out there that remember PCX and CPE?

In my recent article about what distinguishes a top biller from the herd, I reflected on the fact that we used to hire recruiters directly from industry, hence they had no prior recruitment experience.

We employed KPIs vigorously as it was a way of keeping the inductees on track. The methodology was totally alien to, say, a trader or a lawyer, hence we used KPIs to maintain adherence and control.

Training

If a global recruitment firm had a strategy of hiring entry-level graduates to train up or if a firm has a vigorous training program then you would expect a similar approach.

The more experienced a team is, the less the reliance on KPIs. There are of course exceptions to this. The actions measured by KPIs also do not go away but the adherence to activity and quality levels simply becomes second nature.

Management

Managers come in all shapes and sizes. There are managers who adopt KPIs as the core method by which they manage a team.

I began my career that way. My early mentors drilled KPIs into me to the point it ran in my veins. Over time, however, I learned that this is often a very unpopular management style and can often be very demotivational.

Managers must always use KPIs subtly and as a way to guide, mentor and train and never as a blunt instrument to bash a recruiter over the head.

I am talking figuratively, but management by KPI tends to lead to the negative connotation we talked of earlier.

How can KPIs be used positively?

Revenue is king

We adopt KPIs with a view to ensuring that recruiters conduct a level of activity that leads to end results in the form of revenue. 

If a recruiter is 100% on target for a period then surely that is the most important thing? Some firms look at targets beyond revenue, even if the target has been hit.

There is an argument to say that you could have achieved greater revenue if you had achieved other non-revenue related targets, but there is also a counter argument to say if you did that, you may have affected the quality of your conversion rates and lost revenue.

My rule in this scenario became simply that revenue was the most important thing.

Carrot or stick

When a manager uses KPI data to help and guide a recruiter, it is far more positive than using bad KPI data as a stick.

The most important thing for me as a manager is to focus on the ratios, not just the numbers. If a manager tells the team that each recruiter must get 20 CVs, they will send 20 CVs out. Quality will suffer as quantity has taken over. Far more positive is to learn what percentage of CVs sent leads to a successful first interview being set up.

Trend analysis

This is the sophisticated and far more interesting aspect of KPI measurement. However successful or experienced we become as recruiters, we will stay occasionally stray, lose focus and take our eye off the ball.

Trend analysis over time is a very useful tool for spotting this. It may be that the market is changing and you were not aware.

What if, for example, your interview to placement ratio was declining, or indeed improving. Wouldn’t you want to know?

For me, personally and managerially, my absolute most important measurement is the first interview to placement ratio. It is the ultimate measure of the quality of consultative work you produce.

So, can recruiters be successful with zero KPIs?

Yes and no.

Trainee recruiters with subtle, positive and professional KPI management are far more likely to fully understand their art, and to be ultimately successful.

This is true also of experienced recruiters changing agency models. Over time, as the business becomes more like second nature, then an experienced recruiter will adopt the right level of activity quantity and quality.

For the most part that is true. That said, we have all managed many recruiters who do need fairly consistent motivation and discipline. I think these individuals are quite open to this.

I was talking to a great recruiter the other day, and he told me he would always opt for a tough but motivational manager. He openly said that if his manager was ‘soft’, he would not perform as well. 

In my last article, one of the five top billers used to keep his own personal and meticulous KPI records, and these were independent of the ones we kept for him. I recall he even went further and measured his subsequent (second and third etc) interview to placement ratio. We discussed this and I felt that measurement had little validity. I felt that the decision to interview based on the CV coupled with the first interview to placement were the key metrics but he wanted to take it further. Though he was a top biller, he was a very detailed and numeric guy and saw the value in it.

Subtle, professional and motivational KPI management keeps us honest. This applies to the graduate recruiter on day one of their career, and equally to one of the very biggest billing recruiters I have ever worked with.

Embrace the science of recruitment KPIs would be my recommendation.

Consider an agency that adopts a different KPI model

If this article has helped you decipher that your KPI management doesn’t work for you, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

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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!

Disclaimer

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.

Hitting the SGD $1 million / HKD $6 million mark in recruitment is a monumental achievement that belongs to a handful of legendary recruiters.

I was asked recently how many million dollar recruiters I had managed in my career.

Some billers did very well in a particular year, but not the following year. For the sake of this article, I began to think about recruiters who, on more than one occasion, billed over a million dollars in a year.

The biggest billers we had were in the Robertson Smart days. Interestingly, that led me to some insightful conclusions when thinking about what exactly contributed to someone becoming a million dollar biller. 

Five 1 million dollar billers is the answer to the question. Three were based in the Singapore office and two in Hong Kong. Of the five, four are still active in the industry and sadly one is no longer with us. They are a mixture of nationalities and currently residing in three different countries.

It got me thinking about what it was about these 5 individuals that enabled them to bill so much and so consistently. What exactly did they have that separated them from the herd?

This was a tough one, but when I got thinking, I found some similarities in each individual.

Direct from industry and specialisation

This was perhaps a surprise. Of the five, only one was working in the recruitment industry before they joined Robertson Smart. Three were bankers and one was a lawyer. I think this needs some explanation.

The Robertson Smart strategy, from inception, was to hire industry experts and not to hire recruiters. This had two driving forces. Firstly, there was virtually no ready supply of recruiters in Hong Kong and Singapore at the time. This scarcity still exists to an extent in today’s market. Secondly, the strategy was designed to penetrate very senior levels of search business but by employing a broadly contingent model. It wasn’t uncommon for our contingent recruiters to sell retainers.

Was this a factor in those four individuals billing such high levels of revenue? Yes, one hundred percent. Crudely put, we used to say it was easier to teach a banker to recruit than teach banking to a recruiter. The same for a lawyer. They came into recruitment having often been successful in equally competitive businesses. These individuals had instant access, credibility and expertise. That was overlaid with a very solid induction and training programme which helped to attract top talent to a newer brand.

The combination of these elements meant that very credible recruiters were approaching a candidate base that had common senior experience. Resultant fees were big. From memory, the biggest single fee deploying this approach was north of USD $630k. Difficult to believe, but true nonetheless.

Direct from industry is a model that is still very commonly employed in today’s market as more firms appreciate the benefit of being a specialist. It’s easy to see why.

Others who didn’t come from industry, such as the one biller of the five who came from recruitment, who spent time learning their market inside and out, were very successful too.

Methodology and access to senior executives

I touched on methodology above but it’s worth digging a bit deeper. As mentioned, the broad strategy involved identifying lawyers and bankers, for the most part, but we were open to any industry professionals. Traders covered trading, private bankers covered private banking. We had an ex-hotelier covering hospitality and a qualified accountant covering the accountancy and finance function.

The point is, however, that this was a contributing factor in creating above average fees. Recruiters would join the business with zero experience, be encouraged to widely network and meet candidates who were, first and foremost, industry and professional peers. In tandem with the candidate networking, the recruiters were encouraged to meet clients.

The inductees more often than not had zero recruitment experience. If that was the case, how could we have let them loose on their own so early in their recruitment career? This was never a problem. Imagine a qualified lawyer, turned recruiter, networking with a number of lawyers who were both clients and candidates. They were armed with the right set of questions and were clear on the objectives of each visit.

They were taught to try and spot opportunities of a logical connection whilst not being coached simply to look for and fill specific assignments. This worked exceptionally well with what I came to call a ‘bolt-on’. A bolt-on sector is one where a firm is open to hiring additional heads regardless of whether there is a vacancy or not. Two perfect examples are private banking and fee-earning lawyers. Clients could and would simply push the desks aside to create space for another one, figuratively speaking.

In this scenario, it is quite easy to see how rookie recruiters could, sometimes instantly, be transported into high fee opportunities very early on in their careers. Of course, the starting point was at such an elevated level that it often would only go upwards, culminating in a million dollar biller.

The above is not the full story though. Not every recruiter who made this move was successful; recruiters needed character, too.

Character and motivation

Was there a similarity in character of these individuals? Was there something else on top of their career backgrounds and access to senior networks? Absolutely.

When I visualise the five, most were – to some extent – a lone wolf character. Highly engaging, intelligent, fun and challenging individuals but each had a very internal focus. They were all highly money and goal orientated.

They came to work, to work. They would get their heads down and get on with it. I would never have to talk to them about activity. No need to even bring up KPIs, except perhaps as a way to demonstrate what high levels of activity could mean to your personal billings and income.

I recall that the four of them who came from industry (and not recruitment) were utterly invested in the training and induction program. They did not see it as an irritating training ritual, but rather something to learn from and use to their advantage.

They were all with us for over half a decade

Two of the million dollar billers stayed with us for a decade and the remainder over half a decade. They were colourful characters and there was never a dull moment. They carried themselves very well and enjoyed, I am sure, the prestige of being the superstars of the time.

Long tenure is a sign of stability. These were amongst the most headhunted recruiters in Singapore and Hong Kong. So many firms tried to attract these recruiters away from us, but a number of boxes had to be ticked in order to achieve this. For these individuals, it did not seem to happen.

A very lucrative commission scheme contributed to this success, one that I like to believe was not beaten anywhere in the market at the time. It was not the sole contributing factor, though. I will cover that off in another article in the coming weeks.

Combination of factors

The factors of specialisation and methodology, combined with a certain character, led to the successful development of million dollar billers.

I am very certain of this and it is well worth mentioning that this approach developed many scores of top billers in the half million mark over the years as well. All were equally welcome – I can assure you!

Join an agency where you can become a top biller

If you’re a recruiter in today’s market, we’re working with over 20 agencies who have successfully developed top billers through learning & development programs.

Please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

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