New Business Revenue Split Discussion
In our team, we have four sourcing consultants and a newly hired 360 recruitment consultant. The 360 consultant has begun engaging in business development activities. However, she expressed that when she secures new business that she cannot fulfill herself, the roles are passed on to a sourcing consultant. She believes that the revenue split should be 30% for her and 70% for the sourcing consultant. Furthermore, she thinks this arrangement should apply for all new business she brings in and for any placements she cannot fill for a period of 12 months after securing the business.
Is her perspective valid?
RCadmin
The proposed split of 30% to the 360 consultant and 70% to the sourcing consultant for new business that the 360 brings in but cannot fill is not uncommon in recruitment businesses, but whether it is “correct” really depends on your organization’s policies and culture.
Here are some factors to consider:
Company Policy: Is there an existing commission structure in place for business development and candidate placement? If so, it might be worth reviewing that policy to see if it addresses such scenarios.
Role Definition: The 360 consultant is responsible for both development and delivery. If they bring in the business, it makes sense they receive a commission, even if they don’t fill the role. However, the sourcing consultant is also playing a crucial role in that success.
Long-term Business Health: You should think about how this split could incentivize consultants and how it aligns with the company’s goals. Will this encourage collaboration or foster competition?
Industry Standards: It can be helpful to look at what similar businesses in your industry do regarding commission structures for business development and placements.
Duration of Split: The suggestion of extending the split for 12+ months post-business acquisition might be excessive unless there’s a unique arrangement that warrants such continuity.
In summary, while the 30-70 split arrangement may seem reasonable under certain conditions, it’s essential to ensure that it aligns with your organization’s policies, promotes a collaborative culture, and supports long-term business objectives. Ultimately, having an open discussion with all involved parties to establish a fair and transparent process would be the best course of action.