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Precision Recruiting Services Inc., Rec2Rec, Recruiting for Recruiters


 

Precision Recruiting Services Inc.

How does draw against commission work?
by Stuart Musson

Getting paid in whole or in part on a commission basis means that your performance and success on the job will have a direct impact on your paycheck. Being paid using a commission structure gives you, the Recruitment Professional, control over how much you earn during a specific period. In many cases it offers you unlimited earning potential based on how good you are at what you do and how successful you are.

Many recruitment jobs base at least part of their pay structure on Recruitment Professionals, such as you, making commission. Some Recruitment Professionals work on straight commission, and there are others, particularly in the larger Recruitment companies, who simply work for an agreed upon base salary + commission plan. An intermediary step between the two is a pay system called draw against commission, which is quite common for the small to medium size companies that Precision Recruiting typically represents.

Draw against commission generally works in the following way. At the beginning of each pay period you’re given a specific amount of money in advance, called a “pre-determined draw”. This draw is deducted from your commissions at the end of a pay period. When you exceed your sales goal, you’re paid a commission, but your draw in the past has been “drawn” or subtracted from this commission. 

Once you meet or exceed the sales goals, you are paid in straight commission, which is normally more than your draw.

For example: The Recruitment Professional accepts draw of $4000 per month. There is a 3 month period before earning a commission of $24000 (Approx 3 Perm placements). The commission paid would be $24000 - (3 x 4000) = $12000, so your benefit would equal the entire $24000 for 3 months.

However, if you fail to meet the sales goals in the future, you are merely paid your pre-determined draw amount again and the draw against commission starts over.

What’s really occurring here is that you are working on a straight commission, but you are guaranteed the same draw from pay period to pay period to pay the bills. In order to make more money in this system, you have to consistently sell above the draw level to make sure future paychecks won’t have commissions deducted from them.

This payment is slightly different than one where Recruitment Professionals are given a base salary + commission. Though base salary + commission Recruitment Professionals may still have sales goals to meet; not meeting the sales goals does not affect their pay. As they receive their salary plus a percentage on anything they do sell.

With a draw against commission your company understands there is a risk inherited by you and therefore will pay higher commissionable earning percentages versus a base salary + commission. Which allows for the main advantage of draw against commission; it rewards the superior Recruitment Professional for being able to exceed sales goals. Usually the best way to earn higher compensation is to exceed your sales goals so that you’ll get paid more than your draw rate every pay period. Again if you are very good at what you do you will earn more money!

In positions where you generate your own leads, draw against commission is an effective payment method as it will motivate you to work smarter and harder to obtain a higher paycheck. There are still issues outside the your control like a negative economy that might have you making only draw but keep in mind those in a base salary + commission pay structure may be laid off first, in a negative economy, as the company takes all the risk with a base salary payment structure not you.

With a draw against commission versus a straight commission at least in lean times, there is that draw amount to fall back upon, which can be better than making straight commission if sales suddenly take a downturn, where no sales means no income.

Live, Laugh and Learn

Precision Recruiting    
Web: www.PrecisionRecruiting.ca