How do most staffing companies pay outside sales people? Is it base plus commission, commission only, base only, and is mileage always reimbursed? Those are a few questions posed to us by a Staffing Talk reader, Jody Audet of Castle Rock, Colorado’s TPM Staffing Services, and we went on a fact finding mission to get some of those answers. 
It wasn’t that easy though. It seems lots of staffing company owners and managers, like those in any other industry, aren’t all that forthcoming about what they pay their people, for competitive reasons and all that.
We did find a couple however, in different parts of the country, who were willing to share some top level info off the record.
There is a staffing agency in northern California who happens to be currently looking for an outside sales rep. They told us they are expecting to pay a base salary of $40 – $45,000, with a commission structure that could account for an additional amount of up to $2,000/month.
They also reimburse their outside sales reps at the current IRS rate of 55.5 cents for all business miles. They described the position as “road warrior,” but then added that the geographic area this rep would cover is not huge, so mileage is not a big factor in the compensation equation. The cost of living in this area is high though, so maybe these comp figures are a little high in relation to other parts of the country.
A Charlotte, North Carolina staffing company run by a professional acquaintance I met when I was working there in NASCAR, pays his outside sales reps a starting salary of $30 – $35,000, with first year potential of $50K plus according to him. He also offers a health plan, dental plan, 401K, paid holidays, paid sick days, and paid expenses, including mileage.
Outside sales reps start at $30 – $35,000, with first year potential of $50K plus, as well as a health plan, dental plan, 401K, paid holidays, paid sick days, and paid expenses, including mileage.
I also had an email exchange with the manager at a staffing company based in Birmingham, Alabama. They start their outside sales reps at $35,000+commission, with an expectation a person would make approximately $60,000 their first year if they met their quotas.
A number of online job postings I found for outside sales reps at staffing companies in such disparate markets as Woodland Hills, California, and Reston, Virginia, offer starting salaries right around $35,000 on average, with first year potential in the area of $50,000. Those positions offer:
- Commission plan
- Health plan
- Dental plan
- 401K plan
- Paid holidays
- Paid sick days
- Paid expenses
- Advancement opportunity
- Other incentives
Dave Ardent, a consultant in Manchester, England, has this to say about the compensation of outside sales reps.
“Ideally, what you want is to pay a commission that comes from profit generated by the Sales Rep’s success, where the cash amount is above and beyond all incurred costs associated with employing/training the Sales Rep.”
“Ideally, what you want is to pay a commission that comes from profit generated by the Sales Rep’s success, where the cash amount is above and beyond all incurred costs associated with employing/training the Sales Rep. This would be a good and tangible definition of success because employing the Sales Rep has entirely paid for itself so far. You should calculate when this point in time should be achieved – in other words how long it should be before a Sales Rep is effectively ‘in profit.’ The period of time from commencement of employment to the time when such employee-suitability is finally judged would typically be called the trial or probationary period. This process is, of course, something that should be transparent and understood by each new Sales Rep, and agreed to prior to commencement of employment.”
We would love to get a conversation started on compensation plans. Is base plus commission the norm? How much and how much? Does everyone reimburse for mileage? Does anyone pay any kind of per diem to cover the cost of operating a vehicle? Do you feel this is “covered” by a bonus or commission?
{ 19 comments… read them below or add one }
We have a base plus model. The base varies with years of experience. We offer paid health plan for employees (50% for families), paid dental plan, generous PTO, paid expenses, quarterly bonuses, yearly bonuses and a President’s club award and trip.
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For a sales representative without any staffing experience, how quickly do you find that it takes for that rep to become profitable?
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In my experience, I would say they should be up and running within 6 months.
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With no experience you really are looking at a year plus for profitablity. It’s going to take 90 days+ just to really build a solid, fuctional funnel plus they not only need to learn the industry, competitor info, territory, etc… but acclimate to your company culture as well. If you’re going after good business, it’s not an overnight deal. Now if you are just going to bring in a newbie to sell on price and BS then maybe they’re bringing in revenue to cover their salary early but I don’t count that as “profitable”
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No one seems to want to disclose too much, I found this to be true when I was trying to create a much simpler sales and commission plan than what I had when I worked for a large international staffing brand (who btw created a 4 page commission plan) whom I no longer work for! Personally, I have found success with 100% commission sales structure (a small draw to get them started) but at the end of the day in this economy I want aggressive “go-getters”, with an entrepreneurial spirit, who really wanted to treat this like a business of their own. 3-6% of Net Sales; variable on the GM (gross margin), less profit means less margin of commission. Mileage and expenses paid (I cap the expenses based on what volume their doing), obviously its a generous plan and thus over spending on clients is up to the sales rep and will be carried by them if over the threshold. They don’t mind if their making the good money. This helps keep them accountable as well, not as likely to take everyone to lunch all the time, or spend needlessly. This is working for now, but I am always looking at new and improved ways to incentivize and bring the best onboard. I am still trying to define a good bonus structure for our recruiters in the office though, So would love to hear some suggestions that might be working elsewhere.
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Thank you for your article. It is very timely. I am in the process of bringing on an outside sales rep and wasn’t sure how to set up the pay structure. Thanks again!!
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While with a niche firm that focused on Transportation, we set it up so that Outside Sales had a salary of 2,500 per month for the first three months (40k per year average). At 90 days they were dropped to 1,400 per month and started earning 15% of GM$ they brought in. Sink or swim. Average GM$ per hour was $4+, set by the sales person.
We provided them a company cell phone and covered mileage and expenses for the first 6 months. After that, cost of sales was on them.
After two failures we had a woman who made 80k in her first year. For bringing in nearly a half million in GM, the company was happy to write her checks.
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I believe I am truly blessed to work for who I do and I am compensated very fairly.
I have quite a bit more responsibility then just Outside Sales, while my title oozes Sales my duties are quite wide. Safety at each client, accident investigations, quarterly walk thru’s, audit of client sites. Yes, I work a desk too! I have been blessed with the ability to source candidates quite easily and successfully, therefore, I am often brought into the office to do direct hire recruiting as well. My clientele has been built over the last 14 years in the industry and I can say I have managed to keep loyal customers this entire time.
My starting package was 45K and 9% of the GP as the commission package. I am a tad above that now on base, however, the GP package has remained the same and I do not loose commission on clients ever. I am compensated a flat fee for the vehicle I drive monthly. My health insurance is prorated, I am awarded 3 weeks paid vacation, 5 days sick time, several holidays, and a generous flexible schedule. All my expenses are compensated through company CC or expense report.
We are a small staffing company with one owner – however, we manage to still bill over 5 million a year with one ME.
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I’m sorry to say but if you are as successful as you claim you have a pretty horrible comp and benefit structure. After 14 years your base has only risen a “tad” and your commission structure is the same. You only get 3 weeks vacation and 5 sick days plus, I’m assuming, the industry standard 6 holidays. Truly successful sales people are heavily recruited in our industry and especially in California where non-competes are not really enforceble. I’m not judging, just making sure you realize more lucrative opportunities exist. If you’re comfortable where you are though and love who you work for, kudos to you! Personally, happiness is more important then money!
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how should it take for a sales rep in IT staffing to sell $5,000 in weekly GM$?
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PT staffing has such high dollar amounts that it shouldn’t take long. I’d say 90 days or sooner considering you can do it with 1 good sale.
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This is certainly a hot topic in the staffing industry as many firms move in the direction of adding to their staff. It is also a critical decision and topic. First off, you have to realize that staffing professionals are sales people; rather their selling candidates on opportunities, selling to companies or both. With that said, sales compensation plans depends on the company’s organizational structure, performance and sales strategy. Meaning that companies that generate a lot of revenues are more likely to focus on market insight, strategy, coverage and compensation plans last whereas companies that generate less revenues compensation plans may be at the top of their list of importance.
I do believe that base plus commission is the industry norm. In my opinion a company should consider the position role and duties as a major factor in pay. Simply, it should be a good pay mix; a person bringing in new business and recruiting candidates should not be getting the same commission as someone who strictly manages client relationships.
I started in the staffing business as a Staffing Consultant in a small shop responsible for new business, recruiting, and closing deals I was compensated a $500 draw biweekly against commission and was not reimbursed for mileage, after taxes my monthly net was a little over $700. It is not too many people that can live off of $700 monthly however that experience made me hungry to learn the business and close deals.
I share that information with you because now as the President of a staffing agency I find that many staffing agency owners struggle with compensation plans and at times loose money because they offer aggressive compensation plans.
It is not effective to offer a comfortable base pay and commission structure typically individuals follow the same model of being comfortable and don’t have the drive and certainly don’t demonstrate hunter capabilities to close deals or maintain current client base. On the flip side you have to find a way to differentiate top performers; it is common for companies to overpay their underperformers and underpay their top performers; resulting in ultimately not being able to retain their top performers.
Lastly, compensation plans will always be a topic in the staffing industry however for those of you serious about moving forward you have to start with considering position role, market, and pay mix and many of the additional questions regarding gas reimbursement and per diem etc. would be easier to factor as part of your decision making.
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I have a couple of questions for the experts out there:
1) Is there an industry standard for what percentage of gross margin a salesperson should receive?
2) Is gross margin considered a consultant’s bill rate minus thier pay rate?
2) Since revenue doesn’t come in until placements are made, how do you keep a salesperson who landed a new account motivated?
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Regarding #3 – I never consider an account “landed” until an order is placed. A true salesperson is always working on a number of prospects at any given time.
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Thanks, Kimberley. However, once the salesperson has signed up a new account, it’s up to the recruiter to actually try to fill the orders that result from the new account. How involved, then, should the salesperson be involved in the recruiting process?
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It’s the same at my firm. Sales, brings in the orders, Recruiters fill them. If you have a team of trusted recruiters you can walk away from the order leaving them the knowledge that you are only a phone call away if they need help. Sometimes though, for tougher positions, it’s best to meet with the recruiter to map out at strategy on how you will source and fill the role. For most of my orders I simply monitor them from a distance and then connect with the recruiter if I see a potential issue. For tougher positions, I have taken an active role in direct sourcing candidates for them. It really depends on your relationship with your recruiting team.
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There is really no industry standard as far as GM, simply because every company has different goals and motivators. Gross margin is calculated as bill rate – pay rate – burdens (workers comp, payroll taxes, etc..). Salespeople in staffing should have no problem understanding that a sale doesn’t “close” until it bills. How often do we all hear “I’ll give you my next order”? It means nothing until you get the person filled and billed.
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I work in Canada in a very busy market. The city where I live has approximately 300 staffing firms. But not all are created equal. Some pay strictly 100% commission, some pay hourly wages plus commission, some do salary plus commission.
The company where I work pays a very modest salary plus commission. We have a minimum amount of sales that must be achieved each month before any commission is paid ($15k – very achievable). The rate of commissions increases as the sales numbers increase. For example for sales under $40k a month commissions are paid at X percent. For sales $40,001 – $50,00, commissions are at a higher percentage, etc. So basically, the more I sell, the more I earn.
Our clients remain our clients and are never made into “house accounts”. Compared to our competitors we have many long term employees (10 years +), myself included.
Our company pays for parking, but no automobile expenses (as this is a taxable benefit). We can claim our auto expenses on our income taxes. The premium for health benefits are split 50/50. All employees start at 3 weeks paid vacation and jump to 4 weeks after 3 years. Additional paid days off are given during the December holidays.
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How do you guys calculate burden when placing 1099′s? Some go for 25% of pay rate, some a percentage of the GM…
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