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Agency profitability hinges on commission scheme reviews

It's never been more important for recruitment agency leaders to understand how their commission schemes are impacting their end profitability, an advisor says.

There are so many similar but subtly different commission frameworks in the recruitment industry, and agencies don't always review them regularly to ensure they're fit for purpose, says freelance CFO Craig Knox, who specialises in advising recruitment companies.

"There are different schemes that give different levels of payout, but for me, it's all about what does that then do to your profitability," he tells Shortlist.

One critical metric that requires consideration is payout ratios, he notes, adding that this is "your internal staff cost as a percentage of your gross profit generated, and there's benchmarks around what that should be...