The end of the year is typically the time where annual contracts are renewing for your tools and services, you’re evaluating what you still need to close to hit financial goals, and always thinking about how to increase your bottom line. This means now is the perfect time to reflect on what happened in 2019 and create your plan to increase recruiter revenue in 2020.This article focuses on four ways that recruiters may increase recruitment revenue in 2020.
- Engaged Recruitment
While different versions of this type of recruitment exist, typically a recruiter will receive $1,500 to $2,000 before the search begins. Of course, this upfront fee amount will vary depending upon the salary range of the open position. This portion of the fee is non-refundable and subtracted from the final fee payment after a candidate is hired.
With this option, the recruiter changes the scope of the services provided to the employer. It is a great start to add retainer elements to a contingency model. It positions the recruiter as a professional service provider for an employer, similar to the relationship an employer has with an accountant or attorney.
A recruiter with this type of fee arrangement will invest more time in the research phase of recruiting than recruiters with a contingency recruitment agreement. Independent recruiters with their own firm, either where they work alone or have a small staff, do not have the time to invest in research for a candidate if an employer isn’t willing to make a commitment to the candidate search by paying a partial fee upfront.
- Split Fee Placements
Are you currently making split fee placements? If not, you may want to consider this option as a way to better serve your clients and candidates. Isn’t 50% of a fee better than no fee? When you are working in a high level network such as NPAworldwide, many recruiters have 25-30% fees they are splitting, which is a better certainty than hoping a brand new contingent client you signed will agree to a 12-15% fee. Independent recruiters who make split fee placements serve their clients better than those who don’t by being able to increase the pool of candidates in their niche by working with other recruiters. In addition, they ask for and fill positions located in other geographies because they are confident their trading partners will be able to assist them. On the candidate side, a recruiter making split fee placements is able to provide more opportunities to candidates.
Independent recruiters can increase their revenue by developing informal networks of other independent recruiters interested in splitting fees. Another option is for a recruiter or recruiting firm to consider joining a formal split fee placement network.
All of a recruiter’s business doesn’t have to result from split fee placements. Decide on a target percent of your revenue and create actions steps to meet your target.
- Contract Placements
If you are not currently making contract placements, 2020 might be the year to add them to the mix! Many recruiters offer contract placement services to their usually direct clients, helping them to fill their temporary assignments. With contract placements, a recruiter usually receives a small fee on a weekly or bi-weekly basis, earning money for every hour the contractor works. While this seems complicated to keep track of, there are now so many back office support companies that are affordable and manage all of that for you.
Let’s say in addition to one permanent placement, a recruiter also places a contract employee at his client’s company for a short term assignment of lets say 8 months. During that time, the recruiter earns $16,000 in placement fees. That’s a steady income of $2,000 per month that you know will cover some tools/services, etc your firm is using monthly while the direct placements become more like bonuses on top of any contract placements that slowly start to add up.
- No Guarantee
Yes, I said no guarantee! One of NPAworldwide’s new members explained how she has not had a guarantee for more than 10 years. Instead, she charges a fee of 30% of the candidate’s annual salary which is paid in three equal payments on the date of hire, 30 days after hire, and 60 days after hire. In addition, she offers the client a discount off the 30% fee if the client pays sooner than agreed; 25% if the fee is paid within 10 days and 27% if paid within 30 days.
The reasoning behind not giving a guarantee is that the independent recruiter supplying the candidate to the client has no control over what happens after the candidate is hired. The client must accept responsibility if the candidate does not work out. Other professionals – accountants, attorneys, etc. – do not return fees. Why should you? This is a paradigm shift worth implementing in 2020.
Do you have any other suggestions as to how independent recruiters may increase recruiter revenue in 2020?