In a perfect world, every split placement ends with a happy candidate, a client who pays on time, and two recruitment partners sharing a fee. But what happens when a placement goes wrong?
Here are a few common scenarios where a split placement can fall apart:
- The “no-start”: The candidate backs out before their first day.
- Replacement guarantee: The candidate quits or is fired before the guarantee period ends, and a replacement is required.
- Money-back guarantee: The candidate leaves before the guarantee period is over, and the fee must be returned to the client.
- Guarantee extension: The candidate leaves after the guarantee period, but the job recruiter offers the client an extension as a goodwill gesture.
Let’s break down what happens in each of these situations.
What happens in a “no-start”?
A “no-start” occurs when a candidate doesn’t show up for their agreed-upon start date. This might happen if they accept a counteroffer, change their mind, or the client withdraws the offer.
Since no fee has been exchanged, this is the simplest scenario to manage financially. However, it’s still a disappointing outcome for everyone involved and usually means restarting the search from scratch.
What happens if a split placement fails with a replacement guarantee?
A replacement guarantee means the recruiter must provide a new candidate at no extra cost. While that sounds straightforward, the details can get complicated.
In a split placement, it’s common for the candidate recruiter to have the first opportunity to find a replacement. To avoid disputes, you must define a clear process beforehand. Address these questions upfront:
- What is the client’s expected turnaround time for the replacement? If the initial search took three months, it will likely take a similar amount of time again.
- How long does the original candidate recruiter have to find suitable candidates?
- If the candidate recruiter can’t or won’t find a replacement, are they required to return their portion of the fee to the job recruiter, even if no money is returned to the client?
What happens if a placement fails with a money-back guarantee?
On the surface, this is simple: the fee is returned to the client. However, it’s crucial for the job recruiter to discuss this with the candidate recruiter from the beginning. The candidate recruiter must be aware of their obligation to return their half of the fee.
We recommend reviewing the fee and guarantee terms before any split placement activity begins. For larger fees, consider placing the funds in an escrow account until the guarantee period ends. Having to suddenly return a five-figure fee can seriously impact a small firm’s cash flow. These conversations are much easier to have before a problem arises.
What happens if the guarantee terms change?
This is more common than you might think. Imagine a job recruiter has a 60-day money-back guarantee. The candidate quits on day 62. To appease their best client, the job recruiter offers to extend the guarantee and refund the fee.
In NPAworldwide, the candidate recruiter is generally not obligated to honor changes to the fee or guarantee that were not communicated and accepted in advance. If the job recruiter offers a refund after the guarantee has expired—without getting the candidate recruiter’s prior agreement in writing—the candidate recruiter may not have to return their portion of the fee. This means the job recruiter could be out the entire fee, not just their half.
Split placement relationships can be destroyed by misunderstandings about fee and guarantee policies. No one wants to feel cheated out of their hard-earned money. The solution is to overcommunicate in advance and get everything in writing. This ensures all parties are clear on their financial obligations and can walk away if the risk is too high.