Now that 2019 is officially in the rear-view mirror, it’s a good time to show a split placement summary of the activity we saw in our network. We break down split placement data in lots of different ways. Today I will focus on salaries and practice areas. Read the rest of this entry »
Our Global Conference is just 8 weeks away, and I’m neck-deep in the details that lead to a successful event. NPAworldwide’s member-owners elect officers and directors and make decisions about network policies and future plans during the annual meeting portion of the conference.. Member-ownership is perhaps THE thing that makes NPAworldwide different from other split placement organizations. I love this time of year when owners come together to share ideas and debate a wide variety of topics. I’m always impressed and excited by the passionate enthusiasm that members display.
What exactly does member-ownership mean? Well, in it’s simplest terms, the entire network is owned by its members. Each firm becomes an equal co-owner upon joining. We are governed by a board of directors elected from the membership. Members have control over the rules, which are established via a democratic process. Members pool their resources and work cooperatively to reach common goals. Profits can be reinvested in the network or shared among the owners. There is not a private individual or corporate structure that benefits from the profits of the network. Because each member firm is an equal owner of the network, a small recruitment firm can have just as much influence as a larger business.
NPAworldwide members determine the rules that define split placements, membership qualifications, financial responsibilities, dispute resolution and more. Our bylaws were modernized and rewritten in 2012 (not for the first time) and have been amended almost every year since then. As recruitment changes and evolves, our governing documents strive to keep up with that change. Member-ownership means that members can help shape the way they want to work with other members in the network. Members are accountable to each other to ensure the rules are followed. This helps foster a high degree of trust among partners and an increase in split deals.
The ownership of a split placement organization is an important detail. Learn more about different ownership structures here.
NPAworldwide will celebrate its 64th year of facilitating split placements next year, so it’s fair to say we’re biased on this topic. Splits are an excellent way to diversify your business focus. They can help you increase your geographic reach. Splits also offer economical business expansion for boutique recruitment firms. If any of these items keep you awake at night, consider adding splits in 2020.
Diversify Your Business
Split placements can help you fill roles in additional occupations and niches. If your engineering client suddenly needs a CFO, a good split partner means you can say yes with confidence. If your niche is softening, let your split partners serve as your business development division and source candidates for THEIR jobs.
Increase Your Geographic Reach
Do you have the ability to source candidates in Germany when your client opens a new manufacturing facility there? Are you knowledgeable of the salary and compliance laws in Australia? How do you interview candidates effectively with a 9 hour time difference between your locations? Many recruiters are intimidated at the prospect of accepting global assignments. Split placements are a perfect solution. Your in-country partner can help source and interview candidates, and may also be able to assist in the details of the offer, local business customs and more.
Economical Business Expansion
As a business owner, you’ve likely grappled with how to effectively grow your business. In many instances, real growth involves a significant investment of capital. Since the outcome is not guaranteed, it’s a risky model. For recruitment firms, it typically means hiring additional recruiters. In turn, you may also need to provide equipment, software, tools and support, and training. You’re committing to ongoing overhead costs with no guarantee that they will be productive enough, all the time, to cover those costs. Split placements mean reaching out to trusted partners when you need them. You don’t need to train them or purchase a LinkedIn seat. When the role is filled, you’re not continuing to pay. If managing people is not your strength, this model will reduce the amount of time you spend on that activity. In turn, that gives you more time to spend on placement activity.
Split placements are not a magic pill to cure all of your business pain, but when done properly can be an outstanding supplement for your firm.
NPAworldwide is a global network of independently-owned, professional recruiting firms working together to increase revenue through split fee placements. The network enables members to better serve their clients through extended geographic reach and greater access to industry specialization. In the process, NPAworldwide members benefit from increased production and a stronger competitive position.
Not only did the number of NPAworldwide member firms grow immensely in 2019, the number of split fee placements made by members also drastically increased, with total member revenue reaching 7 million dollars! Split placement activity occurred around the world with North America leading the network in deals. The following information highlights key 2019 results:
- Placements of positions with US$100,000 and above salaries were 35% of total split fee placements
- Placements of positions with US$70,000 and above salaries were 59% of total split fee placements
Top 5 Practice Groups based on number of split fee placements, listed high to low. Click here to view industries/niches included in these Practice Groups.
- Sales / Marketing / Business Development
- Accounting / Financial Services
- Chemical Process
It’s not even the end of the year yet and our members are sharing jobs and placing candidates with one another at a rapid pace, excited to see what the rest of the year holds for the network! What does 2020 look like for you? If you are leaving additional revenue out of your business model by not leveraging other independent recruiters there is still time to set yourself up for success in the new year.
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?
In NPAworldwide, our default position is that members share in a 50/50 split placement. That is likely your split placement expectation as well, but what about unique or unusual circumstances? There are times when a 50/50 split might not be the best option. Here are some examples I have seen: Read the rest of this entry »
In a split placement, the prevailing wisdom is that the partner providing the candidate is at the most risk of financial harm. The fee is paid to the partner working with the client. The candidate provider (we say ‘exporter’ in NPAworldwide) is completely at the mercy of the partner to pay them as promised.
However, the job order partner (we say ‘importer’) also faces financial risk. What happens if the candidate quits (or is terminated) AFTER the fee is paid, but BEFORE the guarantee period expires? How do you handle refunds to your client when you’ve given half of the fee to a partner? This does happen, although it’s not common. Make sure you understand this scenario before you enter into a split placement arrangement. Here are some things to consider: Read the rest of this entry »
As the Director of Membership for NPAworldwide, I speak to many independent recruiters who are considering joining that are very familiar with the idea of split placements, have considered implementing them into their business model, or a good percentage of their business already involves split fees. Here are just 5 key reminders you should abide by and look for in others as you make successful split placements or are joining a network.
- Your trading partner’s time is just as valuable as your own. If you have reached out to a trading partner or posted a job, you owe them the acknowledgment and information to make their time worthwhile. Do not ask your trading partners to work jobs that do not have a chance of success, or that you are already almost closing on. Having chosen to be involved in a split placement network or agreeing to make split placements means that you are viewing your trading partner as your equal, and should treat their time and diligence as you expect yours would be treated. This goes hand in hand with sharing as much information as you can about the job order, keeping them updated on status changes, etc.
- Do not only give out needle-in-a-haystack jobs. A successful splitter realizes that being able to take on larger client orders or take on more clients means a growing business, and uses their trading partners to fill many jobs more efficiently. Only relying on, or wanting a trading partner for those nearly impossible-to-fill roles is not a beneficial situation for both parties, and will make it harder to establish long term trading partners willing to give your jobs attention.
- Their candidates deserve the same respect as yours. A trading partner who provides you with strong candidates should be given the same consideration and attention that you give those candidates you find yourself. They deserve to be kept informed once they are in process, and even given bad news if they are not chosen for a role, as you may end up filling a similar position again. Trading partners will notice and appreciate the way you treat their candidates, and use it as a reflection of how you treat your clients or other trading partners as well.
- Not everyone recruits the same way you do. While in a split fee recruitment network, or searching for trading partners on your own, you are going to come across a variety of personalities and business styles. None of these are bad, just different from your own and in order to make split placements, their style needs to be respected. If they require four phone calls for clarity on a position to present you with a star candidate, then the reward will be reaped in the end. If their style completely does not work for you, tell them instantly, so you both can move on to other trading partners and opportunities.
- Pay immediately and true to contract. Those independent recruiters that do not give reason to mistrust them are the ones that deliver payment in the amount, and in the time frame agreed upon. If you are getting a 25% fee from your client, you owe your trading partner 50% of that, and you owe them the minute you receive payment. The most common frustration I hear from recruitment firms wanting to join our split placement network is their concern that the posted fees will be less than what that recruiter is getting from their client, so the split placement is unequal and unfair. In this instance, make sure that you are joining a network operated on bylaws and ethics that prevent this from happening, such as NPAworldwide.
As the Director of Membership for NPAworldwide, I occasionally am asked by independent recruiters how our network is different and better than others. As an independent recruiter, deciding which to join will depend on how you like to work, and how much of a relationship-based recruiter you are.
NPAworldwide is a member-owned and -run network of independently-owned recruiting firms that work together to make split placements. Owners of the firms set the strategic direction of the network. The network is led by a Board of Directors of owners of member firms and has a selective membership process. At the end of the year, profits are reinvested in the network to continue and improve services to our members.
Most other networks promote themselves as recruiting tools or platforms for outsourced/agency-side recruiters and employers to partner with each other through job bidding or are for profit based, resulting in more transaction based business practices taking place to net profit for the company.
How positions/candidates are exchanged
NPAworldwide uses a live, web-based sharing tool for members to post jobs and candidates freely. The members are able to search these databases, as well as search for recruiters and firms based on location or specialty. Each position lists the fee schedule and guarantee. When a member has an interest in working a position, they are able to send candidates directly to that firm or recruiter, and have access to all of their contact information to connect through a phone call or email to see where they are in the search. There is no limit on the number of positions that an independent recruiter can submit candidates to or work on, and the split placement is the result of a placed candidate. Our network highlights each specific industry as well so a niche recruiter can customize their dashboard and trading partner lists, as well as join industry specific virtual calls and participate in forums geared specifically to them.
In other networks, it is common that recruiters can view the posted jobs and respond with candidates (or synopsis of abilities) and “bids.” The bids provide the fee amount the recruiters would be willing to charge for filling the employer’s or other recruiter’s open position with one of their candidates. Recruiters are unaware of competitive bids made by other recruiters; therefore, they must be as competitive as possible with their bids to secure the business. Employers and other recruiters then have the option to accept or decline the bids made. This type of arrangement puts up a lot of walls in building relationships.
Cost of the Network
What is the investment to be apart of a network? Is there a startup cost, monthly fee, fee per transaction, etc? What levels of membership are available and what type of return on your investment do most members see? NPAworldwide has a one-time enrollment fee of USD $500 plus dues of USD $195 per month for a typical North-America, single-location firm (pricing varies by location and/or number of locations being enrolled). Brokerage in NPAworldwide is 2.5% from each partner so nearly a 50/50 split between trading partners. NPAworldwide also has a very robust job board and spends money on advertising member’s jobs which is another unique feature. A successful job board placement is really just pay for success advertising, with you keeping 88% of the fee. As an independent recruiter, not having to manage and maintain monthly job board subscriptions is an immense return on investment of both money and time.
Networking Meetings and Conferences
NPAworldwide strongly encourages members to participate in its annual global conference as well as numerous global networking meetings to utilize one of the oldest business tools, face-to-face networking. During these meetings, strategic ownership meetings for the direction of the network take place, as well as trading group breakout sessions, industry leader presentations, and social activities to establish camaraderie. The goal of the network is to have deep relationships established among independent recruiters.
Marketing and Branding
Finally, a last thing to consider is what type of marketing and branding does the network offer you? NPAworldwide is a relationship-based network facilitating split placements among its members. The members are then able to market themselves to employers as being part of the network and having access to ethical trading partners globally. Being a single point of contact to 1600 recruiters worldwide is not something many can claim. The network provides an entire collection of materials that recruiters can use online on their website or social media platforms, or even documents to send clients to stand out from other agencies.
If you do consider joining another split placement network as an independent recruiter, I suggest you take some time to understand their rules and regulations in regard to candidate ownership and other safeguards. NPAworldwide has time-tested bylaws and an operations manual that clearly define these.
As an independent recruiter, which benefits of a split placement network are important to you?
If you have not previously engaged in split placements, it may be hard to determine if that would be a good option for your recruitment firm. Here are some questions that can help you decide if splits are right for you:
Do you have more jobs than you can fill on your own, and not enough candidates? Split placements can provide a source of candidates, especially for jobs that are outside of your normal specialty. Read the rest of this entry »