Split Placements

Today’s post is courtesy of guest blogger Elsa Duty. Elsa owns executive search firm Recruiting Services International (founded in 1970)  that specializes in technical search globally (R&D/engineering, manufacturing, science). Elsa has been an active member of NPAworldwide for more than 10 years and is currently serving on the Board of Directors.

A lot of small business owners I know often struggle with the decision, “Should I grow my business (hire more employees) or stay small?” Many owners I know never had ideas of grandeur to grow their businesses to be the next Robert Half or Korn Ferry. They simply wanted the lifestyle that recruiting affords; the ability to be at the helm of their own success, the work-life balance, and of course, big commission checks. The struggle often comes from a too-heavy workload in a strong economy (and the inability to say no to a job order that lands on your desk, if you’re like me!)

Finding good recruiters/employees is becoming harder to do. The Millennial workforce is producing a slew of “renters;” employees who come and go three times as fast as they would have 20 years ago. According to EREMedia.com, over 30% of new hires are quitting their jobs after six months! This is especially detrimental to small businesses that are not prepared for this attrition. Losing a new recruiter can tally up quickly if you consider these potential costs:

• Hiring/Onboarding – draw/salary of 3-6 mo, averaging $9,000-12,000+, plus healthcare, office/computer expenses
• Training Costs – 6 months-1 year+, quantifying management time into dollars at roughly $10,000-$15,000+ “lost production hours” of a full-desk recruiting manager
• Employer Taxes – In the US, FICA match, SS/Medicare: 7.65% of every dollar earned (a $60,000 employee costs an employer ~$4,590/year)
• Customer Relationships / Business Reputation – This is the biggest one; hardest to quantify but most critical. New clients developed may not have a bond strong enough to survive account manager attrition. This could mean $20,000-80,000+ in “lost” clients/placements.

Should the economy take another dive, these new hires will bail faster than you can say “cold-call.” You could be $30,000 invested into a new recruiter who is gone in less than 6 months (with minimal production dollars). Hiring “renters” is detrimental to our business. We know recruiting success comes with longevity, dedication, and deep passion for the business. We are “owners” in every sense of the word. We hold ourselves accountable and will do everything it takes to succeed. So when we need extra bandwidth, how do we get help without getting sucked into this cyclical model?

I was thinking of this as I looked around a large ballroom of smiling, welcoming faces at the annual NPAworldwide Global Conference in Washington D.C. a few weeks ago. Who has better ownership of their work, than OWNERS themselves? We eat, sleep, and breathe recruiting. We are warriors who have survived the battles of job-short, candidate-short, or money-short markets. My fellow NPAworldwide partners were all there to help, support, and partner together for the better good of our businesses succeeding. Utilizing a great split-placement partner can be an excellent solution to the urge to hire.

I recognize there is significant value in hiring good recruiters that produce. But that model is not for everyone. Not every owner wants the financial gamble, especially given the mentality of the workforce these days. Instead, if we are able to build sincere, tight relationships with other owners, entrusting ourselves to them, we can build powerful recruiting teams WITHOUT ever saying, “You’re hired.” Our recruiting partners are ready to go Day 1 of being given a new job order: no training, no financial investment, no overhead. If we change our mentality from “my firm” and “your firm” to “we’re a team,” we can support any influx of jobs in good season and bridge any recession when things are slow. That is what a split-placement network is all about.

NPAworldwide is celebrating our 60th anniversary of helping members make split placements this year. We think splits are a terrific option for recruiters, allowing more effective client service and broader geographical, industrial, or occupational coverage. There are a few myths about split placements, though, and I’d like to dispel those for you today.

Split placements are easier than regular placements. There are more than a few recruiters who think that split placements are easy. And while they certainly *can* be, that’s definitely not true in all instances. On top of all the regular things that make placements difficult, you’re also dealing with another recruiter and the communication and trust issues that can crop up. Recruiters who are successful at split placements tend to over-communicate, have very clear expectations, and a clearly-defined process. You can certainly do some things to make split placements work more smoothly, but that’s not necessarily the same thing as easy.

Clients don’t like split placements. I’m not sure where this myth ever originated, but I hear it a few times every year. I don’t actually have any empirical evidence stating whether clients like or dislike split placements, but I think most honestly don’t (or wouldn’t) care. In fact, I’m not even sure it’s necessary to discuss split placements with your clients. After all, do you tell them how much you pay for your LinkedIn package? Or specifically where you advertise? A sales pitch that includes a message about working with carefully-selected recruitment partners might make sense. As long as you’re providing the best talent for your client, it shouldn’t matter to them whether you’re sharing the fee with another recruiter.

You can do “half the work” since you are getting half the fee. Boy, this one can be troublesome. On the surface, this seems to make some mathematical sense – you’re either working the client “half” of the equation or the candidate “half,” right? After all, you’re dividing the work and sharing the fee. But this can be a sloppy mindset to adopt. Even though you may only be responsible for providing candidates, you still have to do ALL of the work that requires. On the client side, you still have to follow ALL of your process. If each side actually did “half a job,” you’d probably never make a placement. Much better to think of split placements as a partnership where each side is willing to put in 100% of the effort.

Have you encountered any other myths about split placements? Share below, or comment on the myths above!

I hope the New Year so far finds your business doing sound with a plethora of additional positions and/or candidates that have you thinking of making more split placements or adding them to your business model. In a split network, firms work position openings cooperatively in order to speed the job fill. Once complete, they share the fee collected. Over time, the network sees many success stories, and some firms really stand out as stellar trading partners that are constantly making deals. One firm that has exported candidates for over 60 roles in the network caught another firm’s eye as they prepared information for a regional meeting, so they asked their top trading partner what it was that caused this firm to split so well? Here is what they were told:

First and foremost, this trading partner is available and focused. Not only is he always answering his phone or getting back quickly, but each position is an assignment that once agreed to, he takes on fully. Smart and equipped, this trading partner will dig deep for answers as well as working hard to find the best candidates. This is more than just searching through a database and forwarding potential fits both old and new, this is really researching candidates to present only quality options to your trading partners, just as if you were working your own independent search for a top client.

The reason the above is true is because the trading partner with the position is giving their trading partners QUALITY work, and not wasting their time with only the near impossible search, or a vague client relationship. Most, if not all of the searches, have direct access to a hiring manager and human resources. Both trading partners are included on calls to both of these, especially in the beginning of the search. This direct access leaves little room for requirements to be lost in translation, and allows the exporter to be fully invested in finding the best candidates.

Another reason this exporter comes so recommended is his ability to think outside the box. He will produce a variety of candidates, something even a little different from the original job order’s description which challenges the hiring manager’s thought process. While this does not always work out, when it does, additional placements usually result. This is able to happen based on the above, but also because these trading partners try to work on as many exclusive jobs as possible. When the job order is exclusive, there is more room to try a couple of options the recruiter may see as more viable than the one top candidate you try to submit to match the order perfectly. If the job order is less exclusive, then the trading partner is aware of that, and can gage their own activity.

Finally, it is important that the trading partners are in contact daily or close to it. The trading partner with the client relationship works to stay on top of the client activity, and regularly communicates it to the exporter. This way they know the exact temperature of each search, and can prioritize accordingly.

If this was an eye opener for you if you are already in a split network, align yourself with these practices to start seeing a better return and gain more trading partners, so that you may be asked eventually, “How do you split so well?”

Today’s guest blogger is James Seidel with James Seidel & Associates located in Kelowna, BC, Canada. JSA is an owner-operated firm with clients across western Canada. The firm primarily places candidates in I/T, engineering, and sales. James is a former leader of our IT Trading Group and is currently serving on the NPAworldwide Board of Directors.

In our business, that prize is a placement and a customer who walks away with a product they feel good about for a price they feel was worth it. If you are good at this business, as in any business, you charge more for your services than someone who is average. Your customers expect more from you for that price, and you deliver. That’s how business works. Read the rest of this entry »

Today’s guest blogger is Liz Carey, network coordinator for NBN. NPAworldwide and NBN merged in September 2014, and our two networks are working toward a full integration effective January 1, 2016. We’re happy to have Liz on our blogging team.

As a recruiter, do you prefer to be a specialist, or a generalist? As the name implies, a generalist recruits for a wide range of job functions and industries. A specialist recruits within a particular niche or industry, usually on higher-level jobs with particular skills. Read the rest of this entry »

Today’s guest blogger is Liz Carey, network coordinator for NBN. NPAworldwide and NBN merged in September 2014, and our two networks are working toward a full integration effective January 1, 2016. We’re happy to have Liz as a regular part of our blogging team.

As part of a split placement network, recruiters have access to numerous tools, including expanding their geographic reach, filling jobs out of their specialty, and additional opportunities. Every tool probably doesn’t work equally well for every person, but to be successful it’s important to maximize the tools in your networking tool belt.

Here are four important tips for making network membership work for you: Read the rest of this entry »

One of the questions we are commonly asked is, “Who owns NPAworldwide?” The short answer is: our members do. In today’s post, I’d like to discuss three common ownership structures for a split placement network.

Ownership by an individual or a business entity
The owner of a split placement network can be one or more individuals, or a business entity. This is generally a for-profit structure. Members of the network may pay dues or other fees as a condition of membership. The owner of the network receives all the profit. The network owner may offer products and services if doing so will increase overall profits. While many private networks do have a formalized set of operating policies, enforcement of the rules can vary. Dispute resolution can be an organized process, or members may have no redress for grievances. Read the rest of this entry »