Split Placements

The chemical process industry (oil/gas/refinery, chemicals, pharmaceuticals, foods, pulp & paper) is hot, hot, hot in NPA. Split placements in this area are up 50% over the same period last year. And still, our chemical process recruiters are leaving business on the table because they can’t find enough qualified candidates. Whether you recruit in the chemical process industry or some other sector, you probably have “leftover” candidates – the ones your client did NOT hire. What recruiting ideas do you employ after the job is filled?

The easy answer is to leave them in your database until a future opportunity arises. Another option is to pitch one of these great candidates to a prospective client as a way to solicit new business. In today’s market, great candidates have a very short shelf-life. Both of these options decrease the likelihood that you’ll be able to quickly turn these assets into revenue for your recruiting business.

Another recruiting idea to consider: use those leftover candidates on a split placement basis with other recruiters. Contact other recruiters you know who work in the same specialty to see if THEY have a current need for your hot process engineer. If you’re not part of a formal recruiting network, make sure you have a signed split fee agreement in place with your recruiting partner (click here for a free template). If you don’t already have some split placement partners, you can certainly look for a group on LinkedIn; lately, I have been seeing lots of posts from independent recruiters looking for split opportunities. Or, you can seek out a formal (or quasi-formal) split placement network. There are relationship-based networks like NPA as well as transactional networks; pick one that matches your business style.

Reports we are reading and seeing indicate that hiring demand is strong in many sectors, although actual hiring may be slower than expected due in part to the extreme shortage of top-level talent. As an independent recruiter, you likely have plenty of great recruiting ideas to ensure satisfied clients and robust business. Split placements should be considered a strategic part of your business mix.

NPA is a global network of independent recruiting firms working together to make split fee placements. The network enables members to provide their clients and candidates with better service and increased opportunities. All of these network advantages have proven to be true in 2012 as NPA members made over 800 splits.

The beginning of January brings new business ideas and resolutions for the year ahead. But we can’t forget to close out the year that’s passed. This is very important to see what changes need to be made and so that business can be evaluated accordingly for what lies ahead. With that, here are some of NPA’s 2012 split fee placement statistics.

• Placements of positions with US$80,000 and above salaries were 56% of total split fee placements
• Placements of positions with US$100,000 and above salaries were 33% of total split fee placements

Top 5 Trading Groups based on the number of split fee placements, listed highest to lowest:

• Manufacturing/Mining/Construction
• Strategic Management/Supply Chain
• Chemical Process
• Sales/Marketing/Business Development
• Information Technology

In 2012 there was over 7.5 million dollars of shared revenue among the more than 400 member firms. NPA also saw increased productivity throughout North America and Australia with continued growth throughout the rest of the world.

The NPA Job Board has also proven to be a key tool for NPA members as its first full year it brought in just under $250,000 in revenue.

Overall, 2012 was a good year for members in NPA as end of year totals have been steadily growing over the past couple years. This leaves me feeling optimistic that the employment market may be becoming less volatile.

With the start of a new year, many recruiters are developing their annual business plans. Will split placements be part of your business mix this year? Split placements can help level out revenue fluctuations, but it takes time to build the solid relationships that allow splits to flourish. With the continued angst in the US over Obamacare and a sluggish jobs recovery, as well as lingering economic issues around the world, global recruiters really should consider split placements as a way to stabilize, and even increase, revenues. Here are some examples to consider:

• Your current niche is soft (or softening). Working split placements can help you diversify into niches that are more robust.
• Your current geography is depressed. If your jobs are located in ‘undesirable’ geographies (high cost-of-living, poor housing, etc.), split placements can help boost your business beyond your current geographic limitations.
• Your clients are nervous about expansion plans. If your current clients have put expansion plans on hold because they are unsure what the future will bring, reach out to recruiting partners whose clients ARE growing. Remember, someone is ALWAYS making money!
• You have more jobs than you can fill, but don’t want to hire more staff. Split placements offer economical business expansion – you pay your partner when you need their services, without ongoing costs for equipment, larger office space, etc.
• You have a good database of in-demand candidates, but not enough jobs. Every recruiter I know is screaming for candidates. If you’ve got ’em, there are people who will help you place them on a split-fee basis.
• You have jobs that are outside your normal area of expertise. You’ve been placing HR candidates at your best client for 15 years, and now they want you to provide engineers? Reach out to an engineering recruiter who has (or can find) the talent your client needs, without having to invest tons of time/money into learning a new niche from the ground up.

If you are currently experiencing even ONE of these situations in your recruiting firm, split placements may be the solution. Will this be the year you commit to splits?

I recently saw a “pin” on Pinterest about everyday ways to save money. The list included things like hang your laundry to dry, use coupons, re-evaluate your car insurance, try DIY projects, make your coffee at home each morning and bike and walk more and drive less. The article got me thinking about ways recruiting firms can reduce their costs. I did an Internet search about ways to reduce or save on recruiting costs and came across a post by SilkRoad. I’ve included a few tips below that are both practical and relatively easy to implement.

• Improve retention – You don’t have to spend money hiring new people if your existing good employees stick around. Study retention, track it, and continuously work to improve it.
• Stay on top of new sourcing technology – Let’s face it, sourcing is your mainstay. A continual investment and investigation of the latest tools and techniques will pay off.
• Use social recruiting – Twitter, Facebook and LinkedIn are all free ways of building a brand and seeking candidates.
• Assess value, not cost – One of the biggest recruiting costs is hiring poor performers. Assess the quality of the hire and go the extra step of asking managers to put a dollar amount on the difference between top, average and poor performers.
• Join a global recruiting network – This tip wasn’t included on SilkRoad’s list but I think it’s a good one. Instead of hiring additional employees with no guarantee of performance, consider joining a global recruiting network. Recruiting networks, like NPA, allow you to make money without the overhead of managing and monitoring your employees. Plus, you only pay those who perform. Can’t beat that model!

See the remaining 6 tips to reduce recruiting costs at SilkRoad’s website. In what ways does your recruiting firm cut back on cost?

Recently, I’ve noticed during conversations with some recruiters with whom I speak about membership in our split placement network that they say they have made split placements. Further questions reveal they didn’t make the split placements the “traditional” way. Instead, they provided a candidate to an employer via an online service like BountyJobs.

I propose that the “recruiter community” language for split placements has changed. You can no longer assume that when recruiters state they have made split placements that it occurred the “traditional” way.  Specifically, what I mean by “traditional” way is when a recruiter with a job works directly with a recruiter with a candidate and the candidate is hired by the employer. This results in the two recruiters splitting the client fee.

“Traditional” split placements happen in one of the following ways:

       1. Informal Network

• Recruiters form their own, usually small, network of trusted trading partners. Most savvy recruiters will have signed split fee agreements even if they make splits with recruiters they have known for a long time.
• In addition, larger informal split networks exist online including in LinkedIn. It is not unusual for recruiters in these informal networks to have never met face-to-face. Again, savvy recruiters will have a signed split fee agreement before working with another recruiter they met online.
• If you are a recruiter considering making split placements with other recruiters or are currently making split placements and do not have an agreement signed with the other recruiter, check out our sample split fee agreement which can be used as a starting point to create your split agreement.

    2.  Formal Network

•  A recruiter pays to participate in a formal network. In NPA, The Worldwide Recruiting Network, members pay one-time enrollment fees, monthly dues, and brokerage payments when split placements occur.
•  Networks can have a general focus or specialize in an industry or niche. Some networks may include members located in only one country or state and others, like NPA, have members throughout the world.
• Formal networks must have rules of engagement so that trust can build among its members. If the formal network is not built on trust, an environment develops where split placements will not flourish. The rules of engagement will typically including the treatment of candidate referrals. Also, a formal network should address what happens if something in the split placement process does not go well. Of course, clear and written communication between the recruiters can minimize these situations. As a cooperative of independently-owned recruiting firms, NPA recruiters are bound to act within the Bylaws approved by our members.
• Signing the network’s membership agreement or contract binds its members to abide by its rules of engagement and may eliminate the need for a split fee agreement to be signed between trading partners. In NPA, a separate split fee agreement between trading partners is not necessary since the owners of the member firms signed the NPA Membership Agreement.

Many differences exist between informal and formal split networks as well as split job boards. It is important for recruiters who make split placements to understand the differences including the different definitions of a split placement?

What is your definition of a split placement?  Do you prefer “traditional” split placements or those made through split job boards?

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