Split Placements

With the skills shortage that is projected to last for a number of years moving forward, I believe employers will need skilled recruiting resources more than ever before. Independent recruiters will need to work cooperatively to quickly source the best candidates for their clients, which means you’ll need to invest time building a strong recruiter network.

There is a growing trend (at least in our membership) of smaller offices and more single-person recruiting firms, many working from home, which removes the traditional “built-in” recruiter network of co-workers. Working alone or in a very small office requires you to reach out to external recruiting resources.

Here are five ways to build your recruiter network:

• Look for online recruiter communities in LinkedIn or other social media sites. Many recruiters are already active LinkedIn users. You can look for recruiting groups based on location or specialty, or start your own group that serves your specific needs.
• Organize an informal Meet-Up or Tweet-Up to meet recruiters in your community. LinkedIn and Twitter both offer mechanisms for creating and publicizing face-to-face events. It can be as simple as getting together for an informal breakfast meeting at the local coffee shop.
• Get active in your local / state / provincial / national recruiting association. Most associations are in constant need of volunteer support, and this can be a great way to meet other recruiters as well as taking advantage of professional development and educational opportunities.
• Attend face-to-face conferences and educational opportunities. Virtual “connections” can be handy, but there still is no real substitute for face-to-face networking. There are myriad opportunities for these kinds of events, which are sure ways to build lasting relationships for your recruiter network.
• Consider joining a formal recruiting network or other recruiting organization. These recruiting resources are often purpose-built for independent recruiters who share a common niche or geographic market. Many can provide infrastructure, business support and other recruiter resources which can create more time for you to spend on your core activities.

There are many other ways to build your recruiter network. It’s not important HOW you do it; what matters is that you have a trusted pool of reliable recruitment partners who can help you serve your clients quickly and effectively.

NPA has been in the business of fostering split placement opportunities since 1956. Obviously we are big believers in splits, since that’s the very reason for our existence. If you haven’t considered integrating split placements into your business model, here are some reasons you should:

1. Split placements can help level out cash flow fluctuations. Splits are good for business in all kinds of economic conditions because they provide incremental revenue that stabilizes seasonal or cyclical revenue fluctuations.
2. Split placements can allow to you work on more projects simultaneously. A split fee recruiter can complete more projects. More completed placements means more satisfied clients and more profitability.
3. Split placements help you serve your clients faster and more efficiently. The most successful recruiters I know are those whose sole desire is to get the best candidate in front of their client faster than anyone else. By building a reputation as the “most reliable provider” they are guaranteeing future business.
4. Split placements can help you expand your scope of service in terms of both geography and occupational or industrial markets. Participating in split placements means you can help your clients with a wider variety of assignments, whether that means branching out geographically or different types of roles.
5. Split placements offer an affordable alternative to hiring additional recruiters in your recruiting firm. Instead of hiring a new recruiter or investing resources in developing a new niche, you can reach out to trading partners who are already established experts. Best of all, there is no ongoing overhead – you simply pay for their services when you need them.

If you’re interested in adding split placements to your business model (or increasing the number of splits you currently make), there are two primary ways of doing so. One way is to relentlessly build your own network of like-minded recruiters that you can trust and who work the same way as you. You’ll need to spend time creating a split fee agreement, upfront, each time, to ensure your client and candidate relationships are protected. The other way is to join an established recruitment network. Split placement networks bring you a ready-made cadre of trading partners, infrastructure and ground rules governing how splits will be made, and dispute resolution if needed.

NPA offers a free tool to help you determine if joining a split fee network could benefit your recruiting firm. The NPA self-evaluation tool is anonymous. NPA does not capture any of the data you submit so you won’t get any phone calls or emails as a result of filling out the questionnaire.

NPA is a member-owned recruiting network that helps foster split placements. We’ve been doing this since 1956, so we have learned a lot about how to make splits. Today I’m devoting this space to the opposite side of the coin – with a tongue-in-cheek look at some actions you can take if you’re NOT serious about making splits. And if you *really* want to kill a deal, feel free to combine 3 or 4 of these all at once:

Hoard your best positions. One sure way to fail at split placements is by only sharing crappy jobs. When you get a great job – great fee, great salary, great company, great hiring process, great relationship with the hiring manager – keep that one all to yourself. Only let your partners ‘help’ you on the jobs that are the complete opposite.

Hoard your best candidates. When you get a rainmaker that’s a perfect fit for your partner’s job, hold out for an opportunity to place them on your own for a full fee. That way, you can up the odds that everyone walks away unhappy. Got a marginal candidate that you wouldn’t send to your own best client? Feel free to send that one along to your trading partner. Conversely, when you get a great candidate from your partner, be sure to present your OWN not-as-great candidate instead so that you can keep the whole fee.

Send speculative candidates that have not been qualified for a current opening. Nothing says, “I love split placements” like expecting your partner to do something with a candidate they didn’t ask for and doesn’t match any of their current positions.

Be paranoid. When you’re working on split placements, make sure you speak in code and withhold a lot of details, like the candidate’s name or the client’s name or the job location. Your partners *love* that.

Don’t return calls/reply to email. Providing timely, accurate feedback to your partner (whether on the candidate side or the job side) is really important when making split placements. If you want to kill your deal, it’s a good idea to avoid your trading partner.

Don’t make any proactive calls for help. When you have a job to fill, send out one email blast to everyone you know. Then sit back and lament the poor response. After all,  email *always* gets delivered, and *everyone* loves being on an email distribution list.

Don’t have a 50/50 mindset. This can be achieved by expecting your partner to accept a smaller cut of the fee (20-25%) OR by expecting to receive half of the fee for doing way less than half the work. Most recruiters I know would be *thrilled* to have an arrangement that unfairly rewards one partner over another.

Recruiters who are successful at split placements know that “50% of something is better than 100% of nothing.” They openly share their best candidates and jobs, and treat their partners “fair and square.” My snarky comments are exaggerated, but these behaviors will — and DO — impede splits. What’s your ‘favorite’ deal-killer?

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?