Split Placements

NPAworldwide placement activity has remained consistent throughout the pandemic. Members continue to rely on each other for split placements and they are finding pockets of activity around the globe, in multiple industry sectors. Here are some notable items through the end of the third quarter: Read the rest of this entry »

An independent recruiter is someone who is hired by an employer to find a candidate for a specific job and who does not work in-house for an employer, but for themselves as an independent contractor that several companies hire to find their new hires. One of the most frequent complaints I hear or read about recruiters is that they do not return candidates’ telephone calls. If you are a candidate who has attempted to reach out or contact an independent recruitment firm, keep reading because my post today focuses on three reasons why independent recruiters don’t return candidates’ calls and three ways to try and get a response.  Read the rest of this entry »

It’s no secret that the recruiting landscape has changed dramatically with the pandemic — and not in a good way. With fillable jobs in short supply, collaboration between recruiters can help determine which agencies survive and which are forced to shutter. If you’ve been open to splits in the past but have relied on them less frequently in the recent strong market, have shied away from splits altogether or have embraced them in your business, there’s good reason to increase that activity now. Read the rest of this entry »

As the Director of Membership of a split placement network, one of the first topics that come up with recruiters considering membership is if they have formerly, or are currently making 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 or Scout. 

In 2020, I have found 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 in various Facebook groups or on Linked-In. It is not unusual for recruiters in these informal networks to have never met face-to-face or know much about the others background. 
• 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 NPAworldwide, 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. In NPAworldwide, we have over 10 practice groups that help specialized recruiters navigate the community and easily form relationships or customize their experience to their most prevalent industry.  Some networks may include members located in only one country or state and others, like NPAworldwide, have members throughout the world.
• Formal networks should 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 include how to handle candidate referrals, client poaching, permission to advertise, etc . 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, NPAworldwide 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 NPAworldwide, a separate split fee agreement between trading partners is not necessary since the owners of the member firms signed the NPA Membership Agreement.

In contrast, split placements that come about from a client utilizing Bountyjobs or Scout are only labeled splits because the online platform itself is taking a percentage of the fee off the top. Many frustrations can exist in these types of splits due to the transactional nature of the placement, as well as the loss of candidate ownership and lack of direct communication and relationship building. 

If you are considering adding to your bottom line, consider all of the above when making the best decision for your independent recruiting business.

There are a lot of reasons why we believe a split fee model makes sense for recruitment firms across the globe. NPAworldwide Chair-Elect Jason Elias of Elias Recruitment in Sydney was a recent guest on The Resilient Recruiter podcast to discuss this topic. We often discuss splits as an option to even out cyclical fluctuations in cash flow, or as an economical means of business expansion. Jason sees value in split fee placements that allow him to serve his clients more effectively. Read the rest of this entry »

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.

• Engineering/Operations/Manufacturing
• Technology
• 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.