The Lowdown on Split Fees

At every Recruitment Agency and Search Firm there are different methods of working. Whether there’s an official handbook, brand values painted on a wall or simply unwritten rules. Every business operates differently.

For all the relationships you have, there are varying permutations on how that rewards you when a placement’s made.

When a monetary value is added to a relationship, ‘ownership’ can become an issue.

Any candidates reading this shouldn’t be perturbed to think that a Recruitment Consultant ‘owns’ them. Typically recruitment’s relationship driven. And any agency with candidate or client ownership just insinuates there’s likely to be acknowledgement that relationship is important to the business. It also means you’re likely to be speaking to a specialist at any company with this scheme in place.

Client Ownership

Client ownership rewards work done by a consultant and attributes commission to the effort in developing the initial business. With a lot clients in recruitment, merely getting an opportunity to work with them can be difficult. Especially in a more mature market, where there’s a constant need for new staff and ‘gatekeepers’ can smell your cold call before you’ve picked up the phone.

Therefore a constant stream of jobs with a great client should be rewarded.

So, to reward a Consultant for a job passed over, many opt for a percentage of the deal.

Which side of the deal is viewed as most important, will largely depend on the market. If it’s a client led market there should perhaps be a higher weighting on the job than the candidate.

Candidate Ownership

For Hunted partner 3Search, recruitment’s about meaningful relationships. Therefore rewarding Consultants building those relationships is paramount to their success. Joe from 3Search: “We do referral splits for candidates and clients at 25% on both. There’s no point being in a relationship driven business if there’s no reward in it for an individual.”

Pragmatism is key in most cases with split fees. Simply finding a candidate and putting it on to a system is unlikely to carry weight in any business.

LinuxRecruit, another Hunted partner that operate splits require a thorough process and notes within the last 6 months on any candidate. Tony, their Founder admits operating splits is a new policy for the company that’s been needed due to growth.

“As we’ve grown, we’ve found it important to reward success across the company. Winning new business is great, but it does raise challenges for a team who specialise in similar markets and cross sell effectively. We reward our Consultants with split fees to ensure collaboration.”

Office Laughing Table

Downfall

There are some potential pitfalls of candidate ownership. The first being timeframes. How long is advisable to give a Recruiter rights to a percentage? Would it be prudent to alter these timeframes depending on whether it’s a contract or permanent desk. What if a candidate moves from contract to permanent? Equally what constitutes a ‘relationship’ for you may not for your employer.

Your CRM is the perfect tool for settling internal disputes. You’ll possibly even have ancient carvings on your walls that foretell… “if it’s not on the system, it didn’t happen.”

Most agencies would argue that if a candidate is ‘actively looking’ and has their CV on a job board, it’s open season. Both Linux and 3Search take this stance.

Split Freeze

There are other Hunted partners however with no referral scheme in place. They instead favour an open sharing policy in the business.

In a case of no client ownership, it’s likely the business will work within specialist niches. Therefore creating the possibility for Consultants in the same agency to be pitching the same client.

This has repercussions for the cohesion between Consultants. In a good team it could work well. In a bad team it could easily create disharmony.

Once again, pragmatism is needed.

Where there’s no candidate ownership there’s a higher chance a great candidate may be kept ‘hush hush’ if the resulting fee doesn’t mean commission for the Consultant who found them. Something any Recruiter, Agency owner and candidate would criticise. All of these insinuations are something to keep an eye on.

With any split scheme, if you don’t have a collaborative workforce, pitfalls are possible.

Fluidity

Whatever scheme your company has in place with regards to splitting fees, the most important rule is for management fluidity. If it makes sense to put a process in place, then office peace will probably make it worth your while.

It needs to be thought about however. Do you have the same scheme for any market? Do you change the percentage based on the desk? Traditionally in recruitment, most placements were client or job driven. Now, having a great candidate network will put you in a strong position. Especially in markets where candidates are harder to find.

Therefore it’s important to have a split fee scheme that mirrors that. And the ability to constantly re-assess is paramount. If a Consultant feels their scheme is fair across the business, you’re probably doing a good job.