Why It Pays To Split Your Fees, Not Your Team

Competition’s a funny thing. It brings out extreme levels of interest in people. Should they all care about the end result.

Take a recruitment company.

Let’s say the one you’re working in now. You’ll notice a common theme of competition, inherent in their very fabric.

You compete with yourself, your colleagues, Perm against Contract, if the company’s big enough there’ll be competition between teams of similar makeup. Like ‘Tech’ versus ‘Creative’.

The desired effect is a rush to the end goal. Which is obviously a placement. 

To win your commission, you have to be cutthroat. You have to be utterly devoted toward getting the prize. Time’s of the essence. And haste or consideration is your worst enemy.

Get on the phone.

Think while you’re dialling.

Seconds count.

And the more seconds you think, the fewer seconds you allow for action.

So, how do you promote cohesion? How do you change an industry that runs on individual accountability, dedicated to winning the competition, while also promoting teamwork?

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You start internally

The subject of split fees is a good way to ascertain how a business works. I’ve written about it previously, and it’s a thorny subject for many.

How much weighting do you rest on a relationship?

How do you apportion effort if the candidate’s supplied by someone else? Does a harder search make a difference? How much is one party ‘managing’ the client account, and how much of it’s just forwarding emails?

Difficult questions to answer.

Which is why it’s important to pay close attention to a company’s ‘standard practice’ when splitting the fees on a placement. You might think this is a minor point to scrutinise, but the wider implications become evident with a little thought.

So let’s say you’ve got competition throughout the business.

Split fees are set in place at 50/50. Doesn’t matter on the effort, that’s the rule.

The sales board’s swelling, so you assume company-wide competition’s a good thing. You’ve got Perm against Contract. Newbies all in a league of their own, regardless of discipline. London V. New York.

It’s an all out dogfight for the top spot.

Who wins?

Well, you might win if you’re the business owner.

As the competition increases you’ll find leaders and winners. And figuratively expel the losers. Which you’ll then do literally in the boardroom at the end of the month.

But I’ll tell you who loses…

The client.

Your client.

Because in the rush to be the quickest, being thorough or measured often gets forgotten. So things get missed. Practices are half-arsed. Candidates feel like pieces of meat, and clients feel dazed by the rushed fast pace you omit on the phone.

And by virtue of this fact, you lose too. And your chance of cultivating that consultative, long term business model you mention on your website nosedives.

split 2

Split the difference

So, given this, how should you work out the set method for a split fee for a placement?

Well, in truth there’s probably no need for one.

Things are always going to change. Weighting on percentages rests on so many factors. The role. The level of involvement for each party. The work undertaken to get the candidate on board. The relationship. The amount of work prior to this. The amount of work thereafter.

And yet, despite this you see a lot of agencies with a set method in place. A process or percentage breakdown, which doesn’t change.

But once you accept internal competition isn’t necessarily the best practice, you open up a whole host of possibilities for working as a team.

And this starts at the top. With the Owner of a business actively seeking to add value to everyone else’s desks as much as their own.

And for an insight into teamwork in a recruitment business, we spoke to a bit of a pioneer: Mark Warburton, Director of Technology & Electronics Recruiter Pioneer Search in London.

split 3

How does your split fee structure work?

If you bring on a new client and convert the relationship to signed terms, it’s your client.

Because we work different technical verticals, others might be delivering on the account. If the client’s in your vertical, it’s 100% yours.

If they aren’t in your vertical, but you’ve got a good relationship with the client – you’re managing the process and ensuring it runs smoothly – it’s 60/40 (in the candidate’s favour).

If the account’s grown to the point the owner’s role becomes more like a coordinator, the Recruiter does more work. So it becomes 80/20.

We agree all of this locally, and right at the beginning, so that when a job comes in we know what the level of engagement’s going to be. And we’ve never had a falling out about it.

This means, there’s never one set rule for a split fee. And that sets a precedent for teamwork to ultimately better serve clients.

And because you’re serving your clients better, they stay with the business and ultimately have a higher spend than competing agencies whose processes might be more focused on speed or competition.

Why do you think other businesses aren’t doing this more?

The culture in a lot of firms can be all about competing and driving deals.

They usually don’t see external forces as something to compete against, but see themselves as their only competition. Which drives sales by creating a bit of a free for all.

The outcome’s usually the same, but the client doesn’t get the best experience.

I can’t speak for other businesses but we asked ourselves “what does a successful recruitment business look like in five years time?” 

Relationship driven, providers of specialist advice, adaptable to fix problems, less transactional, not as hard and fast… and delivering on that meant building our culture around teamwork and collaboration. 

Remember when I said split fees seem like a minor point, but that the wider implications soon become evident?

A split fee structure with more nuance than snapping a pool cue and having your Consultants fight to the death, is often indicative the business shows a heightened level of attention in other areas.

Like Sonos speakers that allow for democratically elected music choices.

Team events that are open to everyone, not just the same three or four high performers.

A learning environment, where failing’s preferable to hiding mistakes based on fear of repercussions.

Collaboration says it’s fine to make mistakes: it happens to everyone, and learning from it’s the only way to protect against it in the future.

And collaboration, to a lesser or greater degree, promotes inclusivity.

It’s why this millennial obsession with unreasonable demands like “working in a grown up environment”, fluffy perks like “medical insurance” and wacky, out of the box ideas like “flexible working” come from.

If the only mistake you’ve made so far in recruitment’s joining a band of lone wolves, or not reading the small print on split fee arrangements, you can rectify that quickly and instantly by clicking here.