Agency recruiters, especially those in smaller recruiting firms or working for themselves, often “split” fees with other companies or external recruiters. The aim is to improve recruiting bandwidth and coverage on a requisition, especially when it is a position outside your core competency. Conversely, by recruiting on splits, a recruiter can immediately have business to work on without spending a lot of effort marketing to clients.
In theory, it would be great to have a few trusted partnerships with other recruiters or even a network of trusted external recruiters that you could “split” deals with. A recruiter could get a lot of workable requirements without a lot of hassle and cover more ground. However, there are a lot of difficulties involved with split deals – sometimes it is best to just avoid them. At a minimum, recruiters have to carefully consider the contractual specifications of a split deal and also whether it is best for their business long term.
In the current environment, split deals are even more tempting. We have high unemployment, and many companies are not hiring. Additionally, budgets for recruiting fees are constricted and at minimum, highly watched and regulated. This environment will likely continue through 2012, according to most economic predictions. When your industry of specialization is not hiring, it may seem quite attractive to instantly generate some business through alignment with some other firms. Banking and financial services, for example, is hot – if you don’t have banking clients, should you help help recruit on other recruiting firms’ banking jobs?
Doing splits during rough economic times appears to make a lot of business sense. However, these are also the times when you must differentiate yourself and set yourself up for success for the next five years. The difficulty with working on splits is not only that you are working for 50%, but that you are selling your future for the prospect of immediate placements. It is exactly during more difficult economies that winning recruiters lay the groundwork for future success. What that means is minding your own business – developing solid client relationships that will pay off in the long term. The crucial factor here is time – will you spend your time now for short term benefit or to build long term value with client and candidate relationships in your area of expertise?
However, this is the time for you to decide whether to make a long term investment in your industry of choice. The people who stick to it now, and continue to develop strong partnerships will reap great rewards when the employment ticks up a bit and the supply/demand for talent gets a bit tighter again. If you feel that the long term prospects for the future of your industry or area of recruitment are low, you should probably switch focus. If you don’t want to spend time investing in yourself – in your own business, industry, or specialization, a career change or change of industry might be in the cards.
Essentially, recruiters must be very careful of working on splits mainly because of the time factor – your time should be spent on high-potential opportunities and future growth. However, of course there is a time for splits and a way to do them successfully. Certain independent recruiters who are generalists or executive recruiters may find that working with a few trusted partners works well to supplement their own recruiting business and efforts. A few common traits of successful management of split business:
- Very low volume, high-trust relationships with a few partner firms
- Complimentary requirements to specialization and/or solid area of expertise
- Strong, clear contract terms and delineation of who “owns” the clients
- Strong knowledge of partner firms’ specialization
- In-person meetings with partner firms with multiple employees
There are ways to build success with split relationships, but they are actually not partnerships to be entered into lightly. If you are spending your time recruiting for someone else right now, you will survive the downturn – but you may not survive the recovery. If you work for free now- building up trusted client and candidate relationships for your own business, you will be rewarded for the future. Any splits that you do work with should be carefully considered, with an eye toward partnership and building long-term value.