Tag Archives: Fee splits

Fee Splits: Right or Wrong?

I received a call this week from a highly experienced and long-standing Executive recruiter whose nose had been severely put out of joint and they wanted to tackle me on a certain issue.  I know what you’re all thinking but sorry to let you down – it wasn’t me or something I had said that had upset this recruiter (not this time anyway).  This recruiter had been the subject of one of the most contentious issues in our recruitment industry.  This must surely be one of the most divisive issues we have.  What elephant in the room am I referring to?

The split fee issue.

Now I’m well aware that many recruitment firms do this internally.  You know, when Johnny Rookie stumbles upon a great candidate but hasn’t managed to win any business from clients yet, but Sally Farquar-Bigbillingham has a great role on with one of her (exclusive, darling) clients, so they agree to split the fee 50/50 (once poor Johnny has been put through the wringer and made to do all the leg work and admin).

But this was of a different flavour entirely.  A fee split discussion between two recruiters from different firms.  I’m keen to get your opinions on this matter, so to simplify things I have decided to relate the story like a film script.  Let’s stick with our characters Sally and Johnny, but bear in mind they are from different recruitment firms, in different parts of the country:

                [Sally’s mobile phone rings]

Sally:    Hello?

Johnny:    Hi is this Sally?

Sally:    Speaking.  Who is this?

Johnny:    You don’t know me.  I’m a fellow recruiter and saw the ad you placed in the paper yesterday.  I happen to have the perfect candidate for your role.

Sally:    Oh excellent, thank you for that.  I am just on my way to review the applications now so please do send the candidate through.

Johnny:    No love, you don’t get it do you?  I called your client up to tell them I had the perfect candidate, and for some reason they told me I had to talk to you about referring the candidate in.

Sally:    Why would you call my client when I’m recruiting the role?

Johnny:    Because I have this candidate who would be perfect, don’t I?  So anyway, how about we both get something out of it and split the fee 50/50 if they take my candidate.

Sally:    I don’t think so.  I won a competitive tender to recruit exclusively for this role so I’m not about to lose half the fee to you.

Johnny:    Well I have this candidate exclusively and I want them to be considered for this position, so what are we going to do about it?

Sally:    If I were you I would advise your candidate to apply directly to me for this role and I’ll take it from there.  However, I would suggest your candidate is severely lacking in judgement if they are at GM level but agreed to register exclusively with you – whoever you are.

Johnny:    I’m a recruiter at X and I’ve been doing this 10 months.

Sally:    Well I’ve been doing this over 10 years and I don’t like the cut of your gib.

Johnny:    I know, I looked you up on Linked In.  But why are you standing in the way of the best outcomes for my candidate and your client?

Sally:    I am not standing in the way young man.  I am following due process and your candidate is perfectly entitled to apply directly to my ad.  It is you who is acting without integrity or ethics.

Johnny:    [Getting irritated and aggressive] Listen lady this can be an easy transaction for us both to make money.

Sally:    You should be taking the long term view on this and doing what is right for your candidate, rather than treating them like some commodity.  They will repay you for it in the long run.

Johnny:    Look, I’m not just in recruitment to make placements and to make money, I really care about the candidates and clients too.

Sally:    Pull the other one.

Johnny:    So you won’t do a split?

Sally:    No.

                [click – click – both hang up]

Ahh, the fun and games of fee splits eh?  Now I myself am a little undecided where I stand on this issue.  I certainly think that Johnny showed a lot of front and guile that will be useful attributes as a recruiter.  But he did go a bit far with the unprofessionalism in my opinion.  Fair enough to ask the question, perhaps, but taking it too far to push it as hard as he did?  Somewhat lacking in respect and integrity?

I myself have partaken in fee split scenarios with competitors of mine in the past.  The difference in these occasions though was that the competitor approached me directly saying they were struggling to fill a role and did I have any candidates that might suit, for a 50/50 split?  It so happened that I did and the transaction was a successful one.  It did leave me feeling like I’d had a fling with an old flame who I had vowed never to go near again though.  But the allure of the split fee was too much to resist.

I know I’ve referred to the real estate industry in the past, but again there are similarities here.  Estate agents from one firm often show prospective buyers around the house listings of competing agencies, if none of their own stock match the requirements, for a split fee agreement.  I myself was introduced to my house by a Barfoots agent, when it was listed through Harcourts, and they agreed a fee split between themselves.

So anyway, Sally and I are keen to hear your opinions on this.  Where do you stand?  Was Johnny rude and obnoxious to make the approach?  Or is Sally being too precious and indeed standing in the way of the best outcomes for his candidate and her client?

What made Johnny think it was ok to call a client based off a co-branded ad with another recruitment agency?

Or does this highlight a difference in recruitment style and approach between Wellington and Auckland?  It would certainly be interesting to hear the thoughts of any of my Australian readers on this too, who I imagine do these kind of fee splits on a regular basis…