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…

Top 5 On-Boarding Mistakes made by Recruitment Companies

Remember that time as a kid you got invited to your little school buddy’s birthday party?  He was bragging about it all week long at school.  The invites had been sent out and they had glitter on them.  The party was going to be held at the local leisure centre and there would be swimming, followed by some football, then lunch at a nearby assault course with a clown and a magician in attendance?  You were giddy with excitement.

Then Saturday arrived and your Mum drops you off at the leisure centre where the pool is closed for cleaning and the gym out of bounds due to an outbreak of Legionnaires Disease through the air-con.  It’s raining so the assault course is off limits so you end up playing arcade games with your mates instead.  It’s ok, not the worst way to spend the day, but nowhere near what you had expected… Then Bozo and Merlin turn up stinking of booze and Merlin’s forgotten his rabbit.

Bit of a come down?  No doubt about it.  The thing is there appears to be a few recruitment companies starting to play the part of your old school buddy all those years ago.  As the recruitment market picks up post-recession and good recruitment talent becomes harder to come by, there are an increasing number of firms making some quite outlandish promises to prospective employees.  Now there’s really nothing wrong with that per se.  If you decide that the best way to acquire recruitment talent is to offer them 70% commission, 30 days holiday and season tickets to the Blues then that is fine.

But you have to then actually back that up when they join you.

Amazing as it sounds, there is an increasing amount of this going on.  Recruitment companies will be, and are, competing for the top talent in the market, and it is natural to conjure up unique selling points and other methods of coercion to land your recruiter.  But I cannot stress enough how critically important it is that you maintain credibility by actually providing what it is you initially promised.

 

The current phrase for this new phenomenon is “onboarding” which must be fairly new because Word just underlined it in red!  But most of you in recruitment will be aware of what it is, and how important it is to get it right and make sure your new employee’s first experiences of their new job are fabulous ones, helping to cement their longer term loyalty and buy-in to the company vision.

Here are my Top 5 On-Boarding Mistakes made by recruitment companies:

1. The promise:  We sit on a large number of PSAs and have an extensive database of candidates for you to put forward for roles.  The reality:  You’re on 3 PSA panels, one of which will only deal with the company’s top biller, and the other two just keep re-appointing your company because of the 8% fees you agreed to back in 2001, which means no-one has ever bothered recruiting roles for them.  The candidate database is made up of CVs sent in in response to generic ads from 2 years ago and no contact has been made to assess suitability or availability.
2. The promise:  We have a tight-knit team who generate a fun, sociable atmosphere and having Friday night drinks every week.  The reality:  You have an insidious clique of long-timers who shun new employees and bottom drawer good candidate CVs, as they see the new employee as a threat to their own desks and slice of the pie.  They make crude comments and jokes during the first week and on Friday they do go out for drinks, but don’t invite the new person whose name they never found out anyway. 
3. The promise:  You will have a car park as part of the package.  The reality:  The car park space is on the other side of town beneath a huge bird-infested tree forcing you to spend every Saturday morning cleaning off the bird product spattered all over your roof. 
4. The promise:  You will have a company phone and laptop as part of the package.  The reality:  You “inherit” the clunky old Toshiba laptop with the processing speed of treacle trickling uphill.  The mobile is quite new but looking through it you find it still contains the lewd photos and dodgy text conversations of the previous incumbent of your desk (who was fired for inappropriate behaviour towards other staff members, funnily enough). 
5. The promise:  All your tools will be ready for you to start recruiting right away, from day one.  The reality:  You arrive on day one to find your desk doubling up as the dumping ground for everyone’s coats and jackets.  Moving them aside you find your new log-on for the computer hasn’t been activated and you have to wait until later in the day for IT support to get onto it, the only programmes accessible being Solitaire and MineSweeper.  As for business cards, you are told that the server room is piled high with boxes of business cards for previous employees like some kind of business card tomb.  To avoid further potential loss you will only be ordered your business cards once getting through the 3-month probationary period.

 

These are all real-life experiences I have witnessed over my years in recruitment, both as a supplier of recruiters to the industry and also as a recruiter within the industry.  What employers need to realise now is that it is one thing making promises to get someone to sign up, but takes a lot of leadership and follow-through to actually ensure everything happens as promised.  If not, do not be surprised if your shiny new employee does a quick about-turn and turns up at your main competitor a few weeks later.

To finish, it is important to mention that the prospective new employee also has a big duty of care before accepting their new role.  It is quite natural for a new employer to go to some kind of length to sell their company over their competitors, especially in a tightening labour market.  If you are a recruiter looking for a new role, make sure you ask the right questions and really dig into the promises made by the person interviewing you.

Croquet and Pimms at the SEEK Estate

SEEK did something quite unexpected yesterday.  They hosted a very pleasant, convivial, civilised and not-at-all-brash garden party at Alberton House the “SEEK Estate” to host a range of clients, recruitment and corporate, to say thanks for our business.  How jolly decent of you SEEK and thanks for having us all along.

Now this was no legendary SEEK Blue Ball thronged with roaring recruiters, chest thumping suits and tottering tipsily on high heels.  This really was an indication of where we have come as an industry since the heady boom days.  The recession put paid to the Blue Ball, the flash venues and manically drumming Japs fading into a distant memory from 2008 as SEEK’s swollen coffers started to run as dry as those of their recruitment clients.  This was altogether a far more genteel occasion.  Recruiters are still in the process of hauling themselves back out of the recession.  No doubt work is picking up significantly and revenues are returning, but there are still a multitude of wounds to lick and heal, which came through in the polite and reserved chit chat that characterised the evening.  No more the sneering gloating over vanquished competitors, more like a few sideways glances and acknowledged mutual respect between competing firms who are all really just glad to still be in recruitment.

Forget Saatchi & Saatchi...it's Simon & Simon (Madison)

But for the wider recruitment masses, it was suggested by JP from Seek (who is now to be known as John-Paul as he was introduced by his new GM), that the Blue Ball will return.  So we will once again have a night of heavy drinking and general letting-hair-down behaviour.  Then we will really see if the recruitment industry leopard has managed to change its spots, or as I suspect is just currently wearing a clever spotless disguise in preparation to cast it aside when the boom returns.

The evening was also an opportunity for SEEK to introduce their aforementioned new GM.  Take a bow Janet Faulding and welcome to New Zealand’s recruitment community.  Janet has a background in running radio stations but did some online stuff as GM for Vouchermate.  We had a chat and she seemed pretty cool, although introducing her new account manager John as a fellow Pom, when he is from Zimbabwe, didn’t go down so well!

Janet Faulding speaks

It seems like The Whiteboard divided opinion last night as well, which is excellent news and just what I am trying to achieve – a bit of debate in our industry.  To be fair, there were many positive comments from some readers of the blog, and just one that suggested I was pushing things too far in a small market – but it’s all good and we’re all entitled to an opinion.  I have to take my hat off to the Manpower crew who were very magnanimous despite the panning received by many commentators a couple of weeks ago.

On that note the blog went past the 10,000 views mark last week, so thanks for all of your reading, especially those of you who contribute, comment and join in the debate on issues in our industry.

So there we have it.  No juicy gossip or salacious details on misbehaving recruiters this week I’m afraid.  I must say a big cheers to the guys from Hays, Recruit IT, Madison, and Automotive Employment, who carried the evening on in Snapdragon in the Viaduct.  It was a great night, but I really am all talked out, so I’m going to slink off to find a coffee and hopefully something abundantly greasy that I really shouldn’t be eating, but will be so good… I heard something on the radio yesterday about a battered sausage covered with chips and wrapped in bacon… a Piggy-Chip-Dog.

Mmm, that’ll be the ticket…aren’t hangovers great?

Recruit IT flying under the radar and banning use of flash

10 New Year’s Resolutions for the Modern Recruiter

 

Welcome back to a sparkling, shiny, brand new world of recruitment in 2011.  All across our region the fair knights and damsels of recruitment are once more donning armour of designer suits, wielding handshakes and smiles and brandishing the shields, otherwise known as black folders, that identify you as a recruiter wherever you may be.

For most of us 2010 was a gruelling, but ultimately much more rewarding year, as we rebounded from the recession of 2009.  So I hope you are all rested and refreshed and ready to enter the fray once more because this is going to be a fun, and busy, year for recruitment.

In order to make the most of what 2011 will have to offer, you are going to have to compete hard, and be at the top of your games.  To help you in your preparations I have compiled the ultimate list of New Year’s Resolutions for you modern recruiters:

1.  Despite being blinded by the glare off the shiny, polished surfaces of my desk and surprisingly easy access to the phone and keyboard, I will endeavour to keep it this way throughout 2011 and not let it quickly become a resting home for mountains of paper, post-it notes, newspaper ad cuttings and CV’s which will keep mysteriously disappearing amongst the heap.

2.  I will digest, become accustomed to, and finally make friends with that blank white box beaming out at me from my e-mail server.  This is my new inbox and it is always practically empty, so I will know that things have been dealt with and followed up upon.  I will action things swiftly and learn to use files to keep my messages organised, and the Delete button will become my new best buddy.

3.  I will talk and converse with my actual voice, rather than resort to e-mail, whenever humanly possible.  Every time I am about to compile an e-mail I will ask myself “could I be more effective and efficient by picking up the phone?” – Or indeed swivelling around on my chair and engaging with my colleagues in real time and in real life, rather than shooting out e-mails.

4.  I will make my marketing calls far more interesting and engaging for the clients on the other end of the phone, even the cold calls.  No more will I timidly rely on “How’s business…?” as my opening gambit but will instead prove my genuine interest and knowledge of their business by asking questions of relevance and pertinence.

5.  I will not drop my pants and reduce my fees just to undercut the competition.  We are approaching an extremely tight labour market and the top talent will be hard to find and I will actually believe in the value of my service.  If a fee reduction is persistently sought then I will make sure I negotiate a hefty compromise by ensuring retained services, exclusivity and/or volume of work.

6.  I will stop starting my ad writing with the words “My client…” because it is outmoded, lazy, boring and probably not even true.  And I will try really hard to limit my use of exclamation marks as a misguided attempt to make my ad stand out from the competition.  I will finally accept that consecutive exclamation marks !!!! are just plain ridiculous.

7.  I will provide some form of polite response to all candidate applications whether successful or not, even if it is merely an acknowledgement.  The exception to this Resolution is that it needn’t apply to those serial pest job applicants from overseas who have clearly spammed out their CV to every job posting across New Zealand and Australia.

8.  I will properly read a candidate’s CV before going into the interview and show them I have taken the time to do this by asking questions around their interests / background etc rather than launching straight into “So…tell me about yourself”.  I will also apply this to my client visits and call ahead to confirm the meeting, read up on the company I am visiting, and make sure I am there on time and ready to go.

9.  I will grab my metaphorical balls and give constructive, truthful feedback to my unsuccessful candidates, no matter how brutal that truth might be.  If they failed to get the job because their suit was crumpled, they were 5 minutes late, their answers were vague and irrelevant and they admitted to liking the music of Phil Collins then I will not say “sorry they have withdrawn the position” or “sorry but they appointed an internal candidate”.

10.  If I take the plunge and decide to give Social Media and Social Recruiting a real go then I will not mistake Linked In and Twitter for some kind of new Job Board.  I will mention the occasional role I am recruiting but will mostly use it to engage and interest my network by sharing useful links and information, and helping others within my network connect with each other.

If any of these are useful to you in recruitment then cut them out and stick them on your wall – feel free as they are Resolutions for all of us in recruitment – but make sure you don’t go and break the first Resolution right away.  And okay…some of them might apply to me too…but nobody’s perfect eh?

Come on then – let’s hear some more Resolutions for Recruiters in the Comments.

Hudson harness Linked In to put themselves about town

 

OK let’s see a show of hands.  Who out there received an “approach” from Hudson this week?

No?  Not you?

Well either you aren’t a recruiter currently operating in New Zealand or Australia, or you haven’t adequately described and categorized yourself on your Linked In profile (I know there is a third option that you might not have a Linked In profile… *gasp* …but I doubt you’d be reading this blog if you haven’t even progressed that far yet).

If you don’t know what I’m on about then I can explain.  This message quietly slipped into my Linked In inbox on Monday night:

Dear Jonathan Rice,

Hudson is the place where the best recruitment consultants do better.

From our A-list client base to a genuine focus on work/life balance, we invest heavily in supporting you so you can do what you do best.

Hudson is growing, and growing quickly. We’ve seen your LinkedIn profile and we’re keen to talk to you about joining the Hudson team. From A to Z, we can list the benefits of taking your next career step with Hudson.

We’re looking for talent management professionals and for recruitment consultants to join us across accounting & finance, sales & marketing, legal, human resources, ICT, office support, managed services, property, public sector, supply chain and technical & engineering.

If you’d like to find out more about why Hudson is the place where the best recruitment and talent management professionals do better, please email careers @ hudson and one of our team members will be in touch.

 

Pretty slick eh?  Thanks but no thanks Hudson, I’d rather remain a supplier if you’ll have me, but I admire the tone, nature and innovation of your approach.

So what’s going on?  How have Hudson managed to become a “Linked In Partner” and gain such unbridled access to all of our inboxes?  I imagine they have probably signed up to Linked In Recruiter Professional Services which is a system that basically allows you to use Linked In as a giant global CRM database and do candidate searches and “e-shots” (terminology from my Hays days) to people’s Linked In profiles.

Makes sense really – I mean did you think Linked In were a Not-For-Profit or a Charity?  Of course not.  It’s just that they didn’t really have much of a focus on revenue generating strategies outside of the US until earlier this year when Australia surpassed 1 million Linked In users and they opened an office on Sydney’s Pitt Street.  Steve Barham popped over from their Californian HQ as Director for recruitment solutions for their Australia and New Zealand markets and from that point on it was only a matter of time before we would start to see more premium Linked In usage entering our realms of reference.

One of the first to sign up was Rio Tinto’s internal recruitment team in Australia.  Now it looks like Hudson are having a go with it too.  So how effective do you think this will be?  I’m sure this premium product must cost a fair premium too – will they get a decent ROI?

I have already heard from a few recruiters out there in New Zealand who have received this approach from Hudson.  I’d be keen to see how wide the reach has been – feel free to leave a comment on the blog if you received it too (and yes, you can remain anonymous if you wish).

Most of all I’d be interested to hear your views on whether you feel this is an effective approach or not and, again anonymously, if any of you are planning on contacting them as a result.

I wish Hudson good luck with this new approach but I hope not too many of you say “yes” as I might need to start doing things a bit differently myself!  Always up for a bit of innovation though!

Have a good Friday and weekend everyone – talk again soon.