Dear Nicky,
I'm a newer member with previous split experience. I haven't seen much information from NPA about how things are handled when there is a fall-off. Is there guidance you can offer?
Learning in Luna Pier
Dear Learning,
In a perfect world, every split placement ends with a happy candidate, a happy client who pays on time, and two happy recruitment partners sharing a fee. But what happens when a placement goes wrong?
Let's review the most common scenarios where a placement can fall apart:
The “no-start”: The candidate backs out before their first day. This might happen if they accept a counteroffer, change their mind, or the client withdraws the offer.
- Since no fee has been exchanged, this is the simplest scenario to manage financially. However, it’s still a disappointing outcome for everyone involved and usually means restarting the search from scratch.
Replacement guarantee: The candidate quits or is fired before the guarantee period ends, and a replacement is required. A replacement guarantee means the recruiter must provide a new candidate at no extra cost. While that sounds straightforward, the details can get complicated.
NPAworldwide requires that the impacted candidate recruiter have the first opportunity to find a replacement. To avoid disputes, you must define a clear process beforehand. Address these questions upfront:
- What is the client’s expected turnaround time for the replacement? If the initial search took three months, it will likely take a similar amount of time again.
- How long does the original candidate recruiter have to find suitable candidates?
- If the candidate recruiter can’t or won’t find a replacement, they may be required to return their portion of the fee to the job recruiter.
Money-back guarantee: The candidate leaves before the guarantee period is over, and the fee must be returned to the client. It’s crucial for the job recruiter to discuss this with the candidate recruiter from the beginning. The candidate recruiter must be aware of their obligation to return their half of the fee.
- We recommend reviewing the fee and guarantee terms before any split placement activity begins. For larger fees, consider placing the funds in an escrow account until the guarantee period ends. Having to suddenly return a five-figure fee can seriously impact a small firm’s cash flow. These conversations are much easier to have before a problem arises.
Guarantee extension: The candidate leaves after the guarantee period, but the job recruiter offers the client an extension as a goodwill gesture. This is more common than you might think. Imagine a job recruiter has a 60-day money-back guarantee. The candidate quits on day 62. To appease their best client, the job recruiter offers to extend the guarantee and refund the fee.
- In NPAworldwide, the candidate recruiter is generally not obligated to honor changes to the fee or guarantee that were not communicated and accepted in advance. If the job recruiter offers a refund after the guarantee has expired—without getting the candidate recruiter’s prior agreement in writing—the candidate recruiter may not have to return their portion of the fee. This means the job recruiter could be out the entire fee, not just their half.
Split placement relationships can be destroyed by misunderstandings about fee and guarantee policies. No one wants to feel cheated out of their hard-earned money. The solution is to overcommunicate in advance and get everything in writing. This ensures all parties are clear on their financial obligations and can walk away if the risk is too high.
Nicky
send letters to: nanderson@npaworldwide.com