The human resource manager seeking an employee and the worker seeking a job are often confronted and confused by a bewildering variety of personnel-related services. Advertisements, yellow pages, or even the names of some of these businesses fail to indicate clearly what services are actually performed and who is required to pay for the services. Services and activities formally performed by one category of business have frequently expanded to such an extent that convenient distinctions between types are no longer possible.

Under "Yellow Page" headings or state licensing categories/definitions, an "employment agency" or "human resource" consultant could easily be a firm placing blue collar workers or a firm specializing in and placing only petroleum engineers. Given the lack of distinction between terms in general usage, it is no wonder applicants and employers alike are finding themselves confused. Definition according to salary level is no longer adequate or accurate.

Below are described the major categories of human resource firms. It should be remembered, however, that a contingency search firm may also have a temporary placement office, work on retained search assignments, or provide resume-writing services, just as other human resource firms perform some of the functions of contingency search firms.

Contingency placement/search
Retained search
Temporary help services
Resume services
Psychological Testing
Executive counseling out placement service
Letter writing services
Clearing houses
How can private human resource firms help employers?
Listing a job opening with aprivate placement service

Contingency Placement/Search

Contingency placement or search means simply that the firm receives payment if and only if the employer hires an employee or the candidate locates an acceptable position. A private placement service working on a contingency basis receives a placement fee only after a job seeker and an employer are brought together and a mutually satisfactory employer-employee relationship is negotiated. Someone must be hired by someone else, begin work and often must complete a pre-agreed upon period of acceptable job performance.

Contingency search firms are frequently described as human resource consultants, employment agencies, executive search firms, personnel agencies, etc. Contingency placement firms may charge the employer, the applicant, or some combination of the two. It is for this reason that employer and applicant alike should be certain they understand any obligation that may be incurred. It is inherent in the free enterprise system that either the applicant or the employer has the freedom and the option of hiring an agent to represent them in the employment-employee search.

Contingency placement services are not paid a fee for the time and money their personnel expend in unsuccessful attempts to find a job for the applicant or a suitable employee for the employer. Sometimes either the employer or the applicant rejects all candidates or job opportunities developed by the placement service. In these instances, the placement service loses money, since the applicant or the employer is not required to pay a service fee unless a job is offered and accepted. This is the price the placement service must pay to permit both applicants and employers to use the professional services of the agency without financial risk to themselves.

Retained Search

Companies working on a retained search basis may operate under a variety of descriptive titles, such as employment agencies, executive search firms, management consultants, etc. These firms are always paid by the employer, with a portion of the payment sometimes being made before a suitable candidate is located. Payment is not contingent upon the actual hiring of the candidate.

Confusion sometimes arises because "pure" management consulting firms do retained search in conjunction with their other services. (Congress has considered, and the American Institute of Certified Public Accountants has imposed, important restrictions on what kind of recruiting can be performed by accounting firms.) Services performed by retained search companies may run the entire gamut from recruitment of one needed person to a complete management audit for a firm, indicating needed organizational changes and new personnel needs which the firm then attempts to meet.

Payment or retainer for these services is usually agreed upon in advance, an advance payment is usually made, and out-of-pocket expenses are usually reimbursed in addition to the placement fee.

Temporary Help Services

Temporary help services are actually employers who lend their employees to other employers. The charge for this service is based on the number of hours the employee works at an agreed upon hourly rate. The hourly rate paid by the employer-client exceeds the rate paid to the employee by an amount which allows the temporary help service to assume payroll taxes, insurance costs, administrative overhead and profit.

Confusion with contingency placement services occurs when the employer-client who has borrowed an employee from a temporary help service decides that he wishes to hire on this employee. To cover the loss inherent in losing an employee after spending the money for recruiting, evaluation, and training, the temporary help service will sometimes charge the client company a conversion fee.

Resume Services

Resume writing services assist a person needing professional help in compiling a resume. For a fee paid by a candidate and based on the amount of work performed, the resume service will assemble the relevant data, organize it, and give the candidate a substantial number of copies. There is no payment contingent upon employment. The total cost of the service is agreed upon in advance.

Psychological Testing

Psychological testing is perfomed by professional psychologists who, for an agreed upon fee, administer personality, interest, and ability in tests; and advise the client of strengths, weaknesses, and probable areas of career success. Usually the applicant pays for these services unless an employer has requested the testing as an aid in evaluating the potential of an actual employee.

Executive Counseling Out Placement Service

Executive counseling has become a controversial service in recent years. The purpose of executive counseling is not to obtain a position for the applicant client, but to prepare them to make basic career decisions, and by using tools which the executive counseling service offers, to obtain the position they desire through their own efforts. The cost of this service is an agreed upon fee paid in advance by the applicant, and no part of the payment is contingent upon the applicant obtaining a position.

To sell such a service for a substantial sum, the executive counseling service may imply that a desired position will be available as a result of the counseling program. If such a position is not obtained, a client who has paid a substantial fee may complain. Rarely, if ever, does the executive counseling firm definitely promise the placement in a position for the fee received. Executive counseling services charge the applicant a fee for work which they do, and usually no fee is charged to an employer or applicant contingent upon placement.

Letter Writing Services

Letter writing services are applicant marketing activities in which the letter writing service has taken an active, rather than passive, role in the task of exploring and developing the logical job market for the applicant. For a fee, paid by the applicant, the letter writing service will prepare a letter, a resume, and a list of potential employers to whom the letter will be sent. The applicant receives the information developed through the letter writing campaign. If the campaign is successful, they can pursue the inquiries which resulted from the efforts of the letter writing firm. Some of the firms that advertise overseas employment are actually letter writing services. While some letter writing firms charge only for the preparation of the letters, others charge a fee for the work done as well as a fee contingent upon employment.

Clearinghouses

Numerous "clearinghouses" for executive, technical and administrative personnel have been established. These firms collect information from employers and applicants and publish all or parts of this information in magazines or other outlets. Some charge the applicant a nominal fee for acceptance and filing their credentials. Some also charge the employer for access to the collected information. Basically, these organizations collect and distribute information.

The users of this service pay for information they receive. They generally do not py a fee contingent upon employment. Technical societies, clubs, associations, and other organizations frequently operate some form of employment services or information clearinghouse, the cost of the service being paid by the organization, the applicant, the employer, or a combination of the three. There are many reasons why successful employers, large and small, with or without human resource departments use private placement firms.

Confidentiality is sometimes of importance. A company's reputation in its community is aided by not having to reject qualified applicants, and a threatening air of change or impermanence is avoided, an air which can easily permeate a department or an entire company when it is learned that new people are being sought.

How Can Private Human Resource Services Assist Employers?

In addition to being practiced at evaluating candidates' qualifications, agency personnel are also experienced at checking credentials and references. Again, the placement firm can keep the company's name from being broadcast to other companies, and the human resource consultant's experience may well yield a more valuable assessment. Further, applicants will get a more complete picture of a business to which they apply than can possibly be conveyed by a newspaper advertisement.

The human resource firm can present a total picture of the company to the applicant if given enough information by the company. In this way, qualified applicants who might not otherwise apply will be referred. If the human resource firm is given a complete and accurate picture of the company, they can conduct a continuous and ongoing search. When there are no specific needs within a company, the agency which understands a firm's needs will still be able to refer candidates who meet company requirements, thus offering the company an opportunity to upgrade various positions.

The human resource service can easily become an anonymous service extension of the corporate human resource office if it is given a complete understanding of the firm's needs, policies and practices. A further consideration for many companies is cost-effectiveness. Comparing the cost of regional or national advertising for locating a suitable candidate, interviewing time for human resource people and department heads, as well as travel and other interviewing expenses, placement firms can often produce qualified candidates faster and less expensively than other sources. A business' own personnel are kept free of time consuming interviews and screening of unqualified applicants.

Listing a Job Opening With A Private Placement Service

The more a placement service knows about a job opening, the closer it will come to sending only those applicants who are fully qualified to fill it. Specifications should be comprehensive but realistic, having a clear correlation with the job to be filled. In addition, placement firms, like employers, are covered by State and Federal statutes and regulations regarding equal employment opportunity, civil rights, age discrimination, etc. The placement service cannot accept a job order that restricts employment based on race, creed, color, religion, sex, national origin, age or handicap, unless such a restriction is a "Bona Fide Occupational Qualification."