employment placement service(1)

Permanent Placement Fee Agreements

Wilson Cole

Have you ever worked in human resources? Are the hires you make for your clients top-notch? Are you receiving payment for your efforts?

How devastating would it be if you responded positively to the first question but negatively to the second?

In addition to finding top candidates for permanent roles, you also recruit, screen, and interview direct hires for your client's direct hire openings. You deserve to get paid! You need that money to stay afloat, yet many companies with poor cash flow might give low priority to your payments.

Delinquent payers go further—or even become ruthless—to avoid paying the placement fee they are legally compelled to pay.

Can you fix this? Is it possible to successfully recoup all the time and effort you invested in placing a candidate?

Understanding Employee Placement Agreement

An employment placement service links businesses and candidates. Job placement services, also referred to as recruitment agencies, executive search firms, or staffing firms, play a significant part in aiding job seekers.

They can connect people with employers directly, assist students in finding internships, aid veterans in locating civilian employment, and provide educational services to their clients to help them become more employable. For instance, a recent graduate might visit a job placement agency to practice interviews and pick up resume-writing tips to prepare for the job search process.

There are generally three categories of employment placements:

1. Direct Hires
A company hires individuals directly when they want a full-time, long-term employee. A direct-hire employee does not get a temporary salary from the staffing firm; instead, they receive payment directly from their employer. Employers seeking a long-term, highly skilled employee most frequently use direct-hire arrangements. Since direct hire roles are more permanent and sometimes need a higher degree of certification than other types of placements, it may take longer to locate one. Still, these positions are typically steady and frequently include perks like health insurance and retirement plans.

2. Temporary
A temporary job is one where the employer and employee have a set amount of time to work together. The length of work varies depending on the position and needs of the employer. However, most jobs are for a shorter period of time than a year. Typically, the placement agency, not the company, is in charge of paying temporary workers. Although temporary postings might have less stability than direct hiring and temporary workers might not be eligible for benefits, these jobs can be excellent for people who want to network with professionals, gain experience in a particular area, or need a short-term source of money.

3. Temporary-to-Hire
Direct hiring and temporary postings are combined in temporary-to-hire or temp-to-hire employment. To determine whether a candidate is a good match for the role, an employer might recruit them on a temporary basis. They might give the applicant a permanent job if the placement goes well. Most frequently, candidates are paid by the employment agency until they take a permanent position.

For job seekers who want to test out a new position or learn more about a certain industry without committing fully at first, a temporary-to-hire position can be a fantastic choice. Out of all the placement options, this one provides the most flexibility because it allows job seekers to try out a position, determine whether it is a good fit for them, and then decide whether to accept a permanent position with the firm.

Understanding Recruitment Fees

The signing of an employment contract or the rules of employment by both parties—employer and employee—is typically a requirement before fees are paid.

The costs associated with hiring outside firms to identify candidates for positions are known as recruitment fees. These vary depending on the type of contract, the open position, and the hiring organization.

Still, paying the fee offers some advantages.

1. Faster Hiring
Hiring a third-party organization to handle your recruiting will allow you to focus on other, more critical tasks while saving several hours daily.

2. Capable of delivering quality and specialized placements
Often, businesses would look to hire highly specialized positions. This can require knowledge of the sector and the job that traditional internal recruiters might not have.

3. Wider network
Recruitment agencies already have a substantial social network. As a result, they find it simple to hire job seekers (often clandestinely), substantially cutting down on the time it takes to fill a position.

Direct Hire Staffing Agreement

Direct hire staffing agreements may be the most straightforward, but it is arguably the one that causes more issues for recruiters.

Staffing agency direct hire agreements may be more prone to instances of backdoor hiring.

Backdoor hiring is when a customer may hire a qualified individual directly from you without your knowledge in a practice known as backdoor hiring to avoid paying the permanent placement fee agreement. 

Being involved in backdoor hiring is a nightmare for staffing companies because it is difficult to collect invoices.

However, a backdoor hire has more negative effects than just the employment agency losing money. Ironically, they are bad news for the business that purposely misappropriated hiring money for their gain.

Even though the offending company may believe they have saved money, seasoned recruiters and those that have invested in a backdoor hiring solution will have the information and tools necessary to make them pay up. Furthermore, these costs would be high due to their previous unreliability, which made them understand it would have been better if they had paid.

Engaging with a different employment agency may be difficult for the applicant who consented to the backdoor hiring.

To Wrap It Up

Long-term open roles are bad for business and usually cause hiring problems. It is time to work with specialists if you are a recruiting team member and have experienced issues with your company's recruitment strategy.

Honoring your end of the bargain should be dutifully observed if you decide to tap a recruitment agency. Following through with your permanent placement fee agreement in a timely and organized manner will ensure good working relations with the recruitment agency.

For more information, book a FREE demo with a Backdoor Hire Specialist.

Wilson Cole

Wilson Cole

Founder and CEO of Adams, Evens & Ross NC, LLC, the nation's largest credit and collection agency designed exclusively for the staffing and recruiting industry. In 2008, he was inducted into Inc. magazine's, "Inc. 500" as CEO of Adams, Evens & Ross NC, LLC, the 307th fastest-growing privately-held company in America. This exclusive group of other Inc. 500 CEOs includes; Bill Gates of Microsoft and Larry Ellison of Oracle. In 2007, Recruiting & Staffing Solutions Magazine named him "The Billion Dollar Man", based on successful collections of more than 1 Billion dollars in past due debt. With a career spanning 30 years as CEO of Adams, Evens & Ross NC, LLC, he's in the business of getting clients paid.