The Con Of Direct Placement Firms

A significant part of my career in Human Resources has been spent as a recruiter and leading the talent acquisition function for several different companies. I am very familiar with the pros and cons of using an outside firm to help fill positions.

In my opinion, the biggest pro to using a firm has been as it relates to the need for “temporary” employees. They are typically used to fill the gap created by either seasonal fluctuation that requires more labor or for projects that will at some point come to an end but require resources to see them through to completion. The model is relatively clean and straightforward; you call a firm; they find a person and then charge you a marked-up hourly rate.

In that model, you are off the hook for all the costs and responsibilities associated with finding someone, interviewing, screening, background checks, benefits, and performance management. If the person doesn’t show up or things don’t work out, the agency sends you someone else. This model is tried and true and works exceptionally well.

The biggest con is related to the direct placement model used by agencies. Here the company has a lot more skin in the game. While the agency or firm will handle the search, unlike the temporary mode where someone shows up and starts working, the company will want to interview the candidate or candidates presented much the same as they would if they were using their internal recruiters. And although the firm will still do things like negotiating an offer doing the background check and drug screen, there is one big con: the fee the employer pays.

Direct placement models rely on either a flat fee or a percentage of the hire’s annual salary. While that in and of itself is not bad, the problem is when the person doesn’t work out for whatever reason. Most agencies will not refund that fee. If the placement does not work out within the first 3-6 months, they will offer up a replacement and, in some cases, pro-rate the next fee, but if it is beyond that 3-6 months, the company is not only out of the resource, but they are out their money too.

Unfortunately, these models have not changed much since the concept of using outside firms to recruit was conceived back in the 1940s despite the ever-changing workforce landscape and what companies need. Or has it?

I was very interested when I came across Staff Pad and its innovative approach to the direct placement model. As a former recruiter and manager of recruiting, I was highly interested in learning what sets them apart from the rest: their fee structure.

Unlike the traditional model I described, this agency has adopted a subscription model to provide direct placements. While that concept is now new for other industries, services, and products, it is revolutionary in using outsourced direct placement.

Staff Pad does things differently. First, they are not just recruiters; they are experts that can find the best candidates. But that is not the best part of what they do. Instead of paying a per candidate fee like traditional firms, their subscription model saves the company money and provides the flexibility to hire new talent when needed. The flexibility of subscription pricing allows the company to spread the recruitment cost hires over the year and pay a monthly fee instead of getting hit with a massive expense for each hire.

The last big disruptor in recruitment was the advent of the ATS, but Staff Pad has changed that with its unique approach.

To learn more please visit: https://thestaffpad.com/find-talent/