Open any magazine or newspaper devoted to the problem of job search, go to a specialized site on the Internet! What immediately catches your eye? Of course, there is an abundance of various vacancies and an impressive number of recruitment agencies that have submitted their applications.
This picture is typical and familiar to the inhabitants of megacities. In a peripheral small town, the situation is diametrically opposite. There are no jobs, no advertisements for recruiting, there is not even specialized media informing citizens about the staffing needs of enterprises – and millions of provincial residents have never even heard of such an activity as recruiting and recruiting.
Even a superficial observer will note the obvious interconnection of phenomena – the development of the labor market determines the emergence and flourishing of recruiting agencies. And the recruiting industry, in turn, is an indicator of the development of a market economic system, the formation of a labor market and labor force, intra- and inter-industry competition of enterprises, i.e. economic development of a city or region.
Administrative methods of economic management, financial and economic crises affecting a region or country, a weak level of product development, a low population, the lack of a legal framework that provides a citizen with the freedom to choose a job – these and several other negative factors that hinder the economic development of the region, industry or the state as a whole – these same factors destroy recruiting as a business, as an industry, as an entrepreneurial initiative, as a demanded service.
Thus, if, opening the magazine, we see applications from hundreds of agencies simultaneously operating in the market of one city, we need to rejoice for the socio-economic and political health of this metropolis. Isn’t it a very simple and convenient indicator! Moreover, it is universally applicable to different cities and countries.
So, recruiting agencies are a phenomenon of the socio-economic life of a city, region, country.
Their activities are regulated, on the one hand, by the development of the human recourses market, on the other hand, by competition between enterprises-operators of various market sectors, and on the third, by a legal, legal framework that ensures the viability of the process of joining the applicant and employer.
Perhaps it is appropriate to mention the fourth factor here, which can be characterized as the “civilization” of the service market, the dominance of moral codes and ethical principles, concern for preserving reputation among the entrepreneurial community, which does not allow customer firms to abandon their payment obligations services performed by the agency.
Compliance with four macroeconomic conditions leads to the development of the recruiting industry in a metropolis or region.
The essence of this amazing business is mediation between an employer – a company with specific staffing needs and a specialist who wants to find or change jobs.
The personnel business is, as it were, an intermediate link between the commodity business and the provision of services. On the one hand, the subject of sale and purchase, and, therefore, a commodity is human recourses, personnel, since payment is made not according to the resources spent by the performer (as, for example, in the provision of medical, educational services, etc.), but in fact hiring a specialist. Moreover, the undoubted advantage of the business is the absence of capital investments, costs for the purchase, storage, transportation of goods.
On the other hand, a significant difference from the commodity business is that the principled agreement reached between the “seller” and “buyer” is not enough. “Commodity” is so autonomous and full-fledged participant in the transaction that sometimes it is not clear to whom what is being sold: the applicant – the company or the company – to the applicant.
Most often it is a counter process coordinated (and not always successfully) by an intermediary party. Where, as in any business, there are many, many nuances.
It should be noted that even though in official reporting and licensing authorities this type of activity is collectively referred to as “promoting employment to the population”, at present it is very popular to divide the entire set of recruitment agencies into three types:
- by Executive Search;
- recruiting firms, recruiting agencies;
- firms engaged in the employment of citizens, employment agencies.
Executive Search companies make up less than 10% of the total number of agencies operating on the market and are looking for narrow-profile, scarce specialists and top managers, for whose “heads” the customer enterprises are ready to pay 25-35% of the specialist’s annual income.
This work requires the highest professionalism since the required specialists are not looking for work, they do not publish information about themselves, and they do not respond to advertisements. Finding them is not easy. But it is even more difficult to convince a successful top manager to change his existing job for a new one. “The best is the enemy of the good,” and the specialist is in no hurry to part with his former place, negotiations with him may take many months.
The classic features of a recruiting agency are the following:
- work is performed at the request of the employer, i.e. recruitment of personnel is carried out following a request received from the enterprise, which indicates the qualification requirements for a specialist and preferred personal qualities; · Payment for the services of recruiters is made by the customer – i.e. company, legal entity;
- services are provided free of charge for applicants.
- Recruiting is the most common type of intermediary agency activity.
- The cost of recruiting services is 7-20% of the specialist’s annual income. Payment is made within 3-30 days from the date of the specialist’s release to work.
In some cases, agencies take 30-50% of the advance payment. The guarantee is the agency’s obligation to replace free of charge a specialist who has not passed the probationary period (dismissed at his own request or the employer’s initiative) or to refund 40-60% of the payment.
An enterprise-customer, as a rule, finds 3-4 agencies, to cooperate with which, in his opinion, is the most profitable, and, as needs arise, sends a request for personnel selection. Relationships between partners become less formal over time, and, in particular, the replacement of a specialist looks quite creative (for example, an agency, with the consent of the customer, can replace a resigned advertising manager with a secretary and a driver, focusing on the total salary of the mentioned employees).
Typical features of the “employment agency” are:
- Collecting payment from the applicant (part of the money immediately, on the day of applying, and part – after the first salary is paid; possible options: before the first interview at the company, immediately after going to work, etc.);
- Agency services are free for the employer.
Curiously, such a division of agencies into two types (recruiting and recruiting agencies) is not entirely correct, since overlooks an important point: both types of intermediary firms described are focused on finding employees who meet the requirements stated by the employer, i.e. in fact, they belong to the class of recruiters.
The only difference is that the quality of work of the former is quite high, self-presentation is performed at an appropriate level, services are in demand in the market, and the customer is ready to pay for competent, efficient, professional recruiting. Firms engaged in “employment”, as a rule, are newcomers who have not yet found their niche in the service market and cannot cope with tough competition from “promoted” agencies, thus trying to go “beyond” the confrontation and attract a client with “free cheese “.
By the way, this type of agency should not be confused with news agencies, which provide everyone with a printout of the list of vacancies (any suitable for the request), taken from open sources of the media and the Internet, which they call “Databases”. Despite advertising publications in the same magazines and in the same headings as recruiting agencies, they are essentially engaged in providing information services to citizens looking for work, which has nothing to do with either recruiting or employment.
So, public opinion does not quite correctly divide many agencies into recruiting and employment agencies according to such a criterion as a source of income.
This principle, certainly important, in this case, does not reflect the essence, the physical meaning of division. “Paid – free” is one criterion, “recruiting – employment” – quite another.
Employment, in the undistorted sense of the term, is a complex, lengthy, laborious process when an applicant is looking for a position following his professional qualifications and level of financial aspirations. In this case, the client is either a person who, for various reasons, is experiencing difficulties in finding a job in his specialty (due to recent migration, a long break in work experience, a desire to radically change his field of activity, etc.), or a specialist who wants to independently stimulate mechanisms career growth through consistent transfers, i.e. change of companies with promotion.
Such an order for an agency, although not urgent, is rather laborious and complicated. He demands filigree technique and artistry from his performer. It is not enough to find a vacancy of a suitable level here, you also need to present and recommend the client in such a way that they will accept him, and not another applicant.
Such professionalism should be paid accordingly (15-20% of the specialist’s annual income). Unfortunately, the majority of job seekers are not ready for this yet.
Leading recruiting companies are engaged in elements of employment, (in the correct understanding of this term), when they present the most outstanding applicants on specialized sites, inviting employing firms, in case of interest, to contact the agency representatives. But only the active position of the customer, including scanning Internet resources, contacting the agency, and the willingness to pay for their services, is the guarantor of the deal.
So, strong recruiting firms can combine both related areas – recruiting and employing highly-demanded specialists. They confidently and steadily occupy positions in the market for providing services in the field of personnel management.
Their customers are approximately 50-60% of firms operating in the metropolis.
The services of Executive Search agencies are in great demand among leading companies leading in their industry, ready to pay any price for “Specialist No. 1”.
Agencies that have not reached a certain level of development provide free services in the field of personnel recruitment, selecting low-paid drivers, security guards, loaders, and other workers for vacancies that do not require special knowledge and high qualifications from the applicant.
There is a fairly steady demand for their services both from employers with limited budgets and low selectivity in the selection of personnel and from applicants who have difficulty finding a job.
News agencies also do not remain without their client.
Thus, the market itself regulates the quantity and quality of services offered in the field of personnel management, without dividing them into “good” and “bad”, “higher” and “lower”, because there is a buyer for each product.