The Logic of No-Placement-Fee

Can corporate policy on placement fee charged by recruitment agencies make a difference in your recruitment campaign?

In the Philippine recruitment industry, there are only two types of agencies:  Those agencies who charge placement fees, and those who do not charge any placement fees on the candidates.

The Philippine Overseas Employment & Administrations’ (POEA) Rules & Regulation, Rule V Section 3 states that the maximum fee an agency can charge on a candidate is equivalent of one month salary. (See info box on the right.) 

While the Philippine laws permit the agencies to charge candidates a placement fee, the underlying question a human resources practitioner will have to ask whether this policy opens the doors to hire the best candidate in the job market, and whether it creates a positive image for your company as an employment opportunity provider.

There are numerous employers and HR practitioners who ask which agency is it better to work with, those who charge fees on the candidates or those who don’t?  Many times when trying to understand the purpose or underlying reason why they ask this question, we learn that what they really wish to know is: What makes a recruitment campaign successful?

Considering the many factors that define the success of a recruitment campaign, let us narrow the question to how placement fees affect the success of a recruitment campaign. 

The following is a table that compares the experiences of agencies that do not charge placement fees to candidates versus agencies that do:

No Placement Fee Agency	Placement Fee Charging Agency
Cost of recruitment absorbed by employer.	Cost of recruitment absorbed by candidate, or candidate & employer.
Candidates are assessed based on their qualifications.	Candidates assessed by their qualifications, and ability or willingness to pay a placement fee.
Applicants are keener to pursue the opportunity since they will be assessed based their qualifications rather than how much they can pay.	Applicants are less interested to apply since there are other opportunities which present a better option than being charged a fee to pursue a career.
Candidates are focused on building a career.	Candidates are concerned with paying their debt.
Employers are concerned with attracting the best candidates.	Employers and agencies have a harder time attracting the best candidates.

It is clear that agencies that do not charge any fees on candidates have an edge when it comes to presenting to candidates the vacancies of their clients.

Sophisticated employers know that in order to attract the best candidates in the job market, they will have to invest to gain their attention.  At any given Sunday, newspapers in Manila advertise job opportunities in Saudi Arabia, UAE, Qatar, Singapore and more.  Hundreds of agencies and companies are trying to catch the attention of potential candidates, and convince them to apply at the job openings being presented.  The average job seeker asks the following questions:

1. Which country is it best to seek a job opportunity?
2. Are these job opportunities from a multinational or a top 100 company in its market?
3. Does this recruitment agency have an outstanding reputation?

Given this, it is clear that agencies who do not charge any placement fee have a better chance in attracting the best candidates.  This is the logic of why companies who want to have a successful recruitment campaign only commission agencies of good reputation – recruitment agencies who do not charge fees to candidates.

For more information on how to conduct a successful recruitment campaign, you may send an email to sales@edistaffbuilders.com  or check our website at www.edistaffbuilders.com.

EDI-Staffbuilders International is one of the top international recruitment agency in the Philippines.  As a subsidiary of the John Clements Consultants Group (JCCI), EDI brings the standards of its esteemed parent company in the international recruitment practice.

EDI was started in 1978 by the Harvard-educated Mr. Leocadio Dominguez and renowned Australian psychologist, Mr.  John Clements.  Being one of the pioneering company in the industry has not only afforded EDI a tradition of leadership, but has set the bar on industry standards.

Over the past three decades EDI has gained the confidence of some of the top companies in the Middle East in the Asia-Pacific, primarily in the oil & gas, petrochemical, engineering, construction, telecommunications, IT, hospitality, services, and banking industries.