PLACEMENT AGENCIES: PROS AND CONS

January, 1995

Whether you believe we are are in a recession or not, one economic fact is

painfully obvious today - more and more Americans are out of work and looking

for employment. And if that's not bad enough, the experts predict this

situation will only get worst before it gets better.

Here at the Career Center, the most common issue I deal with is unemployment

and job seeking. My e-mail and counseling appointment records are full of

overally stressed and panicked individuals desperate to find the next fix

(job). After twenty years of dealing with this issue, I've come to the

conclusion that unemployment is one of the top three stress generators of

life, along with death and divorce.

To cite an example of just how emotional this subject can be, employers have

been forced to coin neutral or safe terminology to mask its impact and help

terminated employees more easily adjust to the realities of their new

situation. You just can't come out and say to someone, you're fired. No,

nowadays, you've got to mention that the company is downsizing, merging,

going through a personnel adjustment, in a hiring freeze, restructuring

internally, or experiencing some other phenomenon which necessitates the need

for requesting that the you seek employment elsewhere. Sometimes I believe

it would be best for the individual if the company was honest and said, "Hey,

we're short on cash and we've got to fire you."

Anyway, and regardless of the reason, when the ax falls, millions of

Americans grudgingly start looking for work. And because job hunting is

filled with personal disappointment and rejection, many people start looking

for someone to help them with this burden. Aware of this need, thousands of

entrepreneurs have created businesses specifically designed to help the job

seeker find employment.

Enter the Placement Agency, or sometimes referred to as Executive Recruiters,

Employment Agencies, Headhunters, or Employment Search Firms. But are they

truly helpful and should you use their service to find employment?

To answer this question, let's look at some statistics (I know, you hate this

part, but it's important!):

In 1972, the US Bureau of the Census conducted a survey of 10 million job-

seekers to learn which job seeking strategies were most successful. The

conclusions of this survey were published in the 1976 Occupational Outlook

Quarterly and are still relevant today. The table below indicates in order

of most-to-least effective, the strategies which were used by these job

seekers.

Percent Using Strategy Used Rate of Effectiveness

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66.0% Applied directly to employer 47.4%

50.8% Asked friends about jobs at their 22.1%

place of employment

41.8% Asked friends about jobs elsewhere 11.9%

28.4% Asked relatives about jobs where 19.3%

they work

27.3% Asked relatives about jobs elsewhere 7.4%

45.9% Answered local newspaper ads 23.9%

11.7% Answered nonlocal newspaper ads 10.0%

21.0% Private employment agency 24.2%

33.5% State employment agency 13.7%

12.5% School placement service 21.4%

15.3% Civil Service Test 12.5%

10.4% Ask teacher or professor 12.1%

1.6% Placed ad in local newspaper 12.9%

.5% Placed ad in nonlocal newspaper**

4.9% Answered ads in professional/trade journal 7.3%

6.0% Union hiring hall 22.2%

5.6% Contacted local organization (not employer)12.7%

.6% Placed ads in professional/trade journals**

20.2% Other strategies 39.7%

**response too low to calculate

It's clear from the most extensive survey ever conducted on this subject that

using a placement agency is not the most effective means of securing

employment. In this case, your chances of securing employment via the

assistance of a placement agency are 1 out of 4 (25%).

In a more recent survey conducted by Drake Beam Morin, Inc. and reported in

Richard Bolles' book, "What Color is Your Parachute", a lower success rate

was reported for those individual who used the services of a placement

agency. Specifically, of the surveyed group:

68% found employment through personal contacts

15% found employment through a search firm's activities

9% found employment by answering classified help wanted ads

8% found employment by mass mailing their resume and/or employment letter

With such modest success rates, you might wonder why there so many employment

agencies in the United States. And why aren't they more effective? To

understand the reason for the number of agencies which exist, you must know a

little about human needs and motivation. As mentioned earlier, the very

nature of the job search can be fraught with personal rejection and

disappointment. As Tom Jackson puts it in his book, "Guerrilla Tactics in

the Job Market", the typical job search can be described as No, No, No, No,

No, No, No, No, No, No, No, No, No, No, No, No, No, No, No, No, No, Yes. In

other words, you will receive far more rejections than offers.

With personal rejection being rather low on our list of things we like to

receive, it's understandable that people will seek help to avoid or lessen

the frequency of this occurrence. I recall one gentleman who came into my

office a few years back and announced that he was willing to pay any amount

of money if I would just take over his job search and call him when I had

found employment for him. To save ourselves from personal defeat,

humiliation, and rejection, we are willing to pay others to help us secure

employment. Hence, one of the major reasons for so many agencies!

The realities of the job search are such that you must be willing (in most

cases) to dedicate eight hours a day, five days a week to finding employment

if you are going to be successful. As a matter of fact, many of the more

successful "job clubs" who specialize in assisting groups of individuals

secure employment via a team work strategy require that all participants

spend this amount of time if they wish to remain in the program.

Considering the above fact, as well as the fact that all agencies must

allocate their time and resources to several job seekers at the same time, it

is obvious that no agency can devote the full amount of time necessary to

secure a position for each individual it represents. This explains why they

are seldom more than 25% successful.

So, where does the employment agency fit into your job search. My

suggestion is that you should use a placement agency as one of your

strategies which you employ to secure employment, but not the main strategy.

Clearly, you must be willing to undertake a direct employer campaign if you

expect success. This means that you must seek out and identify employers

that you would like to work for, and then contact them directly with a letter

and resume. Then, and only then, should you incorporate other strategies,

such as using a placement agency, your college placement services, responding

to employment ads, etc to find employment.

What services can you expect from a placement agency? The answer to this

question will vary (sometimes widely) from agency to agency. Depending upon

the talent and skill of the agency personnel, you may receive any of the most

common forms of assistance (listed below):

* Identifying potential employers

* Researching companies to learn of their employment needs

* Learning how to make "cold calls" to reach the right people

* Access to "hidden" job opening announcements

* Writing resumes and letters of employment

* Selecting a career direction

* Learning how to handle an interview

* Determining what salary matches your qualifications

* Preparation for employment tests

Essentially, there are two kinds of placement agencies - one kind where you

do not have to pay for their services, and the other where you do. Understand

that most placement agencies are hired by employers to find employees. In

these situations, it is the employer who pays the agency and not you. When

the agency finds someone who meets the employer's needs, he or she is

referred to the employer for the final interview. If selected, the employer

pays the agency a fee for their help. While this arrangement may at first

seem best for you, it is often not the case. With this arrangement, the

placement agency's loyalty and dedication is to the employer (the person

paying the bills). So it is their needs that are most important, not

necessarily yours. This sometimes results in the job seeker receiving less

attention than the employer!

However, in spite of this limitation, it is suggested that you use this kind

of agency before one where you have to pay for the use of their services.

The last thing you want to do when unemployed is spend money, especially for

services which you can obtain elsewhere for free. If an agency requires you

to pay for a service, especially up front before any work is conducted, I

suggest you seek assistance elsewhere. And never, never sign a contract for

services which you have not read carefully, fully understand, and are truly

willing to pay for!

How do you differentiate the good agencies from the less skilled? This is no

easy task. Generally speaking, the good agencies are willing to provide you

with a list of individuals which they have helped place into employment that

you can contact for references. If they indicate, for whatever reason. that

no list is available, the warning bells should go off in your head.

Also, the good agencies should be willing to explain up front what their

services are, how they will help you, what your responsibilities will be, how

long it normally takes to find employment, etc. If they don't seem to have a

well understood "plan of action", it's time to look elsewhere.

Since employment agencies often specialize in the professions they handle,

you should shop around until you find an agency that handles your kind of

occupation. To find such an agency, I suggest you obtain a copy of either of

the two books listed below:

The Directory of Executive Recruiters Kennedy Publications Fitzwilliam, New

Hampshire

Directory of Personnel Consultants by Specialization National Association of

Personnel Consultants Alexandria, Virginia

Finally, a word of caution. If an agency indicates that they will only

handle your case if you work exclusively with them, don't agree to this

condition. If you find employment on your own with no help from the agency,

and if you have agreed to this condition, you may be legally responsible to

them for their placement fee.

The Bottom Line! Placement agencies can be a useful tool in finding

employment. Use them as a "second line" of resources, after or while

conducting a direct employer campaign yourself. Steer clear of those

agencies which require a fee or which ask for an exclusive listing. If you

use an agency, pick it carefully. Ask for references and follow them up.

Ask a lot of questions, especially those dealing with what services you can

expect to receive.