Placement fee

Placement fee
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Placement fee is a term which genereally means the agreed amount of money by two entities and paid for the placement service. It is the most often used in the area of recruitment as well as advertising. In general, this term refers to payment for positioning operations provided by suppliers to their customers.

Placement fee in recruitment area[edit]

Placement fee in the recruitment process is a payment imposing on a worker for service of searching for him a suitable employer, provided by the employment agencies. It can be said that it is a fee for intermediation in finding a job. There is not only one payment model, what means that the fee can be charged not only for a successful matching, but also throughout the entire process called then continuous stream. Furthermore, in contrast to selling a job, leasing a job makes employees more dependent on the services of the agencies for a longer time, so it results in regular placement fees (Gonos G. 2000, pp. 21, 30).

The employment agencies service is based on triangular relationship between:

  • angencies,
  • employees,
  • employers,

but it has to be highlited that connection of employees and employers always takes place through the agency thus this solution provides them with higher earnings. Moreover, it is also beneficial for employers, because this arrangement results in weakening ties with employees what reduces the risk of higher wage pressures in the future (Gonos G. 2000, p. 21).

The placement fees issue is mostly regulated by law what results in different rules depending on the country. What is interesting, in Irealand, the United Kingdom and the Netherlands only employers pay placement fees, with exception of the entertainment area. Futhermore, in the UK to run an empleyment agency a license is required and this depends on the decision issued by the Secretary of State for Employment. Of course, the amount of placament fees is also different. In the UK it is around 12 to 30% of annual salary, but in Irealand it is 8 to 18%. It should be also noted that in this situation employers are exposed to financial risk related to inadequate placement fees paid for low quality services. Therefore some researchers claim that there is a necessity of free public placement service, which would increased the transparency of this service (Walwei U. 1991, pp. 249-252).

Placement fee in advertising[edit]

On the other hand, the placement fee term can be also used in refer to advertising service. It is a payment paid for a product placement in movies or television shows, but also in other mass media. This type of advertising became popular in the USA in 1982 after the commercial success of a candy producer who placed this product in the movie "E.T.". It has to be said that there are different ways to determine amount of placement fee, but usually the main factor is the predicted popularity of the movie or the show, which is calculated on the basis of special raitings. Often the level of producers' revenue is also taken into account (Gupta P. B., Lord K. R. 1998, pp. 47-48).

Others[edit]

As it has been already said, the placement fee is a wide term, which can occur in various fields. It appears in areas such as:

References[edit]

Author: Agnieszka Wierzba