Human Resources Agency
The Ministry of Labor and Welfare has defined two types of companies:
Ø A private employment agency engaging in human resource placement- recruitment of human resources in order to employ them with the customer. Mediation is the sole objective of these companies .
Ø Human resource contractor- a company that employs staff for temporary placement.
Human resource companies are intended to fulfill a number of needs:
Ø Economizing the process of employee recruitment at companies with no human resources departments, or companies that do not have enough resources available.
Ø Quick recruitment of employees while using existing worker repositories. The company is thus able to avoid creating employer-employee relations for a period of 9 months, through which employment can be examined.
Ø Employment flexibility according to the company's requirements, especially for short-term or seasonal projects or tasks. The company can take advantage of wage credit given by the contractor:
Ø Employing people who are at a transition period prior to a permanent placement, or people seeking temporary employment according to their convenience.
Ø Exposure to a large number of potential employers- an alternative method for seeking permanent employment.
It is recommended to consider the survey recently published by the Ministry of Industry, Trade and Labor at the following website:
The industry is varied and competitive. Customers (potential employers and employees) usually work with a number of companies simultaneously in order to increase chances of making a good match. A relative advantage is gained by quick responses to potential employers.
Customers: Defining the Target Market and Its Size, Market Segmenting
As human resource agencies engage in mediation, its customers are also its vendors:
Ø People seeking employment approach human resource agencies in order to receive assistance in finding suitable employment.
Ø Employers- companies, factories, and organizations approach human resource agencies in order to receive assistance in finding suitable employees, both temporary and permanent.
Ø Note that the potential employee does not usually pay in order register and receive employment offers. The employer is the one paying for services rendered.
Competition is examined according to professional expertise (a specialized agency vs. a general agency), in addition to the geographic vicinity: Other agencies operating in the same array of professions are relevant competition, while agencies in more distant locations, or agencies specializing in different professions, will pose less of a threat. In recent years a number of agencies have emerged that specialize in specific professions such as programming, engineering, or accounting.
In addition to agencies operating in offices, there is a large number of websites offering available employment opportunities in an array of professions.
As derived from customer definition, a human resource agency must operate two separate marketing strategies: One for employees and one for employers.
Ø Accordance with “Employment by Human Resource Contractor’s Law” passed in 1996.
Ø Accordance with the kibbutz agreement for human resource agency employees, from 2001. The agreement may be viewed at: http://www.feinberg-law.co.il/articles/koahadam.htm
Ø Accordance with the expansion order to the “Employment by Human Resource Contractors Law” published in 2004, and which can be viewed at: http://www.moital.gov.il/NR/exeres/C2C7BBD7-34C7-4356-AE0D-D26DCFCCA50E.htm
Ø Accordance with licensing regulations, available at: http://www.moital.gov.il/NR/exeres/E89D5B54-EE59-4B1B-AF20-ED15B4AFD0B9.htm
Ø Depositing a bank guarantee at the Ministry of Labor, for 50% of the amount paid monthly to employees.
Ø A company supplying human resources requires enough operating capital beyond its regular activities in order to fund wages for employees for two months according to customer payment terms, in addition to financing the required bank guarantee.
A basic agency can be established with four employees: An interviewer experienced at human resource screening, accountant/bookkeeper, salesperson, and a secretary.
Industry Revenue and Profitability
As human resource agencies operate within a variety of professions and price levels, average company revenue cannot be assessed.
Typical Profit Coefficients:
Human resource contracting
Human resource placement
75-100% of monthly salary
3 month trial period 35% per month
105% OF MONTHLY SALARY
Calculating overhead expenses for employee’s salary (calculation coefficient for all peripheral expenses):
Ø When employing for over a year, 37.91%
Ø When employing for up to 3 months
Typical Terms of Payment:
Employee: The agency acts as the employer and pays either hourly or monthly salary, to be paid at EOM+10. The agency must pay the employee's salary, the appropriate amount of National Insurance Premium, vacation pay, sick pay, severance pay, and travel pay. In addition, the company must deduct appropriate taxes from the paycheck.
Employer: If the employee is employed by a contracting human resource agency, it is customary to pay 30-60 days following employee payment. The disparity in terms of payment requires medial financing amounting to total wages paid to its employees, for the credit period it allots. If the employee is permanently placed with a company, commission payment will range between 1-3 consecutive installments, in effect as of actual date of placement.
Licenses and Certifications:
Employment by Human Resource Contractors Law passed in 1996 requires a license from the Ministry of Labor and Welfare, which is subject to stipulations.
Human Resource Agency Union, active as part of the chamber of commerce union, Ha'Heshmonaim 84, Tel-Aviv. Phone: 03-5631010.
Ø Use of an attorney is recommended in order to formulate employer and employee contracts.
Ø The office should easily accessible with comfortable public transportation access and parking spaces.
Ø The option to specialize in a specific profession in order to gain a relative advantage should be assessed.
Ø One of the company’s main assets is its reputation.
Ø It is recommended to consult with your local Business Development Center regarding business establishment and operations.
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