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Employment and Training Administration

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Fee-For-Service - Definitions/Policy Considerations

Click on any one of the following questions to find answers about fee-for-service.

WHAT IS THE DEFINITION OF FEE-FOR-SERVICE?

WHAT ARE THE SERVICES THAT MAY BE OFFERED FOR A FEE?

WHAT OBSTACLES DO I NEED TO BE CONCERNED WITH?


What is the definition of Fee-for-Service?


Fee-for-service means different things to different people. Based on our research to date, (Survey Results and Case Studies)the most common applications/operational definitions of fee-for-service are (in order)

  1. Charging fees to employers for services
  2. Charging fees to other organizations for consulting services
  3. Charging fees to third-party organizations for job seeker type services to their customer-base
  4. Charging fees to job seekers for services
  5. Generating revenue from non-traditional or non-public sources

Providing fee-based services to employers is by far the most common practice thus far. [see below for specific descriptions of types of services being charged for a fee]



In developing a fee-for-service strategy you need to think about what definition/application you will use.
In deciding on your definition some questions to ask yourself are:
  • Why am I interested in fee-for-service? What is my motivation? What results can I expect?
  • How does fee-for-service fit within my organization's mission?
  • What services do we currently offer that are in demand?

What are the services that may be offered
for a fee?

Based on your definition, you will need to decide what services you might provide for a fee and to which customers -- in other words, what are your products? Based on our survey results, the most common types of services being provided for a fee are, in order:

FEE-BASED SERVICES TO EMPLOYERS CURRENTLY BEING PROVIDED:

  1. Specialized vocational / occupational testing
  2. Management consulting services
  3. Job Task Analysis
  4. Computer Skills training for employees
  5. Specialized out-placement services
  6. Customized pre-screening services
  7. Specialized recruitment efforts

Other unique responses included staffing services, job fairs and apprenticeship training

FEE-BASED SERVICES CURRENTLY BEING PROVIDED TO JOB SEEKERS:

  1. Computer Literacy training
  2. Comprehensive assessment and/or testing
  3. Specialized assistance on resume development
  4. Career planning / career counseling services
  5. Specialized job search workshops / clubs
  6. Customized, targeted job development services

Other unique responses included Internet training and "Work-Keys assessments."

FEE-BASED SERVICES CURRENTLY BEING PROVIDED TO OTHER ORGANIZATIONS were primarily either management consulting (similar to that offered to an employer) OR services such as vocational/occupational testing, career planning/counseling and computer literacy training (as is provided to job seekers but is provided to a third-party's customer group for a fee.)

Some other unique responses included MIS services and production of newsletters and brochures.

When developing your own possible products / services, some thoughts on where to begin are to:

  • start with what you already know how to do and build from there
  • look at what requires little or no start-up costs
  • analyze your local market - see what else is being offered at no cost and for a fee - consider if the demand is sufficient

To see what kinds of specific services are being providing (of those who responded to our survey), go to our Links page to see lists of such organizations and their fee-based services!


What obstacles do I need to be concerned with?

There are different kinds of "obstacles" that you may face when developing and implementing a fee-for-service program. Some are EXTERNAL and some are INTERNAL:

POSSIBLE EXTERNAL FACTORS:

  • state laws, regulations, or policies prohibit fee-charging or make it difficult
  • federal laws, regulations, or policies prohibit fee-charging or make it difficult
  • Claims of unfair competition from for-profit and non-profit organizations that provide similar services
  • there is a lack of information about permitted activities
  • there is concern that licensing issues exist with some of the types of services we are considering (e.g., day care provision, temporary staffing services)

POSSIBLE INTERNAL OBSTACLES:

  • staff and/or organizational resistance to the idea of charging fees
  • there is expected to be too great a resistance by job seekers and/or employers to pay fees for what they now believe they have been receiving already at no cost
  • the organization does not have adequate experience with business strategies

And some issues are both external AND internal, such as:

  • the governing or oversight board is concerned about getting into fee-for-service activities

In our research, we have found that organizations that have been providing fee-for-service for some time have OVERCOME the external issues once they understood that it was legal and possible - adopting a "can do / just do it" mentality - and have focused more attention on resolving the internal issues. They suggest that being as inclusive as possible in planning your fee-for-service activities so that staff, board members, and the community at-large feel comfortable with the plans, helped to overcome most of the internal obstacles as well. In addition, time spent on staff development was seen as critical: many organizations saw staff inexperience with operating in a "business mentality" mode as a big hurdle.

Those that haven't begun fee-for-service were much more concerned about all the obstacles, but the external ones most of all, and sometimes put up their own roadblocks in their planning efforts. We also found that the "perceived" barriers did not always coincide with reality.... for instance, fear of complaints of unfair competition and that customers won't be willing to pay fees (particularly employers) were basically unfounded. Those that have been doing fee-for-service state that for-profit firms are used to competition and as long you are clear that public dollars aren't subsidizing the program, then there was no real basis for complaints. Handling perceived customer reluctance was managed by how they marketed the services and trained the staff, to ensure that the fee-based services are DIFFERENT than those that are already offered free.


Employment and Training Administration Department of Labor

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