What Is a Staffing Agency and How Does It Work?

The recruitment and hiring cycle can feel brutal. Hiring managers and HR representatives are responsible for engaging top-tier talent, continuously recruiting, screening, interviewing, and selecting the best fit for each unfilled position. They must also fill temporary and seasonal roles. Moreover, not every company or organization has an in-house HR team or hiring manager, placing the recruitment responsibilities on the employer.

It's not so easy for the job seeker either. Today's prospective employees have different needs and expectations for job seekers than ten years ago. Furthermore, despite a glut of jobs on the market, it's still challenging to land the right one. 

Fortunately, many tools and platforms can facilitate and streamline the hiring process. One crucial option is a staffing agency. Staffing agencies provide diverse services designed to satisfy both employers' and candidates' hiring needs.

What Is a Staffing Agency?

Staffing or recruitment agencies act as extensions of the employer, helping him locate and recruit talent. They also assume screening and interviewing responsibilities and may assist with training, onboarding, and paperwork. Plus, they provide payroll services for their temp or temp-to-hire employees. 

While a staffing agency "works for" the employer, it also protects each candidate's best interests. Bridging the gap between employer and employee, agencies help each party find the right fit for personal and professional growth.

Different Types of Staffing Agencies

Because organizations often face a wide range of staffing needs, staffing agencies provide a broad spectrum of services. While some agencies assist niche candidates pursuing specific positions, many agencies provide multiple service tiers, such as–

1.  Temp

Whether covering permanent employees' extended leaves, helping with short-term projects, or providing seasonal support, temporary work always encompasses an allotted timeframe. Because temp workers are technically staffing agency employees, the agency handles all their paperwork and payroll. Therefore, a temp worker is not typically eligible for company benefits or bonuses.

2.  Temp-to-Hire

In contrast to a temp position's short-term nature, a temp-to-hire position may eventually lead to a permanent role. This employment type allows the employer to thoroughly vet an employee before offering him a permanent position while filling a current staffing need. The employee remains on the staffing company's payroll until they accept a permanent role. At that point, the employer assumes responsibility for wages, benefits, and all necessary paperwork to comply with state and federal tax laws.

3.  Permanent (or Direct) Hires

Staffing and recruitment agencies also funnel permanent (or direct) hires to employers. Direct hires immediately become part of the company and assume permanent roles. They are on the organization's payroll and, therefore, eligible for company benefits.

Industry-Specific Agencies

It is also common for staffing agencies to focus on a specific industry. They build industry-specific talent pools specifically crafted to meet the needs of each employer that partners with them. 

*Note: Although we use the terms staffing agency and recruitment agency interchangeably, subtle differences exist. While staffing agencies often provide a pipeline for all three types of hires, an actual recruitment agency specializes in direct hires. In a recruitment agency, recruiters focus on passive, high-level candidates.

How Do Staffing Agencies Work?

"So," you might ask, "how does partnering with a staffing agency work?"

That's a great question, and we're glad you asked! A staffing agency simplifies the recruitment side of business operations, helping you build relationships and showcase your professionalism. Here's how the process works.

1.  The Employer Contacts Their Preferred Staffing Agency

The agency and the employer begin to build a relationship as the employer shares details that translate into a job description, including–

• Job requirements
• Number of employees needed
• The allotted time for filling the position 
• Pay rate

2.  The Staffing Agency Builds Relationships With Candidates

Sometimes, candidates see the job listing first and reach out to apply for specific jobs. Or they can initiate a conversation with the staffing agency to get their qualifications "in the running" for upcoming job listings. Either way, recruiters meet with the candidates to review their skills and backgrounds, vetting each candidate and determining where they fit best.

3.  Recruiters Match Compatible Candidates And Employers

Depending on the situation, the employer may participate in some level of interviewing. Sometimes, employers may receive several candidates' resumes to review and select from. Regardless of the method, employers have the final say on whether they accept a candidate.

Since temp and temp-to-hire candidates work for the agency, the agency pays them. They may repeatedly return to the staffing agency for new assignments or take permanent roles within a company. Direct hires, of course, become immediate company employees, and the employer takes full responsibility for all paperwork and payroll.

Do Staffing Agencies Charge Fees?

Staffing agencies charge companies various fees, which are well justified by the time, effort, and additional costs they save you. 

1. An agency typically charges a markup on the employee's wage. This markup could range from 25-75% or higher. For example, if the markup is 40% on a $12.00/hour employee wage, the agency would charge the employer $16.80/hour. The agency pays the employee the agreed-upon $12/hour and keeps the remaining $4.80/hour as a fee.
2. They may also charge the employer a flat fee for filling each position.
3. If an employer offers a permanent role to a temp worker, as in a temp-to-hire, the staffing agency may negotiate and charge a contract buy-out.
4. In the case of direct hires, the employer often pays a percentage of the employee's first year's wage. This percentage ranges from 15-30% depending on the position and industry sector.
5. Additional fees associated with the cost of overseeing recruitment may include:

• Advertising
• Technology and database subscriptions 
• Salaries for recruiters and support staff
• Candidate engagement and screening
• Client relationship management.
• Administrative costs
• Marketing and branding
• Professional memberships and certifications
• Legal and compliance.
• Insurance 
• Technology investments
• Research and market analysis

Whether or not you contract with a staffing agency, your company will incur the above expenses. However, by paying the agency to oversee your recruitment, you'll save time while accomplishing the same amount of work.

How Does Working with a Staffing Agency Benefit Me?

Employers:  

1. It's cost- and time-effective.
2. It provides access to bigger and better talent pools.
3. It's a streamlined hiring process that produces qualified candidates quickly.
4. It offers temporary, flexible, project-based solutions.
5. It's a low-risk hiring strategy since the agency reduces bad hires and oversees compliance and regulatory issues.

Candidates:  

1. There is no cost to working with a staffing agency.
2. You'll gain access to streamlined job listings curated to your skills and objectives.
3. You'll save time since the agency schedules your interviews.
4. It offers flexibility if you're unsure what to do long-term.
5. It provides guidance and insight into the hiring process.

As a staffing agency, we're here to help you every step of the way! Founded in 1967, Career Concepts has matched the best workers with the best employers for over 50 years. Located in Western Pennsylvania and New York, we've streamlined the light industrial and professional hiring process. We want to help you! Contact us today!