Why do companies use staffing agencies?
Employers use staffing agencies to recruit candidates on behalf of their company to fill job openings on their teams and help candidates find career opportunities in their chosen field.
The positions can be full-time or part-time, temporary, contract-to-hire, or on a direct-hire full-time basis.
What do staffing agencies do?
Staffing agencies check references, screen resumes, shortlists candidates, schedule interviews, and place candidates who work on-site at the employer’s behalf. The candidate is an employee of the staffing agency working under the direction of the employer.
Regardless of how well a company schedules its employees, staffing shortages are bound to occur.
Employees need time off, overtime pay costs become too high, a short term project requires extra staff, an employer has no time to look for candidates, internal company resources have trouble filling a difficult position, an employer wishes to try out a candidate before a full-time commitment.
Using a staffing agency to hire employees allows an employer to focus on the growth of their business, take on additional short term projects without adding to long term headcount while having the ability to downsize staff and overhead when the projects are finished.
10 benefits of staffing agencies
1. Reduce overhead costs
Permanent employees cost more than just the salary they are being paid. Health care, 401k retirement plans, sick days, vacation pay, and employer taxes are just a few of the costs included with permanent staff.
With a temporary staffing agency, an employer doesn’t pay any of that, they simply pay them for the work they have done, with no additional overhead costs.
2. Reduce overtime pay
Rather than putting additional demands on current permanent staff, an employer can use an engineering staffing agency and bring in temporary workers to help split up the amount of work during busy times.
This saves them from burning out full-time employees and overtime costs for employees if they work on an hourly basis which is a big benefit of staffing agencies.
3. The need for short term staff
An employer may need a temp employee due to permanent staff being sick, on maternity leave, having a family emergency, or taking a leave of absence.
Hiring through a temporary staffing agency gives an employer the flexibility to schedule someone for a short period to handle these situations.
4. Save on training, time, and reduce hiring risks
Training new employees require a significant investment of both time and costs.
When searching for someone to cover a few months’ worth of work, it doesn’t make sense to spend money to train them. By using a temporary staffing agency and employer is provided with someone ready to do the work they need.
When the contractor’s job is completed, the work is over, there is no need to worry about severance pay, unemployment insurance, or finding a replacement. Not to mention the parting of ways is streamlined and smooth which is another staffing agency benefit.
5. A staffing specialist saves time and increases ROI
Sometimes employers looking for resumes may have projects that require a specialist, or someone with certain expertise.
If it’s a temporary project that will only take a certain amount of time to complete, it doesn’t make sense to hire them on a permanent basis.
A temp agency can set an employer up with a skilled staffing expert and save them time by weeding through hundreds of resumes, checking references, and taking calls from candidates who may or may not be qualified.
Technical staffing agencies help find temporary workers while saving employers time and money so they can focus on other business aspects.
6. Handles onboarding and payroll
A big benefit of using staffing agencies is that the staffing agency takes care of the temporary employees onboarding paperwork, payroll taxes, workers’ compensation, and unemployment benefits.
7. Access to talent networks
A good staffing agency spends years building up their talent network through referrals, networking, and speaking with candidates daily. An employer usually doesn’t have the resources to constantly engage talent.
When an employer says “I need a staffing agency to search for IT resumes” a top IT staffing agency should be able to deliver qualified candidates in 24 to 48 hours.
8. The ability to hire quickly
An employer may have an employee quit and need an immediate replacement. A temp staffing agency can deliver qualified talent many times in less than 24 hours due to its extensive network of candidates.
9. Industry market knowledge
Another benefit of using a staffing agency is that an employer gains access to the recruiter’s insider knowledge of skilled available candidates both active and passive, salary ranges, and local market trends.
10. The ability to try out an employee before extending a full-time offer
It can be hard to determine if an employee will be a fit strictly through an interview. By starting an employee on a contract the employee and employer can see if everything is a good match for both parties and if it is not, both can part ways easier.
Types of Staffing Services Provided by Staffing Agencies
Contract staffing services
Contract staffing also known as temporary staffing is when an employer engages a staffing agency to provide a candidate for completing a short term assignment generally between one month and a year at an agreed-upon hourly billing rate.
The staffing agency covers the costs associated with contract personnel including but not limited to general liability insurance, (FICA, FUTA, SUTA, workers compensation, and unemployment insurance).
Staffing firms also issue year-end W2’s and may provide paid holidays, health/dental/vision insurance benefits, a 401k plan, and annual bonus checks.
Contract-to-hire staffing services
In a contract-to-hire agreement an employer and staffing firm agree to terms on a predetermined length of employment before a full-time offer can be made to the candidate by the employer.
Once the contract period has been completed the employer has several options. They can bring the candidate on to their payroll as a full-time employee, continue the contract if both parties agree or end the contract.
By working with a technical staffing agency, a company will have the opportunity to evaluate the candidate’s skills, work habits, and gauge the candidate fit in your unique culture and working environment before a direct offer is made.
One of the big benefits of contract-to-hire is flexibility in the hiring process.
Direct hire staffing services
Direct hire staffing is the process of an employer engaging a staffing agency to fill a long term need. The candidate is recruited by the staffing agency and then is placed directly with the employer. The candidate receives all benefits associated with being a full-time employee of the employer.
The staffing agency is compensated by receiving a predetermined negotiated fee based on a percentage of the candidate’s first-year compensation at hiring.