Your company may save time and money by using a staffing agency to discover skilled workers.
- A staffing firm serves as a liaison between businesses and job seekers, assisting in the matching of competent applicants with organizations that have vacancies.
- Working with a staffing agency may save your firm time and provide other advantages, such as flexibility and less legal concerns, if it wants to hire more workers.
- A markup that normally varies from 25% to 100% of the recruited employee’s salary is charged by staffing firms.
- This article is for hiring managers and company owners who are interested in learning how staffing firms collaborate with businesses.
A small company’ hiring procedure takes time to complete. Reviewing applications, conducting interviews, and setting pay demands valuable time from a business owner’s routine responsibilities, which may ultimately harm the firm in the long run. This is why some businesses cooperate with staffing firms, who by supplying individuals for unfilled positions, significantly reduce the time and effort required to find applicants.
Although dealing with a staffing agency to fill your employment requirements isn’t always the best option for businesses, you should be aware of the procedure.
What exactly is a staffing firm?
A staffing service finds candidates for companies looking to fill certain roles. They assist businesses in filling a variety of positions, including direct hire, temp to hire (a temporary assignment with a defined start and end date), and temporary to hire (a temporary assignment intended to assess a temp worker’s long-term fit with the organization) (a permanent position in which the staffing agency acts as a recruiter).
The agency would normally post the position on job boards like Indeed and other places where job searchers are likely to go if it doesn’t already have a readily accessible and qualified applicant in its talent pool. Through professional networking sites like LinkedIn, where they can limit search results by keyword, job function, area, industry, and more, the firm may also get in touch with eligible individuals directly. When employing a specialized individual with a certain skill set, this strategy is very beneficial.
The organization will then accept applicants, have interviews, and, if necessary, do background checks, just as any other company would. When the ideal applicant is identified, they are employed to work for the organization (except in the case of direct-hire positions). The staffing company issues the employee’s compensation and any perks that may be provided, but the company decides how long the employee will stay there for.
What is the procedure at a staffing agency?
For many small businesses, it is still difficult to find skilled employees. In fact, 69% of worldwide employers, a 15-year high, said they are having trouble finding employees with the ideal combination of technical, soft, and personal abilities. A staffing company may assist your company in overcoming that difficulty.
The procedure usually proceeds as follows when you decide to engage with a staffing agency since you need new employees.
- The staffing firm is contacted by the employer. You should first get in touch with a staffing company that specializes in your field, providing details about the position’s requirements, the number of employees required, the timeframe for hiring new employees, and the hourly pay or compensation.
- The job description is made by the agency. The staffing company then creates a job description for your company and promotes it. If there is a particular applicant who would be a good match for the position, it could also get in touch with them directly.
- Candidates are examined by the agency. The hiring company evaluates applicants’ expertise and credentials when they start submitting applications for the available job before setting up and doing interviews. Then they decide which candidates to recommend to your company’s recruiting manager are the most qualified.
- The ultimate choice is made by the employer. Before making a final hiring choice, the hiring manager or company owner might interview the best job applicants from the staffing agency. This helps you and your employees save time that would otherwise be spent screening a large number of candidates.
- The documentation is handled by the agency. Most staffing firms take care of all the administrative procedures related to new employment, including contracts, taxes, and other payroll-related duties.
What are the fees for a staffing firm?
Typically, staffing companies want 25% to 100% of the new employee’s salary. As an example, if you and the employment agency have agreed on a markup of 50% and the new hire makes $10 per hour, you will pay the agency $15 per hour for their labor.
You can be required to pay extra costs for filling the job or contract buyout costs if you decide to employ a temporary worker permanently in addition to the markup you’ll pay.
What are the benefits of working with a staffing firm?
Staffing firms have developed into a vital resource for sourcing talent quickly and effectively as businesses increasingly resort to part-time, freelance, and temporary employees to cover their workforce shortages. Here are just a handful of the many advantages a qualified staffing firm can provide for your organization.
The recruiting process is lengthier and more challenging now than it was in earlier decades due to the significant changes in the employment market over the last several years. It is faster and simpler to work with a staffing firm.
According to Matthew Rowles, senior manager of talent acquisition operations at Coca-Cola Consolidated, “great talent becomes harder to find, and it becomes extremely time-consuming for managers to review résumés and conduct interviews, all while still being responsible for their day-to-day operations.” It might be time and money-saving to work with a reputable staffing partner. A staffing company may prescreen and qualify applicants so that the manager only interviews people who are a good match for the position.
One benefit of using a staffing agency instead of delegating recruiting duties to a member of your team is that it frees up that person’s time to focus on important role-specific activities. A staffing firm may concentrate on the recruiting process since that is what it does best. However, if your staff members are required to use part of their working hours to screen and interview multiple individuals, it may disrupt their daily routine and lower productivity. That issue is resolved by staffing agencies.
Many businesses are delaying recruiting for full-time employees, according to AJ Brustein, co-founder of on-demand employment platform Wonolo, for a number of reasons. Leaner operations have a significant impact on this.
Companies are attempting to increase productivity by only employing people when they are really necessary, according to Brustein. They must discover measures to guarantee that every dollar they spend benefits the company. Using temporary employment enables businesses to just have workers on hand when they are really needed.
Employers are starting to understand the advantages of having a flexible workforce that can be dynamically altered to suit their recruiting requirements on a continuing basis, according to Jason Leverant, president and chief operating officer of national staffing franchise AtWork Group.
Leverant noted that the flexibility of utilizing a staffing agency “became the main motivation in the effort to bring on a workforce that can change with the ebb and flow of a client’s business needs.”
Over 90% of businesses are having trouble filling positions owing to a skills gap, according to Monster’s Future of Work Report 2022. A specialist staffing company may ease the process of hiring a specialized worker with certain talents.
For instance, some companies only work to fill positions in the legal or technology sectors. They can find the ideal applicant for your position since they have the required resources, contacts, and amassed pools of passive individuals searching for new chances. Additionally, their in-depth understanding of local wage ranges and market trends, as well as their aptitude for spotting red flags throughout the screening process, may ultimately save you money.
Being an employer comes with a variety of legal obligations, such as paying certain taxes, providing health insurance, and abiding by labor rules. Hiring staff has operational and financial risks, particularly if an existing employee is abruptly let go or needs to be dismissed. When you work with a staffing agency, the company takes on a lot of these obligations on your behalf.
The fact that, for the most part, the staffing firm maintains full responsibility for the employees while they are on assignment is valued by [staffing firm clients] because staffing firms are typically thought of as the employer of record when it comes to the temporary associates that are placed, Leverant said. Business Liabilities Every Owner Should Know is a related article.
What are the drawbacks of working with a staffing firm?
While there are many advantages to choosing a staffing agency to streamline and expedite your recruiting procedure, it’s critical to be aware of any possible dangers and drawbacks.
Added hiring expenses
Nothing can be done to avoid it: The typical annual salary charge for using a staffing agency ranges from 15% to 25%, depending on the sector and other elements. On the other hand, according to Zippia study, having an internal HR staff may boost a company’s recruiting expenses by more than 50% when you take into account the yearly wages of those team members. The productivity, time, and resource costs associated with conducting employment internally should also be taken into account. Each business must determine which drawback is the true one.
Big cultural divide
A competent hiring agency will take the effort to learn about your firm and its beliefs, but it probably won’t have a thorough understanding of your organization’s culture. This implies that, although having the necessary knowledge and expertise, its suggested candidates may wind up disagreeing with the rest of your team about morals and attitudes. The agency’s vetting methods may be supplemented by an internal cultural screening approach to lessen the impact of this.
Decreased team cohesion
Multiple rounds of interviews done by various team members often make up the standard internal recruiting procedure. Using this technique enables the staff to get to know a potential employee before they are hired and develop a relationship with them. When you use a hiring agency to handle the majority of the interviewing, a new recruit often joins your company as a total stranger and will need more time to establish connections. This drawback may be made even worse by the potential for temporary workers to be treated unjustly in comparison to permanent employees.
Setting up a top-notch internal recruiting procedure may improve your business’s standing with both potential and present workers and become an essential component of your culture. Candidates may continue promote their good interactions with your company even if they don’t obtain a job offer. However, if you choose to work with a staffing agency, you are depending on its well-known name, stellar reputation, and professionalism. In such instance, it could not be good for your own company if an applicant has a bad recruiting experience while dealing with the agency.
What falsehoods concerning staffing firms are prevalent?
Although using a hiring agency has certain drawbacks, some of the alleged drawbacks may really turn out to be positives. Here are two typical myths regarding outsourcing your employment debunked.
Despite being untrue, one of the most pervasive misconceptions about using a staffing agency is that it is too costly to be worthwhile. When you have the option to employ someone yourself, why spend additional recruitment fees? However, even though you may believe you are saving money up front, using a staffing agency may end up costing your business less overall.
Many businesses simply consider the agency’s fees when estimating costs, failing to see the value and savings they may provide as well, according to Rowles. “Time to recruit is a significant aspect in the cost that a firm may incur from having an open job. Due to lost productivity and resource allocation, the cost of holding a job open longer increases. Working with a staffing company may speed up the hiring process and reduce productivity loss.
Lower caliber of candidates
Some businesses may think that employees employed through staffing firms are only there because they were unable to find employment elsewhere. Contrary to popular belief, temporary workers are often overqualified for the positions they hold, according to Brustein.
According to him, “These people choose to work temporary employment because they value flexibility, they are attempting to enter a new area, or they may just desire a significant change and temporary positions are often initially simpler to get than permanent ones.” Because it gives them a greater understanding of organizations at the ground level, we often see MBAs working as entry-level temp employees.
How can you begin collaborating with a staffing firm?
Ready to work with a staffing agency? Here are some pro tips for reviving the romance.
Identify the ideal agency.
Prior to using a staffing agency to discover exceptional individuals, you must choose a company that is appropriate for your enterprise. Leverant stressed the need of picking a corporation that has an outstanding reputation for adhering to ethical business standards.
Make sure you’re dealing with a respectable company that puts out proud people, he said. “That includes making ensuring that their staff members’ credentials are checked, including but not limited to reference checks. Additionally, you want to confirm that they have the necessary insurances, such as general liability and workers’ compensation insurance.
Like other business partnerships, a staffing agency must provide value to you in order for it to be worthwhile for you to invest in it.
Rowles advised sitting down with a staffing company to see if they may benefit your business. “Find a company that sees [your organization] as a business partner, not simply a customer,” advises the author. “As a small business, each employee’s significance and expense connected with recruiting are accentuated.”
Similar to this, before you sign up or make any payments if you opt to utilize an on-demand staffing platform rather than a typical staffing agency, examine reviews and make sure the website is regarded well by both business owners and employees.
Be specific with your demands.
Good staffing companies want to assist you in finding the greatest employees for your business, but they won’t be able to do so if you don’t describe your organization’s needs, your job duties, and the ideal candidate in clear and detailed terms. Describe any workplace regulations (dress code, hours, breaks, etc.) to offer the staffing agency representative an impression of your corporate culture and the kind of professional who would flourish at your organization. This goes beyond talking about the fundamental duties and necessary abilities for the position.
Once you’ve outlined your requirements in detail, inform the recruiter so they may begin their search. Be careful to notify the agency if your requirements and tastes change at any time so they can modify their search.
Verify the judicial issues.
Check that employment-related legal requirements, such worker classification and payroll taxes, are taken care of depending on the roles a staffing service is helping you fill. The staffing agency should ensure that the personnel you utilize are indeed employees and not independent contractors as they are the official employer for tax purposes for temporary and temp-to-hire positions, according to Leverant.
Leverant said, “You also want to evaluate the contracts to make sure that there are sufficient indemnity clauses in place, ideally a ‘dual indemnification’ language, which covers both parties from any concerns.
Keep the connection positive.
It may take some trial and error to find the best staffing agency for your company, but once you’ve found one that offers top-notch service and highly skilled individuals, stay with it and provide feedback along the way. You and the company may both benefit from discussing the success of new hires with your agency representative as it relates to next recruitment searches.
“Always make sure you have staffing agencies that have proved themselves to be trustworthy so you can concentrate on developing your company, whether you tap into on-demand staffing solutions for unexpected requirements or conventional staffing solutions for predictable needs,” Brustein said.
How much should you depend on a staffing firm?
The demands of your company, the urgency of filling the position, and your budget will determine whether or not you should base all of your recruiting decisions on a staffing service. You could think about incorporating at least one internal screening step even though some agencies provide full-cycle recruiting help from the original job brief through the new employee’s onboarding.
For instance, you may have a final interview or casual conversation with the candidate and a member of the executive team who will be their future direct boss. In addition to giving the applicant a chance to ask questions that an agency would not be able to respond to, this can assist ensure that the possible employee fits the company’s culture.
Some businesses decide to just utilize staffing agencies for the first screening stage of sorting through the voluminous incoming applications. These companies decide to take care of everything else themselves. Others, however, also depend on outside companies to assist with recruiting, job placement, and advertising. For the best of both worlds, so to speak, businesses may even decide to keep up internal recruiting efforts in addition to staffing agency services.
Is hiring from a staffing firm a wise move for your company?
Using a staffing agency may speed up the recruiting process, lighten the pressure on your present personnel, provide flexibility in the kind of recruits you make, and eliminate legal concerns. However, its services have an added cost that might reach 100% of an employee’s yearly compensation, and they are less likely to match the company’s culture.
To guarantee the best match, it may be a good idea to combine an agency’s efforts with further internal screening. If you choose to utilize a staffing agency exclusively, be sure to thoroughly evaluate your company’s needs, objectives, and budget; carry out a thorough reference and reputation check; and express your recruiting criteria in a clear and concise manner.
You may use on-demand hiring platforms like Upwork, Freelancer.com, and Wonolo as an alternative to utilizing a conventional staffing agency since they allow you access to independent individuals who are prepared to work, often remotely. These platforms function somewhat differently since the employees who apply via them are regarded as independent contractors, so you are in charge of paying them directly and providing them with a 1099 tax form at the end of the year. If these individuals are correctly categorized, you are still exempt from formal employer duties (payroll taxes, benefits, etc.), just as with staffing agency employees.