Small businesses need time for hiring to be completed effectively. Deliberately spending this precious resource on staff requires time that could otherwise be put towards screening applications, interviewing candidates, determining salaries, or screening applicants is time wasted that could otherwise be put towards other duties such as screening applications or conducting interviews for future staff members - something staffing agencies are especially adept at taking care of by matching candidates with open roles more seamlessly than businesses could on their own. For this reason, many firms hire staffing agencies; staffing agencies take away much of the hassle by matching candidates up with open positions faster.
Though using a staffing agency for hiring purposes might not be ideal for every company, here are a few things you should keep in mind if this option interests you.
What Is A Staffing Agency?
Staffing firms specialize in matching candidates to jobs companies are looking to fill. These agencies assist businesses in recruiting for various roles, including direct hire (wherein a staffing agency acts as the recruiter for permanent hire positions), temp to hire (where temporary assignments help employers evaluate the long-term fit of temp workers with their company), and temporary (which have set starting and ending dates).
Assuming your agency has exhausted its talent pool of acceptable candidates when an opening becomes vacant, they usually post it on Indeed or other job boards where job hunters will likely search. Furthermore, professional networks like LinkedIn can help find qualified prospects directly by refining search results by keyword, job function, area, industry, etc. If hiring specialists with specific skill sets, this method works extremely well.
What Is The Staffing Agency Process?
Some small businesses find it challenging to source talent. According to ManpowerGroup data, a record-high 69% of employers globally reported having difficulty hiring employees with appropriate combinations of technical, soft, and interpersonal skills - an obstacle that staffing agencies can help companies overcome.
When working with a hiring agency and searching for new staff members, the typical procedure typically follows this path:
- The Employer Contacts The Staffing Agency. Starting, contact a staffing firm specializing in your sector and share details regarding job duties, personnel needs, and timeline for hiring new staff, as well as rates or salaries of hourly pay or salary packages available to them.
- The Agency Creates The Job Description. After this step is completed, the staffing company drafts and promotes an official job description at your organization. If there's someone who would fit nicely for this position, it might also contact them directly and begin recruiting efforts directly.
- The Agency Vets Candidates. Before scheduling and holding interviews, hiring companies evaluate applicants' backgrounds and experience when applying to open positions. After reviewing each application, they select only those most suited as candidates to present to your company's recruiting manager for consideration.
- The Employer Makes The Final Decision. Before making their hiring choice, hiring managers or company owners may interview top applicants from an employment agency. By doing this, your team can avoid spending hours screening through large volumes of applications.
- The Agency Takes Care Of The Paperwork. Staffing firms typically take care to handle all paperwork related to recruits, such as tax returns and contract agreements, as well as payroll duties related to payroll services.
How Much Does A Staffing Agency Charge?
Staffing firms typically charge between 25% to 100% of the salary paid out to workers they place with clients, depending on your agreement with their service. If we agree upon a 50% markup with regards to compensation of new hires receiving $10 hourly, you will pay that agency $15 per hour in fees for their services.
Additional charges could include costs related to hiring temporary staff permanently or contract buyout fees in addition to your markup costs.
Read more: IT Companies vs. Software Companies: Which Offers Greater ROI?
What Are The Advantages Of Using A Staffing Agency?
Staffing firms have become an invaluable asset for companies seeking talent quickly and efficiently, as an increasing number of them rely on temporary, freelance, and part-time workers as temporary covers to fill workforce gaps. Below are just a few advantages an excellent staffing firm could bring to your organization.
Fast Hiring
Due to changes in the job market, hiring procedures have become longer and more complicated since just a decade ago. Working with a recruiting agency makes things simpler;
According to Matthew Rowles, Senior Manager of Talent Acquisition Operations for Coca-Cola Consolidated, finding great talent has become harder, and it becomes time-consuming for managers to review resumes and conduct interviews while managing day-to-day operations." To save both time and money by working with a reputable staffing partner, their pre-screening service ensures you only interview individuals suitable for your position - saving both precious manager time and budget.
Reduced Team Workload
Utilizing a staffing agency allows your team members to focus on role-specific activities without taking on hiring duties themselves, which is one advantage of using one over giving hiring responsibility directly. A staffing firm's primary function lies within hiring candidates, unlike having your staff screen and interview multiple applicants during work hours, which could reduce productivity compared to using an outside firm instead.
Specialized Hiring
Monster's Future of Work Report highlights that more than nine out of ten employers struggle to fill positions due to a skills gap. Yet, most remain uncertain about how best to fill specific vacancy requirements. Utilizing specialized staffing companies may make the hiring process faster for specific talent requirements, such as speciality workers.
Certain agencies specialize exclusively in legal or computer hiring services. They can quickly source you with candidates for your role due to their extensive contacts, resources, and amassed pools of passive individuals looking for new opportunities. Plus, their vast understanding of market trends and wage ranges specific to each location, as well as an aptitude for recognizing red flags during hiring, can save money in the end.
Reduced Risk
Being an employer comes with several legal responsibilities, including paying specific taxes, providing health insurance plans, and abiding by labor rules. Hiring staff also poses operational and financial risks that must be assessed when hiring new staff - the latter risk particularly being taken on by employment agencies when you use their services on your behalf.
Leverant noted that staffing firms tend to act as employers of record when placing temporary associates; as such, clients of staffing firms appreciate this aspect as the firm assumes full responsibility for them during an assignment.
What Are The Disadvantages Of Using A Staffing Agency?
Staffing agencies offer various advantages when it comes to streamlining and expediting the hiring process; however, potential disadvantages and hazards must be considered as well.
Additional Hiring Costs
No one can escape it: there's a 15% to 25% annual salary cost associated with using staffing agencies; prices vary based on industry and other considerations. When considered alongside team member salaries, having an internal HR department could increase hiring expenditures by over 50%, according to research by Zippia; it is, therefore, crucial that businesses consider potential productivity losses, time commitment requirements, and resource requirements before considering this path for hire as the true disadvantages are revealed in practice.
Wide Culture Gap
An effective hiring agency should spend ample time understanding your firm and its ideals; however, its understanding of its culture may remain incomplete. This means that even though suggested individuals possess the necessary education and work experience, their morals or attitudes might clash with those of your team despite possessing all required credentials; this problem can be mitigated by adding culture screening protocols into existing vetting protocols of an agency.
Reduced Team Bonding
Interviewed team members tend to conduct several rounds of interviews for internal hiring processes, enabling the staff to get acquainted with potential employees and form rapport before finalizing a selection decision. When using staffing agencies solely as interviewing resources, however, beware that recruits might often come in as strangers and require longer to establish rapport; due to misconceptions of temporary personnel being less valuable than permanent workers, this drawback could become even greater.
Reputation Consequences
Establishing an excellent internal hiring process is an ideal way to establish and strengthen the reputation of your business among current and potential employees while simultaneously building your broader culture. Even if an applicant declines your offer of employment, having had a positive working experience might encourage them to recommend your business later on. On the other hand, when using employment agencies, they rely on established reputations of professionalism and the brand name of each agency involved; any negative experiences might reflect negatively upon your business in turn.
What Are Common Misconceptions About Staffing Agencies?
Hiring a staffing agency does have its drawbacks, yet many times, what may initially appear negative can turn out to be benefits. Here are two commonly held beliefs regarding hiring that need dispelling:
Too Expensive
One of the more persistent yet false beliefs about hiring staffing agencies is that it costs too much. After all, when hiring individuals, you may save more money overall. But even though hiring one may appear costly initially, hiring one may ultimately save your business more in terms of future savings and increased efficiency.
Rowles reports that many businesses only consider fees when calculating costs associated with staffing agencies, often failing to recognize any value and savings they might offer as well. When considering potential costs associated with an open position for any given business, time to recruit becomes an enormous factor as lost production and resource diversion add up; working with staffing firms allows hiring faster while decreasing productivity losses by shortening recruitment cycles significantly.
Lower Candidate Quality
Businesses often make the mistaken assumption that employees hired through staffing firms only exist due to the inability to find employment elsewhere, when in actuality, temporary workers often outclass permanent ones, according to Brustein.
He further added that temporary roles can often be easier to obtain initially than permanent ones, and workers often opt for temp roles due to their flexibility in seeking entry-level experience in another field or just seeking change altogether. MBA graduates frequently work as entry-level temporary employees as it allows them to gain more insight into businesses at ground level.
How Do You Start Working With A Staffing Agency?
Ready to hire a staffing firm? Here's expert advice on kick-starting the relationship.
Find The Right Agency.
Before turning to a staffing agency for help in filling positions with qualified candidates, you must find one that matches well with your company and its goals. According to Leverant, selecting one with an excellent track record in adhering to ethical business standards should be priority number one when searching for staffing agencies to utilize.
"Ensure the company you're dealing with is respected and takes pride in the workers it sends," advised Mr Bomgaras. This requires validating all worker's credentials through reference checks as well as verifying whether or not they possess appropriate insurance such as workers' comp and general liability policies.
Be Clear About Your Needs.
Staffing companies aim to help firms locate the ideal employees, but this cannot happen unless you outline your organization, role, and candidate requirements for them to review clearly and comprehensively. Give the staffing firm representative an understanding of your corporate culture by detailing any dress codes/hours/breaks requirements/abilities needed, as well as listing essential duties required of this position.
Notify the recruiter as soon as your needs and preferences have become more clearly defined in order to begin searching immediately. Also, notify any changes so they may adapt their search accordingly.
Check The Legal Aspects.
Verify that legal requirements for your staffing contract, including worker classification and payroll taxes, have been properly fulfilled. According to Leverant, staffing agencies should verify whether individuals used are employees instead of independent contractors as this provides for tax benefits in temporary and temp-to-hire roles.
Leverant recommends reviewing contracts to ensure appropriate indemnity clauses are in place, particularly "dual indemnity" provisions, as this provides added protection to both parties against potential problems.
Maintain A Good Relationship.
Finding the ideal staffing agency may take some trial and error, but once you find one with excellent services and top candidates, continue collaborating and provide regular feedback as time goes on. Communicating regularly with agency representatives about performance evaluation of new hires can only benefit both you and the business when hiring again in the future.
Brustein recommended hiring staffing agencies that had proven themselves reliable, whether that meant using on-demand staffing solutions for unpredictable needs or traditional staffing solutions for predictable ones.
Conclusion
Utilizing the services of a staffing agency may reduce legal concerns, streamline hiring procedures, and provide greater flexibility regarding who and what kind of recruits you hire while relieving strain on existing staff members. Unfortunately, however, its services tend to lack cultural fit, with surcharges that may reach 100% of an employee's yearly income.
Supplementing an agency's efforts with internal screening is best to guarantee the perfect candidate matches. When working exclusively with staffing firms, make sure to assess all your company needs, objectives, and financial situation thoroughly, check references thoroughly, and outline hiring standards clearly.
