A staffing agency is a company that connects employers with qualified job candidates for temporary, permanent, or contract positions. They handle the recruitment, screening, and placement processes to meet the staffing needs of businesses.
What do staffing agencies do?
Staffing agencies, which are also called staffing firms, staffing services, and employment agencies, specialize in connecting employers with qualified job candidates for various types of positions, including temporary, permanent, temp-to-hire, contract, and contract-to-hire roles. They can often handle the entire recruitment process, from sourcing and screening candidates to managing administrative tasks associated with employment. This allows businesses to be as hands-off as they want to be, so the staffing agency can help them save both time and resources during hiring.
Staffing agency vs. temp agency
A staffing agency provides a wide range of staffing solutions, including temporary, permanent, and contract placements. A temp agency, on the other hand, primarily focuses on providing short-term and temporary workers for businesses needing immediate but short-term help.
Staffing agency vs. recruiting agency
While both staffing and recruiting agencies connect employers with job candidates, recruiting agencies often specialize in finding candidates for permanent positions, particularly for higher level positions. Staffing agencies cover a broader spectrum, including temporary and contract roles, in addition to permanent, full-time placements. They also help place candidates at all levels, which can include entry level positions.
How do staffing agencies work?
Below is a typical process a business and staffing agency might follow when they work together.
Employers contact staffing agencies
Businesses reach out to staffing agencies with their specific hiring needs. The business should communicate with the staffing agency about exactly what types of candidates they need, including the type of role, job description, required qualifications and skill sets, and duration of employment. Staffing agencies then use this information to source suitable candidates.
Candidates apply for open roles
Candidates looking for job opportunities apply for positions listed by staffing agencies. Staffing agencies often have extensive job boards and databases to help them attract a wide range of job seekers. They also advertise job openings on social media, like LinkedIn, take referrals from their existing networks, post open positions on their websites, and recruit directly—all to find the most qualified candidates for each client.
Candidates are screened
Staffing agencies screen candidates to ensure they meet the employer's requirements. This screening process may include interviews, skill assessments, background checks, and reference checks. Depending on the role and the specific circumstances, the employer may also participate in the screening process, or even conduct their own interviews separate from the staffing agency.
Staffing agencies handle administrative employment tasks
Once a candidate is placed, staffing agencies manage various administrative tasks related to their employment. It’s typical for staffing agencies to handle most or all of the paperwork, such as the employee’s contract (and termination, should that become necessary). Staffing firms also often manage employment taxes, and, in some cases, they may even handle payroll processing and benefits administration for the hired employee.
Because the staffing company takes care of so much of the administrative work related to managing employees, it frees up the employer’s time and resources to focus on their core business activities.
Employers pay fees to staffing agencies
Employers typically pay fees for staffing agency services. These fees can be a markup on the employee's salary or a flat fee, depending on the agreement between the employer and the staffing agency.
Why work with a staffing agency?
Outsourcing hiring to a staffing agency offers many benefits that can streamline your hiring process and improve your overall talent acquisition strategy.
It can help reduce time to hire
Depending on your industry, it can take an average of 33-49 days to hire a new employee. That’s a lot of time for many human resources teams to spend on one task—especially when they have other important work to do.
Staffing businesses have access to a vast network of qualified candidates, which enables them to quickly identify and connect with potential hires. This can significantly reduce the time it takes to fill open positions, allowing your business to maintain productivity and meet critical deadlines without prolonged vacancies.
It can reduce administrative work for your team
Handling recruitment usually comes with extensive administrative tasks, such as posting job ads, reviewing resumes, conducting initial screenings, and managing payroll and benefits for new hires. Staffing agencies take on many or all of these responsibilities, freeing up your internal team to focus on core business activities and strategic initiatives.
It can widen your available talent pool
Staffing agencies have extensive databases and professional networks that give them access to a broader range of candidates. This includes passive job seekers who may not be actively applying for jobs but are open to new opportunities. By working with a staffing agency, you can tap into a more diverse and extensive talent pool.
It can give you more flexibility
Staffing agencies offer flexible staffing solutions to meet your business's changing needs. Whether you need temporary workers for a short-term project, contract employees for a specific duration, or permanent hires, staffing agencies can provide the right candidates quickly. This flexibility helps you manage workforce fluctuations without long-term commitments.
A staffing agency can support your internal HR team
Staffing agencies can act as an extension of your own HR team, providing additional expertise and resources to handle recruitment demands. They can assist with specialized hiring needs, such as filling niche roles or high-volume hiring, and offer valuable insights into industry trends and salary benchmarks. This support allows your HR team to focus on other critical functions while recruitment and hiring continue.
Pros and cons of working with a staffing agency
Pros of working with a staffing firm
Cons of working with a staffing firm
Specialized expertise: Staffing agencies often have industry-specific knowledge and expertise, making them particularly effective at filling specialized or hard-to-fill positions. This can save you time and ensure you get candidates with the precise skills needed.
Potential misalignment with company culture: While agencies strive to match candidates to your requirements, there is a risk that they may not fully understand your company culture leading to a potential mismatch.
Better retention strategies: Many staffing agencies offer support beyond the hiring phase, such as onboarding assistance and retention strategies, helping new hires acclimate and remain with the company longer.
Dependency: Relying heavily on a staffing agency can create a dependency, which might be problematic if the agency fails to deliver quality candidates promptly.
Scalability: Staffing agencies can help you scale your workforce up or down quickly in response to business demands, without the long-term commitments or liabilities associated with permanent hires.
Initial setup time: Establishing a relationship with a staffing agency and communicating your specific needs and company culture can be time-consuming initially, requiring a significant upfront investment of time.
Market insights: Agencies can provide valuable insights into job market trends, salary benchmarks, and competitive hiring practices, which can inform your broader HR strategy.
How to choose a staffing agency
Selecting the right staffing agency can make or break whether your organization meets its hiring needs effectively.
1. Determine your staffing needs
Identify the specific roles and skills you need to fill, as well as the duration of employment. This helps narrow down agencies that specialize in your industry and required positions.
2. Choose a specialized agency
Look for staffing agencies that specialize in your industry or the type of roles you need to fill. Specialized agencies are more likely to have a deeper understanding of your requirements and a better pool of candidates. For example, there are staffing agencies that specialize in filling healthcare or IT/technology roles.
3. Be involved in the hiring process
Your hiring managers or HR team can be as involved in the screening and hiring process as they want to be. Taking part in interviews and providing detailed feedback on candidates can help make sure the agency knows exactly what you’re looking for in an employee and seeks out applicants who will be a good fit./
4. Make the final hiring decision
While staffing agencies handle much of the recruitment process, the final hiring decision should be made by your company. Review the shortlisted candidates, conduct final interviews if necessary, and select the best fit for your team.
Frequently asked questions about staffing agencies
What types of positions can staffing agencies fill?
Staffing agencies can fill a wide range of positions, including full-time, part-time, and temporary positions. They cater to various industries and job roles, from entry-level to executive positions, helping businesses find the right fit for their specific needs./h
Can staffing agencies help with part-time employment?
Yes, staffing agencies can assist in finding part-time employees. They can match candidates who are looking for flexible work schedules with employers who need part-time support.
What is the cost of using a staffing agency?
The cost of using a staffing agency can vary based on the type of position and the duration of the employment. Typically, agencies charge a fee based on a percentage of the hired employee’s salary for full-time positions. For temporary and part-time roles, agencies may charge a flat fee. It’s important to discuss and understand the fee structure with the agency beforehand.
Are staffing agencies only for large businesses?
No, staffing agencies cater to businesses of all sizes, from small startups to large corporations. They offer flexible staffing solutions that can be tailored to meet the specific needs of any organization, regardless of its size.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.