With 77% of millennial clients planning to increase their use of staffing agencies in the next five years, as reported by Career Builder in their report, it’s clear that these agencies are becoming a key player in the modern hiring landscape. Staffing agencies are particularly beneficial for small businesses without a dedicated recruitment team, and for larger companies that need a steady flow of new talent, especially those with specialized or niche requirements.
Not all staffing agencies are alike, though. They vary in specialization, candidate pool quality, and recruitment efficiency. Choosing one that aligns with your business needs, whether that’s industry-specific expertise, a wide range of candidates, or streamlined recruitment processes.
This guide delves into what a staffing agency is, how it can benefit your business, and what to look for when choosing one. We’ll explore the advantages they bring, such as expert recruitment knowledge and access to extensive candidate databases.
What is a Staffing Agency?
A staffing agency works as an intermediary between employers (client companies) and job seekers (candidates), providing services to match the right talent with the right job opportunities. They usually have a bank of pre-screened candidates to discuss your role with, and they will also be able to source more suitable candidates if they don’t have the right person on board.
Their main responsibilities are:
- Candidate sourcing – Actively seeking out potential candidates through various channels.
- Candidate screening – Conducting preliminary interviews, skill assessments, and background checks.
- Job matching – Ensure the employer’s job requirements and the candidate’s skills and experience match the available position.
- Coordination and communication – Facilitating communication between the employer and the candidates throughout the hiring process.
- Onboarding process – Ensuring all the needed paperwork and documentation are completed.
- Compliance and legal matters – Take responsibility for completing relevant labor laws, regulations and employment standards.
- Providing HR solutions – Some staffing agencies offer HR-related services such as workforce planning, talent management, consulting, etc.
- Post-placement follow-up – Follow up with both the employer and the candidate to ensure the process was successful.
How Does a Staffing Firm Operate?
Now that you understand the service a staffing agency offers, let’s explore how a staffing firm works, connecting businesses with people looking for jobs and helping to fill positions quickly and efficiently.
1. You Contact the Agency
The first step is to let the agency know that you have a vacancy coming up. They will want some basic details of the role, including responsibilities, any requirements you have, and your timeline for finding the right person.
2. Job Description
Placement agencies will develop your requirements into a job description that they will use to advertise your vacancy. Your internal job description can be used as a basis for that, but a good recruiter will want to rewrite it to appeal to the right candidates.
3. The Role is Advertised
This is where the agency really earns their money as they put your advert in front of the right candidate.
This could be through:
– Calling potential candidates who are registered with them – most agencies maintain databases with hundreds of candidates.
– Adding a listing to Jobs boards
– Promoting the opening via their social media
– Head-hunting suitable candidates
4. They Create the Shortlist
The agency will then vet any candidates who apply, checking them against the job profile. A good agency will also have gained a grasp of your company culture and the personality types at play, so they’re presenting you with candidates who fit.
It’s at this point any vetting needed will take place, for example, checking skills or certifications.
5. Decide Who to Interview
You then get to review the shortlist and decide which candidates you’d like to talk to more fully. You let the agency know, and they make the arrangements.
6. Make a Decision
Once you’ve made your choice, you let the agency know, and they will talk to all the candidates, both successful and unsuccessful, and give them feedback on what went well and what didn’t.
7. HR
You’ll need to do all the relevant paperwork to get the new employee on the books. If you’re hiring a remote employee this can be complicated by international tax laws, so your staffing agency may take care of this for you by becoming the ‘employee of record’.
8. Onboarding
The agency will then support you through the onboarding process, making sure that you have a seamless experience with your new hire.
The Value of Staffing Agencies to Employers: Benefits in Recruitment and Hiring
According to Gitnux, 90% of businesses worldwide use talent acquisition agencies to some extent. Here are the main reasons why:
Save Time
Staffing agencies have extensive networks and databases of candidates, including both active job seekers and passive companies. This gives your company access to a broader and more diverse talent pool, increasing the chances of finding qualified candidates quickly.
On average, according to the Society for Human Resource Management, the average time to hire is around 36 days. A LinkedIn survey revealed that companies usually take between three to six weeks.
In contrast, CareerBuilder revealed that 76% of employers using staffing agencies fill a position within the first month.
Hire Fast
They have everything set up and ready to start the hiring process. They have a pool of candidates looking for work, and they know the right places to post advertisements to get a great response.
All that speeds up the hiring process – here at DistantJob, we can find our clients a new developer in under two weeks (in other words, 40% faster than the industry average). However, we do this focusing exclusively on headhunting, which allows us to find the perfect fit for every company as we target their requirements.
Flexibility
Using an agency gives you the flexibility of pulling in additional staff as and when you need them on temporary contracts, letting you scale your business easily or pull in extra manpower when you need it.
According to the ASA, 79% of companies in the US use staffing agencies to find temporary or contract employees, providing them the flexibility to scale their workforce based on business demands.
Wider Talent Pool
Remote recruitment companies can find you the right person, no matter where they are in the world. Your talent pool is usually limited to people who live nearby or are willing to relocate to your area for work, but what are the chances that you will get the best person?
Hire Quality Professionals
If you work with a specialist agency, then you get a recruiter who knows the ins and outs of what you’re trying to do.
For example, if you’re reviewing CVs for a software developer a keyword search isn’t going to cut it. Specialist knowledge means recruiters understand exactly what’s needed.
Reduced Paperwork
If you’re hiring an employee who works overseas, there are legalities to consider to make sure that you comply with local tax legislation.
A staffing agency handles all that for you, becoming the employer of record in the employee’s home country. You just pay their invoice at the end of the month and get on with managing your new employee with none of the admin headaches.
Hire Right First Time
A good staffing agency will not only find you candidates with the right skills, but they’ll also find people with the right personality to work well with your team. They should take the time to understand your corporate culture and find people who will thrive within it.
The CareerBuilder study mentioned earlier revealed that 36% of employers using staffing agencies reported that one of the main benefits is reducing the risk of a bad hire.
Focus on Core Competencies
Outsourcing the hiring process to a staffing agency allows companies to concentrate on their core business activities as the agency handles the recruitment and staffing tasks.
Confidential Hiring
In certain situations, companies may prefer to keep their hiring activities confidential, such as when replacing a key employee. Staffing agencies can maintain confidentiality during the candidate search and selection process.
Common Misconceptions About Staffing Agencies
If you’re considering working with a recruitment agency, then you may have heard some of the common misconceptions about staffing agencies – things like this:
“They Don’t Care”
You might have heard that agencies just want to get their commission and don’t really care about the quality of their clients.
There might still be some big companies that rely on churn rather than quality, but smaller boutique agencies rely on building a reputation for quality, and the only way they can achieve that is by going above and beyond for you every time.
“It’s Too Expensive”
As we’ve discussed above, there is a financial cost to using a recruitment agency, but there is also a cost to doing it yourself.
While the average cost of hiring a new employee is $4,000, the cost of hiring the wrong person can be devastating to morale and deadlines.
Getting it right the first time is much cheaper.
“Low-Quality Candidates”
Have you ever had a bad experience with a recruiter? Been direct messaged on LinkedIn for a role you’re not remotely qualified for, or been sent a standard email out of nowhere when you’re not looking for work? Some recruiters try and play a numbers game, hoping that if they throw out enough bait, they’ll get a bite.
These are the rare exceptions, though. For most recruiters, and especially the smaller companies, their reputation is based on their ability to find you the right person. The CVs you get as a shortlist should be the cream of the crop.
How to Choose the Right Staffing Agency: 7 Practical Tips
Not every staffing agency works the same way and offers the same benefits. This is why when choosing to work with one, make sure to research their experience, rates, and other benefits that match your business needs.
These are some of the things to keep in mind:
1. Expertise
While there are generalist staffing agencies that have a good reputation, it’s always best to look for a staffing agency that specializes in your industry or in the specific type of talent you need.
Particularly in IT, where the demand is high, and some roles are very specific or complex, a specialized agency will have a better understanding of your requirements, and they are better at evaluating and testing developers’ knowledge, providing you with candidates that suit the right skills and experience needed.
“Working with DistantJob was a game-changer for our company’s talent acquisition process. They understood our needs inside out and wasted no time in presenting us with a selection of top-notch developer candidates. It’s rare to find a recruitment agency that truly excels in a specific field as they do. We even hired one of their recommended developers from the very first set of candidates they sent our way, and he has been working with us for a year now.”
Jason Taylor, CTO of Transilient
2. Time Efficiency
Another key factor to discuss with a staffing agency is their expected timeframe for delivering suitable candidates. Make sure to set clear expectations in terms of the hiring process to avoid any misunderstandings later.
Sadly, some agencies prioritize speedy hiring rather than dedicating time to finding individuals with the right experience and skill set. If an agency tells you that they will provide you with candidates a day after you submit your request, that might be a red flag. There´s no way they can source and evaluate candidates carefully that fast.
3. Quality Of Candidates
The quality of candidates is a major consideration when deciding between staffing agencies, as it directly influences the success and growth of your organization.
Request candidate evaluation criteria and go in-depth regarding their processes and evaluations. Also, keep an eye on their timelines. You want to hire candidates fast but without compromising quality.
“DistantJob took the time to talk about the job description and explore what was important to us. They came back with a great candidate on the first try”
Todd Tolly, Teamlogic IT Santa Rosa
4. Cost
While it may seem counterintuitive, investing in a staffing agency that prioritizes quality candidates can lead to cost savings in the long run.
The United States Department of Labor calculates that the cost of a bad hire is at least 30% of the employee´s wages for the first year.
The cost of a bad hire can be significant, including recruitment expenses, training costs, and lost productivity. By partnering with talent acquisition experts, you can avoid these additional costs and invest in hiring the right candidate from the start.
Make sure that you understand how the agency´s fee structure and contract work, as most agencies charge different rates and have different policies – whether it´s a percentage of the hired candidate´s salary or a flat fee. Ensure there are no hidden costs.
“We have 3 employees from DistantJob right now. Phenomenal. For the dollar value that we are spending, we are far ahead of developers we would find locally or offshore”
Matt Bricker, CTO at Surgent Professional Education
5. Replacement Policy
Candidate guarantee is an aspect that tends to go unnoticed in agencies’ policies.
Ask about the agency’s policy for candidate replacements if the hired candidate doesn’t work. A reliable agency may offer a guarantee period when they find a replacement candidate at no extra cost.
This policy will ensure that whatever happens, you have a backup, so you don’t waste money or time.
6. Process
Every agency’s process is different, so when considering which one to work with, inquire about their candidate screening and selection process.
Especially with IT, where evaluating candidates is more challenging, it’s important to know what types of tests and interviews agencies conduct. Ensure they have rigorous screening procedures to assess candidates’ skills, qualifications, and cultural fit before presenting them to you.
“DJ is phenomenal. They find amazing candidates and make hiring extraordinary devs easy. Think of it as having a top recruiter, HR, and payroll departments, in dozens of countries”
Éric St-Jean, VP of engineering, Monetate
7. Geographical reach
The geographical reach of a talent acquisition agency plays a key role in how they source a diverse talent pool, providing customized solutions and offering specialized expertise.
Agencies with a local reach can source great candidates, but they often miss out on excellent professionals in other locations. Agencies with a broad geographical reach can adapt to the evolving demands of a global workforce and cater to the unique hiring needs of companies.
They can access top-tier talent and tap into specialized markets, sourcing and finding the type of candidate you need.
“The remote developers presented by DistantJob deliver a caliber of quality, skill and technical expertise, beyond my best expectations, far exceeding our local team members”
Gili Tzabari, Director of R&D Amaya
Is A Staffing Agency A Good Choice For Your Business?
If you’re looking for a cost-effective strategy that saves you time and enables you to access top tech talent, then partnering with a staffing agency can be the best choice for your business.
Moreover, specialized staffing agencies like us focus exclusively on helping our clients find tech experts who fulfill their requirements. Our IT recruiters know how to evaluate candidates, ensuring you get the perfect match.
Want to know more?
FAQ
The disadvantages of staffing agencies include potential high costs for employers, as they often charge fees for their services, reducing the overall hiring budget. Additionally, there may be a lack of direct control over the selection process, leading to potential mismatches between the candidate’s skills and the employer’s needs.
The purpose of a staffing agency is to connect employers with job seekers who have job openings. They act as intermediaries, sourcing and screening candidates to match them with suitable job opportunities based on their skills, qualifications, and the employer’s requirements.
There are two types of staffing agencies: Generalists and specialists. Generalists offer recruitment services to any business, while specialists tend to work with a particle sector, for example, care staff or IT professionals.
