Understanding Which Staffing Agency Is Best For You.
Updated: Jun 28
The purpose of this article is for you to gain clarification on two thingS;
1) The various types of staffing agencies, and how they work.
2) In which scenarios using a staffing agency will benefit your business.
The operations of a business always depends on people. The bigger the operation, the larger the workforce in most cases. With company growth, more people could be required in the organization. Sometimes that growth can be faster than you think, and you begin to fall behind, and individuals in an organization or a team become overwhelmed with work.
This is about the time you may consider using a staffing agency.
Let's get right into it....
The various types of staffing agencies, and how they work.
There are various types of staffing agencies across the globe. However here are the two core models.
1) Temp-Placement, also knows as contract based staffing agencies
2) Permanent-Placement, also known as head hunting, or full time staffing agencies.
Temp-Placement Staffing Agency.
As a temp-placement agency the model is fairly simple. You as the business owner requires additional people to add to your team, however you do not want to go through the hassle of having those new people on your payroll, workers compensation plan, or benefits plan. You simple need people to show up everyday and work.
This is where a temp-placement staffing agency will offer you a contract with contractors to work for you.
In a nutshell, the staffing agency will sent you a contractor on their payroll. The staffing agency will pay the contractor weekly or bi-weekly. Your company will receive a invoice on a given pay period, for example every 30 days. Finally you will pay your bill which then covers the staffing agencies labour expenses, benefits, workers comp, and insurances.
Billing structure of a temp-placement staffing agency.
In the market place today you will find a range of 35%-65% fee of the contractors annual salary. Meaning if a contractor is to make $100,000 annually, your company will pay anywhere between $135,000-$165,000 to the staffing agency. The staffing agency will pay the employee their $100,000, and the remaining money will go towards business expenses, such as benefits, insurance, workers comp, in house employees, rent, etc.
Most staffing agencies will provide a 90 day one time replacement contractor, if in any case the first contractor did not perform or remain with the company.
Permanent-Placement Staffing Agency.
A permanent placement staffing agency focuses on simply finding you the employee you need, in exchange of a finders fee. A staffing agency that focuses on permanent-placement could also be categorized as a head-hunter. Using a staffing agency as such means that the employee found will be your employee from day one.
Billing structure of a permanent-placement staffing agency.
In the marketplace today, you will find a range of 7%-20% of the new employees annual salary. For example if the new hire is going to be paid $100,000 annualy, your company would pay a one time finders fee of $7,000-$20,000 for the time, strategy, tactics, and support the staffing agency provided to help your company.
A typical staffing agency will provide a 30-90 day one time replacement employee, if in any case the first contractor did not perform or remain with the company.
Comparing the two models.
Temp-placement staffing agency:
Payment: Contract and on payment cycle.
Terms: Cannot break the contract anywhere between 3-6 months.
Purpose: High volume staffing.
Benefits: Removes employee liability from your business.
Permanent-placement staffing agency:
Payment: Finders fee.
Terms: 50% on start date, and remaining 50% after 30 days.
Purpose: High talent acquisition and quality employee staffing.
Benefits: Provides you with the high quality employee.
In which scenarios using a staffing agency will benefit your business.
The following will help you decide which type of staffing agency service your organization need the most.
Temp-Placement Staffing Agency:
When you need labourers for a project short term.
Lower wage employees with high risk:
If you need a 3 month probationary period without having the liability.
If you need bodies as fast as possible and do not care much about skill.
When you want a payment plan.
Permanent-placement staffing agency:
When you need a skilled or specialized employee, but do not have the time or resources to find them.
When adding critical members to the team.
On a lower budget and want something more affordable.
Looking for quality people to build your team.
Do not want a payment plan.
There are two key factors to consider. Quality vs Quantity and Insurance vs responsibility.
If you are looking for someone fast and not concerned with their skills and do not want to risk your business incase they get hurt on the job, then temp-placement staffing agency is for you.
If you are looking for specialized talent, and want someone of serious value to add to your team, you simply need to have them all yours as a full time employee. A Perm-placement staffing agency if for you.
Most temp-placement staffing agencies will say that they offer full-time placements. Be cautious, because they may sell you on someone of lower quality just to make quick money. Always remember, they would rather have 35%-65% over 7%-20% any day.
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