Keeping positions filled is a major part of owning a business. The availability of employees naturally ebbs and flows over time, and staffing shortages are unavoidable. This is particularly true in industries that are seasonal or involve large projects with specific timelines. Although the state of the workforce is unpredictable, there are drawbacks if your open positions stay empty for too long. Productivity suffers while you spend valuable time and resources trying to find the right person for the job, and other employees can experience burnout while they compensate for unfilled roles.

A smooth and efficient hiring process that consistently fills empty positions is critical to the success of a business. If you can’t keep up with your business’ hiring needs, registering with a staffing agency might be a good option for you. But before you make that decision, it’s important to understand what staffing agencies do, how they work, the benefits they can provide, as well as the risks.

What is a staffing agency?

Staffing agencies recruit employees on behalf of your business. It seems simple, but staffing agencies take on all the work involved with hiring new employees other than making the final hiring decision. This includes:

  • Advertising a variety of open positions (temporary, part-time, full-time, temp-to-hire)
  • Direct outreach to candidates who are a good fit for the position
  • Screening potential matches
  • Completing all paperwork, including in situations where a termination is necessary
  • Managing all payroll duties for each employee, including distributing wages

Essentially, staffing agencies function as a bridge between employers and employees, using their resources to keep your business consistently staffed with qualified individuals. An agency builds relationships and connections within the local work force, offering insight into who might be a good, reliable fit for your business.

How does a staffing agency work?

First, a representative of your business, such as a hiring manager, reaches out to the staffing agency and identifies the specifics of open positions, such as:

  • Number of employees required
  • Job responsibilities
  • Timeline (for example, if the position is temporary or full-time)
  • Wages (hourly or salary rate)

Then, the agency creates a job description and advertises for your business. Some agencies choose to feature open positions on job boards, while others might send job openings directly to employees matching your criteria.

The staffing agency vets candidates who apply. It checks references, screens resumes, and conducts initial interviews. Candidates are then presented to the hiring manager at your business, who makes the final decision. Most staffing agencies handle all paperwork involved with the hiring process, including contracts, tax forms, and payroll documents.

For temporary or temp-to-hire positions, employees work under the direction of your business but will remain an employee of the staffing agency. Your business makes payments to the staffing agency, which distributes wages to the employee.

What are the benefits of working with a staffing agency?

Reduced hiring costs.

The process of onboarding new employees is time-consuming and costly once you factor in providing insurance, 401k retirement plans, sick days, vacation pay, and employer taxes. These standard costs quickly add up with each new employee, particularly if you’re experiencing high turnover rates. Staffing agencies manage these costs, paying out wages and completing payroll tasks so that you don’t have to.

Plus, hiring temporary employees during busy seasons removes the extra stress from your current employees, and could limit the amount of overtime pay you must issue.

Quickly fill open positions.

It is essential to fill in positions as they are vacated, particularly for seasonal work or temporary projects that must adhere to a strict timeline. Your available positions will be advertised to individuals actively seeking work in your industry, rather than getting lost in a sea of job postings. By the time you’re introduced, potential employees have already been vetted and know that they are interested in what your business has to offer. Ultimately, this can lead to positions that are filled faster with reliable employees.

Easily downsize when big projects are finished.

If your business is in an industry like agriculture or construction that naturally has busy and slow seasons, staffing agencies can preempt the busy seasons, advertising well in advance. If you have an upcoming project that requires more employees, but only for a short period of time, an agency can provide temporary employees. When the project is complete, it’s easy to downsize.

Get to know employees before extending full-time offers.

A resume and a couple of interviews usually are not enough to get a complete picture of an employee. By partnering with a staffing agency, you have the option to hire on a contractual basis. You have the flexibility of choosing to extend a full-time offer once you’re sure the employee is a good fit – without having to fully onboard them first.

How much does it cost to work with a staffing agency?

Some business owners shy away from partnering with a staffing agency because they are unsure of the cost. Hiring someone do to all that work couldn’t possibly save a business money, right? In reality, staffing agencies can save you money in the long run. Your business won’t be accumulating costs related to hiring, employer taxes, Social Security, insurance, 401k packages, or payroll. Plus, you and your staff can focus on other aspects of business growth instead of sinking time into finding new employees.

Staffing agency fees vary depending on location, how many employees you need, and the types of positions you need to fill. Agencies charge a fee that’s anywhere from 25%-100% of the hired employee’s wages. As an example, if you and the staffing agency have agreed on a markup of 50% and the new employee’s hourly wage is $10, you will pay the agency $15 per hour. There may be a one-time charge for filling a full-time position. For temp-to-hire positions, you might negotiate a contract buyout if you decide to bring the employee on full-time.

It’s impossible to give an exact estimate of what you can expect, because it depends so highly on your location and circumstances. The best way to know the cost is to interview several staffing agencies in your area and compare prices. Before you sign on with an agency, make sure you fully understand their fee structure so you aren’t surprised by hidden costs.

What are the risks?

As with any business partnership, working with a staffing agency can come with some risks. Here is what to look out for prior to registering with an agency:

  • Uninsured or improperly insured staffing agencies
    • Confirm that the agency has all insurance as required by state and local laws. If a staffing agency operates without proper liability insurance, your business could be open to litigation should an employee injure themselves on your property.
  • Unqualified candidates
    • If a staffing agency’s vetting process is not thorough, you could be presented with unqualified employees. Always review contracts and exercise due diligence. Your final say on what employees are hired can act as protection against unqualified employees impacting productivity or injuring themselves. If you don’t think an employee is the right fit, ask the staffing agency to present more options. If you see a pattern, it’s probably time to move on from that agency.
  • Lack of available employees
    • It is possible to partner with a staffing agency that can’t fulfill your staffing needs. In this case, your open positions might sit empty for just as long as they would have without using a staffing agency. To combat this, vet potential staffing agencies. They must specialize in your industry and have potential employees consistently seeking jobs in your field.

Find the right staffing agency for your needs.

According to the American Staffing Association, staffing agencies provide businesses with 16 million employees annually. They can be an excellent resource for businesses that feel overwhelmed or disappointed by their current hiring processes. With hiring procedures handled almost entirely by a staffing agency, your business doesn’t have to waste time searching for candidates, undergoing extensive interviews, or waiting it out to see if a newly hired employee is a good match. Instead, you can focus your time and effort on growing other aspects of your business.