How Do Staffing Agencies Work?

Updated February 16, 2023

Staffing agencies aim to match the right job candidate with the right position. Their input can help save time for both employees and employers. If you are currently looking for a job, you might want to know more about staffing agencies to use their services. In this article, we explain how staffing agencies work and some tips to enhance your experience with them.

What do staffing agencies do?

Staffing agencies recruit employees on behalf of employers looking to fill positions and help candidates find appropriate jobs. The positions are sometimes temporary and can be part-time or full-time. Staffing agencies allow employees who are willing to start working in a new industry to gain experience and test new positions before committing to them. They are also known as recruitment firms or temp agencies. They usually specialize in a particular industry.

From the job opening to hiring, here is how staffing agencies work:

Employers contact the agency

When they need to hire new staff, employers contact a staffing agency specializing in their industry. The employer specifies the job requirements, number of employees needed, rate they will pay and for what period staff needs to work. Based on this information, the agency composes a job description and advertises it on its website or other job boards. Recruiters might also use social media or other professional networks.

Candidates apply

Job candidates can browse a job opening on the agency's website or other channels. They can also meet with recruiters to discuss their qualifications. In both scenarios, the recruiters review their skills and background and then select corresponding positions that employers are looking to fill. The candidates sign up with the agency, who will manage the entire recruitment and hiring process. Candidates receive feedback to improve their chances of success.

Interview

Once the agency finds possible candidates for positions, they perform screening interviews. Depending on the type of position, employers may participate in the interview process. Staffing agencies introduce the selected candidates to the employers, who decide who they want to hire.

Contracts and pay

The agencies take care of most of the paperwork, such as managing the candidates' contracts and terminating them when necessary. They manage employment taxes, including Social Security, as well as payroll. Employers can save time and energy by using staffing agencies' services. For temporary positions, staffing agencies pay the employees directly. When the employees get hired by the company for which they performed a temporary job and did well, the employer takes over the payroll.

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Do staffing agencies charge fees?

Employers pay fees to staffing agencies to outsource their hiring process. If they didn't work with an agency, they would have had to pay hiring costs directly for job-board ads and internal recruiters instead.

A job candidate doesn't pay fees to use the services of a staffing agency. There might be deductions on their paycheck once hired, but the amount paid corresponds to what the employer would have paid directly. The employer is paying the fees to the agency. No staffing agency should charge an employee.

Staffing agencies charge fees to their clients for the amount of work the employee performs. Fees take several forms, including:

Markups ranging between 25% and 100% of the employee's wages. The percentage varies according to factors like job salary or location. For example, with a 50% markup, if the employee's salary is $10 per hour, the employer might pay $15 per hour to the agency.
Agencies may also charge the employer an additional fee on top of this percentage for filling the position. If the job is temporary, it will be deducted regularly, but if the position is permanent, it will be a one-time fee.
In the case of temp-to-hire contracts, which give employers the option to hire the employee for a longer-term period, they negotiate and pay a contract buy-out. It is important to note that temp-to-hire doesn't guarantee permanent employment after the temporary period, but offers the possibility to transition.

Deciding to work with a staffing agency

Working with a staffing agency can be beneficial for both the employer and the employee. Here are some tips to help you have the best experience possible with an agency and find your next job faster:

Choose a specialized agency

Find a staffing agency specialized in your field of interest. Specialized agencies that know your industry can often find a perfect match quickly and save you time. They have contacts with companies in the specific sector you are seeking to work in and are trained to evaluate your skills and education, so they can direct you toward the best potential employer. A good agency will take the time to interview you, exchange feedback and coach you through the hiring process. Also, they won't charge you any fee. If they ask you to pay, you should not sign up with them.

Be professional from the start

When you meet and interview with the staffing agency's recruiter, you should act the same way you would with an employer. Dress professionally, arrive on time and rehearse your presentation. The recruiters are the ones deciding if you will meet the employer, so you should try to give them a good impression. Also, it is an excellent practice for the final interview. You can ask the recruiters for things you can improve in your interview, and they will help you prepare.

Clarify your needs

Explain clearly the type of job you are looking for. Talk about the minimum salary you expect and the location. You might not be able or willing to work a certain distance from your home, and it is important to clarify. The recruiter will use this information to find a job that suits you best.

Be honest

Tell your recruiter about any gaps in your employment history, including the reasons why you were terminated, if that is the case. It will allow the recruiter to explain the situation to the employer.

Improve your skills

Staffing agencies often offer free training and courses to help candidates become more marketable. You can take advantage of these resources to improve your skills, write a better resume or prepare for your interview.

Multiply your options

Besides staffing agencies, there are multiple other possibilities to find a job, such as online job boards, social media or networking. You can use all of them to multiply your chances to find the ideal position. Just be sure to inform your recruiter of the companies you applied to, to make sure they don't send your application a second time.

Stay open

You might be looking for a full-time and permanent position, but stay open to other propositions the agency has for you. Temporary jobs might create an opportunity for permanent ones, and they are an excellent way to gain experience.