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Is a Staffing Agency Right for You? Examining the Pros and Cons

Pragnesh Anekal

May 24, 2023

Hiring the perfect talent is mission-critical to every HR professional. It's a task that requires time, effort, and a keen eye for spotting the perfect fit. That's where staffing agencies come into the picture.

Time and cost are precious resources, and staffing agencies understand that. They specialize in a streamlined recruitment process, handling administrative burdens and freeing up your schedule. In this post, we'll see how staffing agencies can up your hiring game and bring in top talent.

However, surrendering control over the hiring process can be a concern for HR professionals. We'll also explore the cons and considerations that need to be kept in mind while looking at staffing agencies, such as maintaining your employer brand and engagement to ensure a positive candidate experience.

Let's begin.

The pros of partnering with staffing agencies

Client ratings on staffing agencies

Access to a vast talent pool

Staffing agencies have extensive networks and databases filled with qualified individuals from various backgrounds and industries. This means they can access a wide range of candidates you might not come across through traditional hiring methods.

Whether you're seeking specialists in IT, marketing gurus, or skilled administrative personnel, staffing agencies can cast their net far and wide to find the perfect fit for your company.

But here's the best part: these agencies don't just collect resumes like a dusty old library. They actively maintain relationships with candidates, keeping their information up-to-date and ready to match with suitable positions.

An American Staffing Agency survey, which analyzed data from over 1,000 companies, revealed that 90% of respondents reported increased hiring success when working with staffing agencies.

Time and effort savings

Staffing agencies are the secret shortcut to finding the perfect candidates. They handle the nitty-gritty of the recruitment process, from sourcing to screening, saving you time and effort.

They do the heavy lifting by thoroughly screening candidates before presenting them to you. They assess qualifications, conduct interviews, and perform background checks, ensuring that only the most qualified and suitable candidates make it to your desk.

They pretty much do everything except deciding which candidate to hire; that is left to you.

Staffing agencies can reduce your hiring time by upto 6 and a half weeks.

You can leverage their industry knowledge to make informed decisions and save precious time that would otherwise be spent researching and understanding market dynamics.

Flexibility and scalability

Staffing agencies bring flexibility to the table, allowing you to quickly find qualified candidates for short-term needs. Whether you're experiencing a sudden surge in workload or planning for a specific project, staffing agencies have your back with a diverse roster of talented individuals.

Around three million temporary and contract employees work for America’s staffing companies during an average week.

Whether you're experiencing seasonal peaks, sudden project surges, or unexpected employee absences, staffing agencies are your ultimate allies. They offer a flexible solution by providing access to a pool of temporary or contract workers who can step in precisely when you need them.

The cons and considerations for HR staff

Cost implications

One potential drawback of using staffing agencies is the associated cost. These agencies typically charge a fee or commission based on the candidate's salary or an agreed-upon rate. While the cost varies, it's crucial to carefully evaluate the financial impact and determine if it aligns with your budget.

The folks at the American Staffing Association released a fact sheet that sheds some light on staffing bill rates and the resulting profit.

According to ASA, a staffing agency on an hourly rate of $17 would need to charge a minimum of $25.76 to cover legally mandated costs and achieve the industry’s national average net profit rate of 3.3%.

Total cost for a staffing agency

Let's break down the legally mandated labor costs that staffing agencies consider:

  1. FICA (7.65%) - Social Security (6.20%), and Medicare (1.45%)
  2. FUTA (0.60%) - Federal Unemployment Tax Act (varies by state)
  3. SUTA (4.00%) - State Unemployment Tax Act (varies by state)
  4. WC (1.99%) - Workers’ compensation (varies by work type and state)

The fees of staffings agencies usually range anywhere between 20% to 30% of the new hire's first-year salary.

When working with a staffing agency, you need to consider the potential return on investment. Assess the value they bring in terms of finding qualified candidates efficiently, reducing time-to-hire, and enhancing the overall quality of your workforce.

Cultural alignment

When outsourcing the recruitment process to a staffing agency, there is a risk that the agency may not fully grasp your company's culture, values, and specific requirements. This can result in the presentation of candidates who may not align with your organizational culture, which is a critical aspect of successful team integration.

You can actually counterbalance this concern by adding an internal culture screening process alongside the agency's own vetting procedures.

Limited control over candidate selection

While staffing agencies aim to present suitable candidates, HR staff may have limited control over the selection process. The agency acts as an intermediary and ultimately decides which candidates to present for consideration.

You rely on their expertise to identify and present suitable candidates for your consideration. They handle the initial screening, interviewing, and shortlisting based on your criteria. However, this means you have limited control over the selection criteria and decision-making process. It's essential to establish clear communication with the agency, providing detailed requirements and preferences to guide their selection.

Maintaining employer brand and engagement

Maintaining employer brand and engagement is a crucial consideration for HR staff when working with staffing agencies. While staffing agencies play a significant role in candidate selection, it's essential to ensure that your employer brand and employee engagement remain strong throughout the hiring process.

Studies show that organizations with a strong employer brand see 50% more qualified talents and take 1-2 times faster to hire.

Your employer brand represents your organization's reputation as an employer and how it is perceived by potential candidates. When partnering with staffing agencies, there is a risk that candidates may have limited exposure to your employer brand, as the agency acts as an intermediary.

It's important to convey your employer brand values, company culture, and unique selling points to the agency. This information can be shared through detailed job descriptions, regular communication, and providing insights into your organizational values and work environment.

How to start working with a staffing agency

Research and shortlist

Do some online sleuthing and identify staffing agencies that specialize in your industry or the specific talent you're looking for. Check out their websites, read reviews, and get a feel for their expertise and track record. Make a shortlist of agencies that align with your requirements and have a good reputation.

Creating a shortlist of potential agencies will help you narrow down your options and focus on those that seem like the best fit. With a little digging, you'll be well on your way to finding the right staffing agency to partner with.

Ask questions

Don't be shy to ask questions. Inquire about the agency's candidate vetting process, screening methods, and how they ensure cultural fit. Discuss their fee structure, any guarantees they offer, and the level of support they provide throughout the hiring process. Get all the nitty-gritty details to make an informed decision.

Remember, there's no such thing as a silly question, so don't hesitate to seek the information you need to feel confident in your collaboration.

Collaborate and communicate

Maintain open lines of communication with the agency throughout the process. Regularly update them on any changes in your requirements, provide feedback on candidates, and address any concerns that arise. The key is to foster a collaborative relationship based on clear and consistent communication.

Establishing a collaborative environment creates a space for transparency, trust, and effective problem-solving. So, keep those communication channels open and build a strong partnership with your staffing agency.

Evaluate and provide feedback

As you start receiving candidates from the agency, evaluate their fit for your positions. Provide constructive feedback to the agency on the candidates presented, including both positives and areas for improvement. This feedback loop helps the agency refine its search and better understand your needs.

This feedback loop is a vital part of the process, as it helps the agency fine-tune its search and better understand your specific needs and preferences. By actively participating in the evaluation process and offering insightful feedback, you contribute to the overall success of the collaboration and increase the likelihood of finding the ideal candidates for your organization.

On a final note

Staffing agencies can be a valuable resource for HR staff. The expertise and industry knowledge they bring to the table can streamline your recruitment processes and yield excellent results.

However, it's essential to carefully consider the cost implications, maintain control over candidate selection, and proactively manage your employer brand. Find the right balance between utilizing staffing agencies and maintaining an active role in the recruitment process.

Ultimately, finding the best talent for your team is what matters most.

FAQs

Is it worth it to use a staffing agency?

Yes, using a staffing agency can be a highly beneficial choice for companies looking for efficient and effective hiring solutions. Staffing agencies have access to a wide pool of talent, saving you time and effort in the recruitment process. They bring expertise in candidate sourcing, screening, and selection, ensuring you find qualified professionals who fit your requirements.

What are the pros and cons of using a staffing agency?

Using a staffing agency has several advantages. Firstly, it provides access to a vast talent pool, saving time and effort in sourcing candidates. Additionally, it offers flexibility and scalability in adjusting your workforce as needed. However, there are also considerations to keep in mind. Cost implications should be evaluated, as well as the limited control over candidate selection. Maintaining employer brand and engagement is another factor to consider when partnering with a staffing agency.
Pragnesh Anekal

Pragnesh is the EiR at Adaface. He loves reading books more than scrolling through social media, which is a big deal if you ask him.

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