According to recent research, the major pain points hiring managers report in the hiring process are access to candidates with the right skills (52%), the time it takes to hire (40%), and higher costs (34%). A staffing firm can solve these issues and help you hire top talent quickly without as much hassle. They have more extensive candidate databases, rigorous screening processes, and effective recruitment techniques.
In this article, we’ll explore the primary functions of staffing firms and compare them to carrying out the hiring process in-house. We'll also discuss a staffing firm’s long-term advantages for your company, including lower costs, higher quality candidates, better retention, and reduced risks. Whether you're a small business owner or a hiring manager at a large corporation, understanding the benefits of staffing agencies can help you make more informed decisions about your recruitment strategy. Keep reading!
What Is a Staffing Firm?
A staffing firm or staffing agency is a third-party company that provides workers for open positions in another company.
Their client base is usually diverse, and their candidate databases include candidates' previous work experience, education, and other relevant data. This information enables them to match candidates to client needs more efficiently.
If the agency doesn’t have a readily available and suitable hire in their pre-screened talent pool, they source them from job boards and other networks where job seekers might look, such as LinkedIn, Indeed, Glassdoor, etc.
The most significant advantage of using a staffing agency is that business owners and hiring managers can focus on the core business operations while the staffing firm takes care of sourcing and screening candidates. This can help reduce the time and costs associated with recruitment, including advertising jobs, screening resumes, and interviewing candidates.
Functions of a Staffing Firm
Here are the primary functions of a staffing company:
Source workers for different positions
A staffing firm is responsible for sourcing workers for different positions, including temporary, temp-to-hire, and direct-hire roles.
- Temporary employees are hired by the staffing firm and assigned to work for the client company for a specified period of time.
- Temp-to-hire workers are initially hired by the staffing firm and may later be employed by the client company if they perform well.
- Direct hires are employed by the client company from the outset.
Conduct the hiring process
In addition to sourcing workers, a staffing firm conducts an efficient hiring process, which includes screening applications, conducting interviews, and performing background checks.
These processes ensure that client companies receive qualified and competent workers who are a good fit for the open positions.
In cases where the worker is employed by the staffing firm, the staffing firm is also responsible for the worker’s payroll and benefits for as long as they provide work for the client company. This includes ensuring workers receive their paychecks on time, managing tax withholdings, and providing benefits such as health insurance and retirement plans.
By taking on these responsibilities, staffing firms help relieve the administrative burden for client companies and ensure that workers are well-compensated and taken care of.
What Is Hiring In-House?
In-house hiring is when the company's own team members or hiring managers source candidates to fill different positions across departments.
To ensure new hires have the skills and experience they need to succeed in their roles, in-house recruiters use direct input from the company's managers and stakeholders.
In contrast to outsourcing the recruitment process to a staffing firm, hiring in-house allows the company to have complete control over the hiring process, including creating job descriptions, screening resumes, conducting interviews, and extending job offers to successful candidates. As a result, the company has a more direct role in shaping its team and ensures that new employees are effectively onboarded.
However, because in-house recruiters may have limited access to external talent pools, it can be more challenging to find specialized candidates; as a result, the recruitment process may take longer.
As the legal employer, the company is also responsible for managing the hire’s payroll and taxes. This includes withholding and remitting payroll taxes, providing workers' compensation insurance, and issuing forms like W-2s for US-based hires. For remote workers, the process can be more complicated. Companies may need to set up a system to manage taxes and payroll across multiple states or consult with experts to ensure compliance with all applicable laws and regulations.
In-house recruiters are typically focused on finding candidates who are a good fit for the organization and are likely to stay with the company for the long term. Most often, this means that in-house recruiters prioritize employee retention over other factors, such as cost or speed of recruitment, which results in a time-consuming and expensive hiring process.
Bonus resource: Want to know how to develop an effective hiring process? Read this article to find out!
Advantages of Keeping Staffing Firm Hires Long Term
Although staffing firms usually source talent for short-term or temporary positions, there are benefits to keeping them for longer periods or even as a permanent member of your company. We outline the primary advantages of this approach below.
1. Lower Cost
Since long-term hires tend to be more committed than short-term hires, businesses can avoid incurring turnover costs: the time and money needed to recruit, hire, and train new employees.
Most staffing agencies also offer guarantees on worker replacement at no extra cost if the companies are not satisfied with the candidate's performance, which can provide additional peace of mind.
2. Higher Quality
Staffing firms can identify and attract top talent from various industries (finance, marketing, accounting, technology, etc). To ensure their clients get only high-quality candidates, they implement rigorous screening processes, check backgrounds and references, and use different tests (personality, aptitude, and skill tests) to evaluate potential candidates.
By partnering with a good staffing agency, companies can benefit from access to a larger pool of qualified candidates who may not be available through traditional recruitment methods as well as find niche workers with specific skills.
Keeping the talent hired through a staffing firm long-term allows the new hires time to familiarize themselves with the company’s SOPs and teams. This usually results in hires utilizing their talents to the maximum potential within the organization, enhancing the quality of their work even more. It can also lead to better collaboration with other employees and increased productivity in general.
3. Better Retention
Although staffing firms will provide talent that has good retention rates, the journey doesn’t end here.
Investing in a long-term relationship with a new hire can help companies better understand the new team member’s career aspirations and goals, enabling the provision of opportunities for professional development and advancement within the organization. These opportunities are a powerful motivator for the employees and encourage greater commitment and loyalty toward the company, which naturally leads to increased retention and more stability.
4. Reduced Risks
Employers have several legal obligations, including paying specific taxes, offering health insurance coverage, and complying with labor regulations. From a financial and operational point of view, hiring new employees also entails financial risks—they can leave unexpectedly or need to be let go because they aren’t a good fit.
Partnering with a staffing agency minimizes these risks. The staffing firm would be responsible for payroll processing, benefits administration, tax and legal compliance, and other employee affairs, such as unemployment claims or wrongful termination.
As a result, companies can continue to remain compliant with labor law requirements, reduce the legal and financial risks associated with a new hire, and manage their workforce easier if they keep staffing firm hires long-term rather than bringing them onto their in-house payroll.
In the current competitive landscape, it is imperative not to overlook any potential advantage that gives you an edge over your competition. Partnering with a good staffing firm comes with many benefits. They can help you reduce hiring risks associated with recruiting and turnover, save time, and fill open positions quickly with qualified candidates—and the longer you partner with a staffing firm the more you reap those benefits.
While Near may not be classified as a staffing firm, it offers the same benefits as a staffing firm and even more. Near is a nearshoring service that provides access to top talent from Latin America for your company's remote roles. We offer transparent pricing, with clients paying only a percentage of the talent's monthly rate.
One of Near's key advantages is that candidates are pre-vetted to match your company culture and to ensure they have the best qualifications for the role. Free replacement is also guaranteed in case of compatibility issues, while ongoing consultations with clients help to address any issues that might affect worker retention (poor communication, unclear career paths, lack of performance reviews, etc.).
We aim to provide the best remote worker experience by treating them as the top talent they are, which ultimately benefits both the candidates and the client. The talent is hired as individual contractors by Near, eliminating any compliance issues and removing employer responsibilities from the client.
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