What Do Staffing Agencies Do and How Do They Work?

How Do Staffing Agencies Work

Last Updated May 10, 2024

Even with an advancing economy and substantial availability of work opportunities, employers have a hard time finding the right talent, and jobseekers have a hard time finding the right jobs. That’s where staffing agencies come into the fold.

Staffing agencies have become increasingly vital to the business world because they help employers find candidates who match their requirements. The staffing market is set to be a $665 billion industry globally and a $207 billion industry in the U.S. in 2024, according to Staffing Industry Analysts, with that projected nationwide number signaling 3% year-over-year growth.

Using a staffing agency to recruit workers or find work has mutual benefits for the parties involved, especially since they vet both sides. As the future of work keeps evolving, it is important to understand how these staffing agencies work and the pros and cons of using one. Let’s dive in.

What Do Staffing Agencies Do?

Staffing agencies are the middlemen between employers and employees. They help employers to find talent and help employees to find work. Finding talent and finding work are both time-consuming and stressful tasks, which is why staffing agencies benefit both parties. By connecting the employers to the employees, they create a mutually beneficial staffing process that’s easy and quick. Staffing agencies’ functions include:

  • Temporary and contract staffing for employers
  • Managing placements for employees
  • Outsourcing and outplacement where needed
  • Human resource consulting for both employers and employees

Staffing Agency vs. Temp Agency

Staffing agencies are sometimes referred to as employment agencies, or temp agencies. However, a temp agency and staffing agency are technically not the same. Temp agencies solely fill temporary positions, while staffing agencies’ services encompass hiring for a wider variety of roles, including temporary, contract, contract-to-hire, and short-term positions.

Staffing Agency vs. Recruiting Agency

Staffing firms are similar to recruiting firms as well, but the latter generally specializes more in hiring full-time, long-term roles. Furthermore, staffing companies oversee more of the hiring process (such as completing background screenings and managing payroll and benefits) than recruitment firms do, as they focus strictly on recruiting talent.

How Do Staffing Agencies Work for Employers?

Employers who contact staffing agencies are looking to hire workers, especially temporary and contract staff, but want to save time and money. The cost of hiring staff keeps getting more expensive and temporary workers are essential for employers to stay afloat ahead of a potential recession.

Staffing agencies are usually a great solution to curb these issues; they always have a supply of talent and can help employers fill empty positions quickly. They also come in handy during the holiday seasons and for filling maternity leave positions. They also provide all kinds of employment options ranging from temporary and contract to permanent work options.

Also, the staffing agencies handle everything ranging from paperwork for contracts, taxes, payments, and training. As an employer, here’s how to make a staffing agency work for you:

  1. Research staffing agencies in your industry (many companies specialize in certain industries, such as healthcare staffing)
  2. Provide your selected agency with details of the types of workers you’re looking for
  3. Sign a contract with your selected agency
  4. The agency sources candidates for you
  5. You start working with your new hires

How Do Staffing Agencies Work for Employees?

Job hunting is a job on its own, and many job-seekers get frustrated along the way. It’s no fun to be inundated by rejection emails, and that’s where staffing agencies can work for you. They know where the best jobs are, can access plenty of job options in the shortest time, help you get into the market faster, and can provide you with their expertise in the market. Overall, they’re a great option for your professional success.

However, staffing agencies are more than just recruiters; they can provide employers with:

  • Consultation tips
  • Interview prep and retention strategies
  • Training for finding the perfect professional fit

According to a recent survey conducted by the U.S. Bureau of Labor Statistics, the number of permanent job losers increased by 127K to 1.4 million. It’s little wonder why 55% of companies plan to use more contract talent in the next year. A staffing agency is an ideal option to navigate because they have a simple process for employees. This works in 4 short steps.

  1. You fill out an application through the staffing agency
  2. The staffing agency provides you with coaching and interview preparations
  3. You receive access to personalized jobs
  4. You interview and start working

Before using one, make sure to ask the right questions and analyze your options to find the perfect fit for your goals and objectives. Don’t be afraid to ask questions and be firm in your negotiations to ensure you’re not being ripped off.

How Do Staffing Agencies Find Work?

Staffing agencies find clients by advertising, reaching out to a network of organizations and employers, creating websites that are optimized for SEO, and offering free resources to employers. Oftentimes, employers reach out directly to employment agencies with work opportunities based on the relationship they’ve built or through referrals.

Staffing and temp agencies will also find clients on job sites, social media channels, and recruiting software. Using a combination of these sources ensures they maintain a wide reach to acquire new clients.

How Much Do Staffing Agencies Charge?

How much a staffing agency charges depends on many factors, including the type of staffing it provides, the level of position an employer is hiring, the amount of work the hired employee will perform, and more.

One of the most popular pricing models for staffing agencies is charging the employer a markup on the employee’s hourly rate or salary. For example, if the agreed markup percentage is 30% and the employee rate is $50/hr, the staffing agency would receive $15 for every hour while the employee receives $35/hr. An employer can expect to pay anywhere between 20% – 30% of the employee’s first year’s salary.

What Kind of Jobs Do Staffing Agencies Hire for?

Staffing agencies hire for a range of temporary and permanent positions across industries in:

  • Administrative
  • Clerical
  • Customer Service
  • Warehousing
  • Manufacturing
  • Healthcare
  • IT/Technology
  • Engineering
  • Finance
  • Accounting
  • Legal

Regardless, employment services can be utilized across any industry. As long as there is an open position, there is an opportunity for a staffing agency or temp agency to assist with the hiring process.

Pros and Cons of Working with a Staffing Agency

For Employers

Pros Cons
Produce faster results as there’s no shortage of clients Can be expensive, especially for small firms
Seamless & efficient hiring since they handle the bulk of the processes involved Might recruit low-quality candidates
Help cover short-term needs without having to hire and fire
Can be cheaper than hiring directly, saving you money
Access to a variety of skilled workers as staffing agencies have large databases of talents

For Employees

Pros Cons
Opportunity for recurring work Compensation metrics may not be favorable
Receive mentorship and resume reviews No severance packages if you are laid off
Have wider opportunities to get a job as you’ll get exposed to different jobs in a short time Sometimes staffing agencies can charge for services rendered (though they are usually free to the employee)
Get more flexible job options Can misrepresent what the job is about
Gain networking and skill-building opportunities Their placement fee for hiring you can reduce your earnings

In-Summary: What Do Staffing Agencies Do & How Do They Work?

Because of the low entry barrier and how easy it is to start a staffing agency, it doesn’t look like the demand for staffing agencies is going anywhere anytime soon. And for good reason — employers worldwide heavily rely on staffing agencies to assist in hiring processes that would otherwise be time-consuming.

What Is a Staffing Agency FAQs

How do employment agencies work?

Employment agencies are responsible for everything from identifying and sourcing candidates, to interviewing candidates, to performing initial candidate background screenings for their clients. These roles can be on a temporary basis (temp agencies) or full-time basis. Employment agencies are utilized to reduce the significant amount of work for business owners, hiring managers, or HR professionals, that is so often required when aiming to fill open positions.

What is a temp agency?

A temp agency is an employment firm strictly specializing in filling temporary roles for employers.

What is the difference between a temp agency and a staffing agency?

While a temp agency only fills temporary roles, a staffing agency works on a larger scale of roles for their clients, such as temporary, contract-to-hire, and short-term roles.