How Do Staffing Agencies Work?

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Last Updated on December 19, 2022

Even with an advancing economy, and substantial availability of work opportunities, employers have a hard time finding the right talent, and job-seekers have a hard time finding the right jobs. While predicted to be a $653 billion industry in 2022 by Statista, staffing agencies have become increasingly vital to the business world because they help employers find candidates who match their requirements.

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 vs. Employment Agency

Staffing agencies can also be called temp agencies, or employment agencies. They are similar to recruiters but differ in the sense that they only offer temporary or contract work solutions.

However, if an employer chooses to retain a temporary worker permanently, it becomes their responsibility and not that of the staffing agency’s.

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 you 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, and the legal industries.

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


Because of the low entry barrier and how easy it is to start a staffing agency, it doesn’t look like they’re going anywhere anytime soon. And since you’re now well acquainted with how staffing agencies work, it will be best to study these interview tips and learn how staffing agencies find the right fit for you as an employer or employee.