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The Best Hiring Option: Staffing Agency vs. Recruiter vs. Direct Hire

When you need new employees, you have a few different options for hiring. In this guide, we break down the three most common options: hiring and working with a staffing agency vs a recruiter firm, or hiring directly.

Direct Hire vs. Staffing Agency vs. Recruitment Firm

Direct hire involves a company hiring a candidate directly for a long-term, permanent position. The company is responsible for the entire recruitment process, from sourcing to onboarding. On the other hand, a staffing agency is a third-party firm that companies hire to find temporary or contract-to-hire workers. The agency manages the recruitment process, and the worker remains an employee of the agency, not the client company. In contrast, a recruitment firm specializes in sourcing and placing candidates for permanent roles. Unlike staffing agencies, recruitment firms focus on finding long-term employees for their clients and often have a more involved role in the candidate selection process, including conducting interviews and background checks.

How Does a Staffing Agency Work?

Staffing agencies use their network of active candidates, or people who are actively seeking a job, to find employees for client companies. The agency will screen potential candidates using their own processes and review resumes, skills, or background checks. They may also introduce candidates to the client company, depending on the position.

Once the client company decides to hire a candidate, the staffing agency takes care of most of the paperwork. For temp hires, the agency is considered the employer and usually manages the contracts, taxes, payroll, and benefits.

Companies often use a staffing agency to find multiple employees for short-term projects, seasonal work, and events. However, staffing agencies can also help companies find long-term and permanent hires. Some staffing agencies specialize in a particular industry or job type.

Staffing Agency Pros and Cons

Pros:

  • Hiring temp workers through a staffing agency often allows you to avoid dealing with taxes, paperwork, background checks, and company benefits since the agency is technically the employer.
  • Since staffing agency candidates are usually active job seekers, they often have fewer existing time commitments and may be more motivated to start working right away.
  • Many staffing agencies are good at working within a budget.
  • Agencies often have streamlined processes and carefully vet candidates. This means a shorter turnaround time for getting new employees and less turnover.

Cons

  • The focus on active job seekers may cause you to miss potential candidates who are comfortable in their current roles and not actively seeking a new position.
  • Agencies do charge a small fee.

How Does a Recruiter Firm Work?

Recruiting is a hiring approach that focuses on finding candidates with helpful skill sets and asking them to be part of the organization. It is often used to find high-level candidates, including candidates for management and C-level positions. Sometimes a new role is created for a good candidate rather than the other way around.

While many people use “recruiting” and “staffing” as synonyms, true recruiting is sometimes very different from staffing. It’s a much more candidate-focused rather than position-focused approach.

Unlike staffing agencies and companies using direct hiring, a recruitment firm often focuses on more passive candidates, or candidates who are already employed and not actively seeking work. High-level employees are often assumed to always be looking for opportunities to move up the ladder. This means the recruitment firm typically has a large, well-maintained candidate pool of both passive and active candidates.

Recruiter Pros and Cons

Pros:

  • Since recruitment firms do not limit the candidate pool to active job seekers, they may be better able to find the very best quality candidates for high-level roles.
  • Recruited candidates are more likely to bring in new systems and management practices rather than just the usual skills and experience, which can be especially helpful if your company is in a rut or looking to overcome the competition.

Cons:

  • Since recruiting candidates are more likely to already have a good job, organizations often have to provide more incentives to get them on board. You may have to provide significantly higher compensation.
  • In a difficult or mediocre economy where there are more people actively seeking work at all levels, it may be easier to find exceptional candidates through less expensive means.

How Does Direct Hiring Work?

Direct hiring is a traditional employment model where a company hires an individual directly for a specific role. This individual becomes a full-time company employee, receiving a regular salary, paid time off, and other benefits such as health insurance and retirement accounts. The hiring process is typically managed internally by the company's HR department.

Direct hiring is an option for companies that need a long-term employee and do not wish to use a staffing agency or recruitment firm or only wish to use one for part of the hiring process. Typically, the company with the open position will post the job description on a popular job board, filter and sort through the applications they receive, and interview candidates until they find the right person for the job. In some cases, they may still work with a staffing agency for part of the process, but the company itself will still ultimately be the one to hire the employee.

Many companies use direct hiring to find just a few higher-skilled, longer-term employees, although many companies will have temp-to-hire or probation periods before the worker becomes a fully vested employee.

Direct Hiring Pros and Cons

Pros

  • If your company can easily find qualified, interested candidates on its own, direct hiring may allow you to save on hiring costs.
  • If your new employees are given a permanent or long-term position, they are more likely to feel committed to your organization.

Cons

  • Since there is no other company involved in the hiring process, your company has to do everything on its own. That means finding the man-hours to advertise the opening, review resumes, and interview candidates.
  • Companies using direct hiring often find it difficult to access a wide candidate pool, especially if they have a tight hiring budget.
  • Direct hiring can be extremely time-consuming, especially if the people in charge of the process at your company have other responsibilities on top of hiring a new candidate.

Staffing Agency vs Recruiter Firm: Which Hiring Option is Best?

Ultimately, the best choice depends on what your company needs.

  • If you need to fill multiple roles, need a position filled quickly, or are hiring for a temporary project, a staffing agency is likely the best choice.
  • Direct hiring often makes sense when you only have a single role to fill, can offer moderate compensation and benefits, and have plenty of time to find a candidate.
  • Recruiting can be an excellent option when you have a large budget and want to draw in high-level talent from competitors or other related industries.

LG Resources focuses on using comprehensive screening processes to find high-caliber candidates for positions in the manufacturing, logistics, transportation, and clerical industries. If you are looking for a staffing agency in Utah, reach out to us today.

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