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Recruiting & Hiring

How Employers Can Use Staffing Agencies in the Temp Economy

POSTED 01/27/2016
By Joseph Rauch

When you need to hire someone, your options are do it yourself or use a staffing agency. Picking the latter affords you a massive pool of candidates — more than 17 million people with “tenuous ties to the companies that pay them,” according to The Associated Press.

These workers are in demand. A study from CareerBuilder and Harris Poll found that 42% of employers planned to hire temporary or contract workers. Of those 42%, nearly half planned to eventually offer their best temporary workers permanent positions.

When Charlotte-based infrastructure upgrades provider MonMan needed to hire someone to support their sales team, they tried recruiting on their own and regretted it. They used Monster.com and Craigslist to attract candidates. The person they hired disappointed them and was let go after two months, a waste of time and money.  

MonMan had some trepidations about using staffing agencies for their second hiring attempt. They’re expensive, often taking 30-40% of the total compensation employers offer candidates. This forces clients to increase the amount even more to satisfy the candidate and agency.

“It seemed crazy to pay that much for a new staff member,” said MonMan Vice President Ryan Hulland. “It was almost like paying for one and a half people but only getting one person.”

Nonetheless, Hulland realized MonMan’s hiring debacle had already cost them more than the agency would.

“The potential business and growth we missed out on trying to hire on our own was enough to give me chills,” Hulland said.

His team hired a staffing agency that studied MonMan and referred Ashley Chandler, an excellent employee who provided a great return on investment. Hulland chose the option of allowing the agency a 30-40% cut of the total pay each month rather than paying a finder’s fee up front. This option spared MonMan from tax, payroll and legal issues because the staffing agency acted as the employer.

Chandler completed a 90-day trial period with hourly pay before Hulland hired her permanently and assumed employment responsibilities. MonMan could’ve terminated the contract with the agency early but would’ve had to pay a $2-$3k fee. The trial period satisfied Hulland, who was initially worried about “getting stuck with someone who didn’t care and just wanted a job.”

Hiring skilled workers through staffing agencies differs from directly hiring workers via Monster.com or similar sites. Using the latter will provide dozens of candidates who are looking for a job, any job. With staffing agencies that specialize in helping skilled workers find the next step in their careers, you’re more likely to find candidates passionate about the work.

The Agency Perspective

Most staffing agencies use some variation of what MonMan experienced. One of them is the New York-based Execu|Search Group. The agency frequently helps mid to large size companies and startups fill skills gaps and mostly recruits people ages 24-34.

Echoing the statistics from CareerBuilder, Execu|Search Staffing Manager Allie Shulman said temporary jobs are continuing to gain permanent popularity. In fact, they are sometimes more attractive than permanent jobs.

“I’ve had permanent candidates switch to temp jobs without worrying,” Shulman said.

People stay with agencies for years, choosing to bounce from assignment to assignment rather than settling down at one company. These assignments average 11 months in some staffing agencies such as Boston-based Aquent, which places talent with specialized skill sets. Eleven months is the standard; employers face new legal issues after employing a temporary worker .

Aquent  staff mentioned people who maintain long and dynamic relationships with their agency.

“They might be talent, then a client, then talent again,” said Bridget Verdun, a managing director at Aquent.  

Due to lifestyle similarities, Aquent frequently competes with the freelance economy. They often win these battles by offering candidates healthcare and other benefits such as access to Aquent Gymnasium, their online training center.

For all candidates, agents try to satisfy both the candidate and agency by negotiating with the client.

“I go off of what candidates want and then go up to calculate what Execu|Search needs,” Shulman said.

Both Execu|Search and Aquent said candidates in all fields are increasing steadily but noted especially high growth in and attraction to digital design and other Web related jobs, particularly user experience design. Healthcare jobs were also a common assignment at Execu|Search.

The Candidate Perspective

Ashley Chandler, now happy with her job as Inside Sales Coordinator at MonMan, sent her resume to “five or six” agencies when she was job hunting. Three of them responded, and one eventually landed her the job she wanted. Like most, none of them charged her for the time they spent recruiting and knew she was allowed to work with multiple agencies.

The agencies said her best bet was to go through them and find a temp-to-perm opportunity.

“If I happened to find a company that wanted to [immediately] hire me full-time, then I would be one of the lucky ones,” Chandler said.

Once she started her temp-to-perm period, the agency shared only a few details of the contract with her. All she knew was it was 40 hours a week, and that her performance during one week would decide whether there would be another.

“None of it made me uneasy because I knew this is how it works,” she said. “The thing you really hope for is to find a permanent position and not keep going from temp job to temp job.”

Working with an agency was vastly superior to spending dozens of hours applying to jobs via Internet applications, Chandler said. Nonetheless, the reduced and hourly wages were disheartening at times.

“I assumed the agency has to make money too so they charged money and took their cut,” she said. “I wasn’t used to getting paid by the hour, because my previous job was a salary job.”

Chandler’s story is common in what experts from NPR, The New York Times and Temple University have called “the temp economy” or the “permanent temp economy.” Speculations on the reasons for this rise in temp workers vary, but what’s clear is the temp economy will rule for the foreseeable future and in spite of the economy recovering.

Recruiting Passive Candidates and Receiving Honest Feedback

Recruitment agencies are invaluable for finding passive candidates: people not actively looking for jobs. Dan Ogden of Omnibus Consulting, who has worked for recruiting departments in companies and staffing agencies, said these people are not likely to respond to ads or job postings. The networks agencies offer make it possible to find them and companies are better off not spending the massive amount of time needed to search.  

Using an agency also gives employers the opportunity to receive honest feedback on their companies. There are things candidates will never say to your face, so having the agency report back helps companies improve their reputation and recruitment policies.

Staffing Agencies Have Changed Yet Remained the Same

In 1971, staffing agency Kelly Services ran a series of ads promoting the “Never-Never Girl:” the archetypal female office temp worker.

The copy on the ad contained lines such as:

“Never takes a vacation or holiday

Never asks for a raise

When the workload drops, you drop her

Never costs you for unemployment taxes or social security payments

None of the paperwork either

If our Kelly Girl doesn’t work out, you don’t pay”

Once you get past the good old 70s sexism (see the image if you haven’t already), the ad still embodies a culture of dehumanizing temporary workers. The temp industry has grown exponentially since the 70s, improved its practices and lost much of its stigma thanks to today’s freelance economy, but the dehumanization is still there.

Executives at MonMan, like most staffing agency clients, had the option of terminating their temporary or temp-to-perm employees immediately and without notice or just cause. The agency handles all that unpleasantness. It was part of what Hulland called a “replacement warranty,” although it’s unclear whether the agency used that language.

“It’s weird to say this about a person,” Hulland said, alluding to the inescapable comparison to a product.

Chandler expressed similar uneasiness regarding the way employers are allowed to treat temp workers.

“It sounds bad, but a temporary worker hired from a staffing agency is ‘disposable,’” she said. “The company could just fire them at any time and not have to worry about it.”

It may not be as blatant as the “Never-Never Girl,” but it’s not much different either. In fact, temp employees can now take assignments for many more months than in the past. During this time, employers don’t have to provide much of anything other than money and the agencies are not required to offer benefits.

Reconciling the Stigma and Doing What is Right

Employers need to be tactful when exercising the power these agencies give them. After all, what would stop temporary workers from telling everyone about how their former client, rather than pulling them aside for a hard conversation, had a temp agency send them an email saying they’d been fired or laid off? It’s a moral grey area, but the need for cautiousness is undebatable.

Potential clients worry about wasting time and money with defective agencies, but the real risk is a damaged reputation. Agencies provide return on investment most of the time, but there is a stigma surrounding them to the point where clients request or stipulate the agency and their workers not disclose their relationship to the public.

Employers should empathize with these temp workers so they can treat them properly. This protects their business, reputation and conscience. Like Hulland, they should be understanding be uncomfortable about things like “replacement warranties.” Only then will they have a zero risk, high reward experience.

Jagged Edge Media JAcom Consultants