How Staffing Agencies Work. Detailed Breakdown

How do staffing agencies work?

In this article, we address all the theories and assumptions behind staffing agencies. Moreover, we will provide details on how they work and what their fees are.

How Staffing Agencies Work

For businesses, they use staffing agencies to find employees. Afterwards, they pay the staffing agency a fee for their services. For job seekers, staffing agencies help candidates connect with companies. There are no fees to job seekers for their services.

How Staffing Agencies Work for Businesses

How Staffing Agencies Work for Businesses

When a business needs to fill a position, they often turn to a staffing firm for their hiring needs. Here is how it works.

First, the business provides their hiring requirements for the vacant position.

Second, the staffing agency develops the recruitment plan and starts sourcing.

Third, the agency screens and provides the most suitable candidates to the business.

Fourth, the business interviews the final candidates and makes their decision to hire.

Finally, the staffing agency is paid a service fee for their assistance in sourcing, screening, payroll, and HR solutions.

How Staffing Agencies Work For Job Seekers

How Staffing Agencies Work For JobSeekers

Staffing agencies will help job seekers find their next position. They do this by reviewing the candidate resumes and connecting them with clients who have vacant positions.

Job seekers can review the vacant positions presented and work with a recruiter to interview for those positions.

There is never a fee for their service to job seekers.

Types of Staffing Services for Businesses

When businesses work with staffing agencies, they are a few options to choose from in their staffing needs. Here is a brief breakdown of these options.

Direct Hire

Direct hire is when a business needs to fill a position that will be full-time time and internal from day one. In other words, the staffing agency helps the business find the ideal candidate for a difficult position to fill. After the business hires the ideal candidate, they pay the staffing agency a service fee for their assistance.

This is usually a percentage of the annual salary of the hired employee. Most importantly, the employee never pays for this service. Only the company pays the fee to the staffing agency.


One of the most popular approaches with most businesses is the temp to hire option. With Temp-to-Hire, the staffing agency sources and screens ideal candidates for a vacant position. 

Afterwards, the client conducts the final interview and decides on a candidate.

Subsequently, the staffing agency handles all employment costs and payroll for an agreed period. After the agreed time, the candidate is hired on board with the client company.

Outsourced Staffing

In some cases, business prefer to keep a position completely outsourced with a staffing agency. This means the staffing agency handles all employment costs and payroll for the employee.

However, the employee sill works for the client, and at their location.

The Fees for Staffing Services to Business

The Fees for Staffing Services

The fees vary depending on the type of staffing option a business decide to work with. Here are examples of these fees.

Direct Hire Staffing Fee

A direct hire staffing fee is usually a percentage of the employee’s annual salary. The percentage is agreed upon with the client and there are usually warranties behind these fees.

Temp-To-Hire and Outsourced Staffing Fees

With these options, the staffing agency is responsible for all employment costs. Moreover, candidates are employees of the staffing agency. They work at the employee location. However, they are paid through the staffing agency.

The business pays the staffing agency for this service. This will include the employee salary, the employment costs, and the fee for the Staffing Services.

Why Businesses Work with Staffing Agencies

Why Businesses Work with Staffing Agencies

Staffing agencies help businesses save time, money and resources. Most importantly, they protect businesses from costly mistakes of hiring bad candidates.

In addition, staffing agencies often have a large database of candidates who are in the market. Therefore, they often have pre-screened candidates ready to interview in short notice.

Staffing agencies specialize in screening and hiring candidates in specific industries. They do this day in and day out. As a result, businesses prefer them especially for hard to fill positions.

Finally, with the Temp-to-Hire model, businesses can evaluate employees before they hire them internally.

Why Job Seekers Work with Staffing Agencies

Why Job Seekers Work with Recruitment Firm

Many staffing agencies have exclusive partnerships with some of the top companies in the world. For many of the vacant positions, companies work exclusively with staffing agencies to fill those positions.

In addition, recruiters can help job seekers fine-tune their resume to make it stand out to hiring managers.