If you consider using a staffing company, you will be hit with some instant staffing lingo and can quickly get caught off guard if you aren’t ready for it. “So what are you looking for? Contract Labor? Direct Hire? Temp-to-Hire? Is this a prevailing wage job?” And then the awkward pause, um, I think I need…
The vernacular might vary a bit, but let’s look at the three most common staffing solutions, what questions you should be asking yourself prior, and what question you should ask the staffing provider you are considering using for your next project. The examples we will look at will be a bit skewed towards skilled trades staffing (a little self-promotion never hurt, lol); however, there is a lot of commonality between most industries that depend on using staffing companies to supplement their workforce.
Let’s begin with Direct Hire; it seems straightforward, you need someone for a Site Manager or an Engineer position, you want to hire them directly. But hold the phone. If it were that easy, would you still be reading this article? When working with a staffing company on a direct-hire position, you would typically agree to the pay range of the candidates and, wait for it, the fee for finding the candidate. The fee is generally based off a percentage of the annual pay range of the position and is usually paid when the candidate starts their first day.
That sounds like it could be a bit pricey upfront; why would I consider this option? Good question! Sometimes the job requires workers to perform tasks that must be covered by your own workers’ compensation and other insurance policies and can’t be covered by a staffing agencies plan. It could be as simple as driving a company vehicle. In most cases, if the job requires driving a company vehicle, it will probably need to be a direct hire. Higher-level and permanent positions are also very common types of direct-hire positions. The benefit of going through a staffing company for a supervisor or engineer position allows you to maximize the pool of candidates so you can find the right candidate for the job.
Next up is temp-to-hire. This one is also very common in skilled trades staffing. Temp-to-hire is an excellent option for growing companies. It allows companies not to waste internal time and resources searching for candidates. So how does temp-to-hire work? Great question! You meet with an account manager, tell them what you are looking for, and teach them more about your business and your needs. Next, you provide the requirements for the position(s) of need, and the staffing company starts providing you candidates for your approval.
Is it really that easy? The short answer is yes. Your account manager has already discussed the bill rate or bill margins; within your job description, you have provided an outline of the pay rate. The staffing agency is responsible for the onboarding, I-9 verification, screening, and workers’ compensation coverage. So essentially, the staffing company is taking on almost all of the risk. For most positions, a worker will work about 500-600 hours, and then you will have the opportunity to hire that person full-time as part of your company without requiring a buyout to do so. This is a great way to try before you buy.
The last one is contract labor; if you regularly use staffing companies, then at some point, you will probably require contract labor. Contract labor is usually a position with a definite end date, and when that job is over, the worker moves on. Examples include a regional fencing company with an influx in seasonal projects and needs to beef up without taking on long-term employees or a construction project requiring specific trades to be available at certain points of a construction project. Contract labor typically ranges from a couple of weeks up to a year.
Hopefully, this helps as you begin figuring out what you are looking for and making those first conversations you have about dipping your toe into staffing not so intimidating. Other great questions to ask any staffing company you are considering working with:
What is the average length of time to fill a direct-hire position?
How many of your temp-to-hire hires make it to being hired permanently?
Do you have a pool of contract laborers you use regularly?