Did you know cost of hiring can exceed $5,000 per employee?
While some of that expense is in training and lost productivity, a large part of the cost is in the hiring process itself: how much time your managers spend discussing the opening and the objectives of the hire; advertising; screening; interviewing; re-interviewing; background checking; and everything else involved with making sure you’ve got the right person for the job.
Companies frequently take these steps only to find they have to restart the process when the hire falls through due to something outside of their control.
So why use a staffing agency? For smaller organizations, where employees’ time is already stretched thin, recruiting in-house is often not a feasible solution, nor do these companies have the resources to recruit effectively without losing focus in another critical area of their business. If you don’t have a dedicated recruiter, you’re pulling valuable work time away from other employees, time that affects your bottom line. Using a staffing agency may be the optimal choice if you want to see the most value out of each dollar spent on hiring.
How often do you hire?
When you’re considering bringing on a staffing agency, you should have an understanding of your hiring objectives in order to know how to best use the agency’s services.
Let’s say you’re only hiring once or twice per year, having a recruiter on staff is a cost you don’t need. An agency can get the right candidate in the door, screened and guaranteed. Your additional responsibilities will be minimal – set up meetings to see if they’re a good fit and make the hire once you’ve decided you’ve found the right person.
Let’s say you hire frequently: you’re typically posting, interviewing, verifying, or onboarding. This can be a lot to handle for one person. Having an entire department to help would be great, but not every organization has this luxury. A staffing firm can be your HR department: They can take the bulk of the work off your hands and free you up to hire for quality, rather than quantity. In many cases, they even handle the payroll functions, which is another responsibility off your plate.
You are ALWAYS hiring. You’re growing, you have high turnover (if you ever get time, you might ask why), or you’re hiring to fill multiple seasonal spots. You need help!
Many of our clients hire 400+ seasonal staff members every spring to ready for the summer rush or every fall for the Christmas rush. It can be a challenge to find all these people when you’ve also got to worry about the logistics involved for each one of them. Some agencies are equipped to deal with this type of volume: They work with community agencies, foreign workers (and verify work visas for you), and other outreach programs to help with large staffing needs, not to mention they place a large focus on advertising for you.
Take advantage of the Guarantee!
In addition to the recruitment help, all agencies offer guarantee periods. If the hire doesn’t work out, you don’t pay and they start the search over, not you.
Consider that 62% of businesses have reported making the wrong hire within the last 2 years. As we know it can cost up to $5,000 to hire an employee, over half the businesses in North America may be spending double that in order to get the right person for the job.
Your guarantee period is an opportunity to assure the new hire is the right hire.
What does it cost?
There are many types of agencies out there, with varied fee and guarantee structures. Here are the two main types you’ll see the most frequently:
These agencies are paid contingent on you hiring one of their candidates and not before then. They are paid to fill positions, not line up interviews.
Cost: Typically 15-30 percent of the annual salary
Guarantee: Generally 60 – 90 days
Temporary or Temp to Perm
These agencies provide temporary workers who can come and go, or, if you find they’re a good fit, can transfer to your payroll. Their contract can be bought out for a fee, or after a length of time you can have them for free. There’s typically a sliding scale on the buyout: The sooner you take them off the agency payroll and onto yours, the higher the cost.
Cost: 30 to 60 percent of the hourly wage
Buyout: Generally after 90 to 120 days
Keep in Mind!
The Canadian unemployment rate is the lowest it’s been in 40 years. This means there are less people actively looking for work than ever. LinkedIn has previously reported that as little as 12% of people on their platform are actively seeking new employment. Agency recruiters won’t just wait for a quality candidate to walk in their door – they’ll target your competitors and the marketplace for people in similar positions, to see if anyone is interested in looking. Because the core function of an agency is recruiting, agency recruiters have the time to identify and reach out to passive candidates in a way that’s probably just not possible for your team.
Recruitment agencies can turn a month-long search into one that lasts just a few days. Knowing when and how to use them effectively can not only reduce the stress of recruiting, it can help you guarantee the right hire.
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