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Pros and Cons of Using a Staffing Agency

Hiring just the right worker for your company can be time-consuming, stressful, and costly. It’s no surprise that staffing agencies have provided a solution for managers who want an easier approach when it’s time to dip into the talent pool. But using a staffing company isn’t for everyone, and whether you find them a good value will depend on your company needs, hiring goals, and budget.

In this guide, we’ll explore the differences between using a staffing agency compared to keeping everything in-house.

Related: Evaluate the cost effectiveness of outsourced recruiting options, like RPOs and Elastic Recruiting.

In-House Recruiting vs Using Recruitment Agencies

There are many reasons to consider using a recruiting agency. You may not have the time or manpower to handle the full life cycle recruiting process on your own. You also may be new to hiring and not have the confidence to feel like you’re making the right choices. Whatever your concerns, it’s important to understand that recruiting agencies have their positives and negatives.

Like any investment in professional services, they should be weighed against their cost and drawbacks. If you’re continually disappointed with your own efforts to hire or you are struggling against a low employment rate and tight labor market, an agency may be able to provide the help you need. They can also be a welcome reprieve for those without a dedicated hiring team and who can’t handle the strain of additional hiring duties.

Two things to consider as you evaluate in-house recruiting versus recruitment agencies:

 

  1. Evaluate how many resources and much internal staffing you need to hit your hiring goals. IQTalent Partner’s Recruiting Resource Calculator can help you figure it out. 
  2. Consider Comeet’s modern alternative to both options with Elastic Recruiting, which takes the recruiting process of your hands with a team that feels like an extension of your own.)

The Pros of Using Recruitment Agencies

Many companies are attracted to these major benefits of using outside recruiters.

Shorter Hiring Times

For almost every company, time is money. An open position can mean fewer sales, less overall productivity, and lower workplace morale. It’s in your best interest to get that role filled right away with a good hire, so you can get up to maximum efficiency again.

If you want a job posting filled immediately, recruiters can be a good option. They have all of the hiring processes already in place, an understanding of the market, and a way to weed out those who aren’t a good fit before you ever meet them. Their connections with talent networks also ensure that they aren’t fumbling around to figure out where the best workers are. They also recruit all day and every day, so you can enjoy a shorter time to hire.

Higher Quality Candidates

Remember that network of job-seekers we mentioned? Recruiting agencies not only know where to find willing workers; they know how to find good willing workers. This often means that they have access to employees who are not actively seeking but are open to leaving their jobs for the right opportunity.

They also excel in providing lists of candidates who are pre-screened and pre-vetted, which lowers your risk of taking on a bad fit. Plus, some talent agencies will ask that their candidates perform aptitude tests, personality tests, and other measurements of suitability for your open position. Additionally, these candidates have usually gone through some level of interview screening.

The professionals at the agency are well-versed in how to spot red flags as well. And if they see any, they’ll dig deeper to reveal any potential problems before you’re even aware of them.

Lower Risk

Better candidates often mean fewer administrative or legal headaches, too. Those red flags that would have turned off the recruiting agency are exactly what you don’t want to see in your new hires. When you remove these riskier hires from the talent pool, you can expect those that make it to your door to have a lower overall incident rate. For those in highly-regulated industries, this value is immeasurable.

There’s also a lower risk in the time and money you spend on training. Better-qualified workers are worth investing knowledge and development dollars. It’s likely that they are committed to a company for a longer time since they’ve already jumped through several hoops for the opportunity.

Staffing agencies usually allow a “try before you buy” period for new hires as well, where they can work for you in a temporary capacity before signing on as a permanent team member. This alone lowers the risk of a bad hire and is one of the best ways to see if they align with less measurable requirements, such as acceptance of company culture.

Specialist Knowledge

If you are hiring for a very specialized tech or legal field, it may be hard to find anyone with the skills or experience to fill in the gaps. That’s where a staffing agency may become your best ally. Since they have the bandwidth and connections to reach out to colleges, industry organizations, and other networks, they can find that diamond in the rough that other companies may be competing to find as well.

Don’t discount that only newer industries are struggling to find talent. Over the next 19 years, the U.S. will see 10,000 baby boomers reaching age 65 every day. For those who are leaving the workplace without a suitable replacement, this means there will be a significant loss to companies who have more-experienced workers at the helm. The financial services industry alone expects a shortfall of 10.7 million workers by 2030. Seeking the help of an agency can shore-up gaps you may soon face.

The Cons of Using Recruitment Agencies

There’s a flipside to every possibility, and staffing agencies aren’t without their flaws.

Higher Cost

You’ll definitely pay for the privilege of using an experienced team of staffing professionals to handle your hiring needs. Fees vary, but it’s typically charged as a percentage of the employee’s annual salary. Below are the recruitment fees of the top five industries in the U.S.

Major Disciplines Average Fee % Average Amount Average Salary
Finance and Banking 21% $33,922 $166,250
Scientific 20% $29,270 $127,466
Engineering 23% $24,521 $105,831
IT/Information Systems/Data Processing 22% $21,956 $98,437
Sales and Marketing 20% $21,718 $101,485

 

For each person you bring on, you’ll have the cost of the employee, their training and development expenses, as well as the agency fee. For one or two hard-to-find new hires a year, this may be worth it. For the larger corporation or someone with a very limited budget, the expenses may be hard to squeeze into the financial plan. 

Lack of Employer Branding

A company’s reputation can be established in many ways, and one of them is in your hiring process. Getting the word out about your culture happens naturally when you hire. If you stand out with your hiring, you can attract better talent.

There’s also a natural benefit to earning a stellar reputation through hiring; your customers may hear about it. When you outsource hiring to someone else, you are resigning yourself to their branding, which may not be better than your own.

Legal Issues

No one’s perfect, and that includes recruiting firms. While the more established ones have built a business on doing hiring well, there’s still human error and process glitches to consider. If a hiring firm messes up, what could you lose? In addition to missing out on top talent, it could leave you vulnerable to lawsuits, especially if you can’t prove you didn’t know about any infractions on the agency’s part.

Another sticky area is in temporary employment contracts. These are often used to test out an employee before you commit to hiring them on for your own. Abusing temporary work arrangements is discouraged, and any staffing firm that encourages it could put you in a precarious place.

Company Culture Gaps

Letting someone else do the hiring comes with risks that your workers may not bond in the same way. People who start as temporary employees could feel inferior to a traditional new hire who gets the benefits of a full-time employee from day one.

Even if temporary workers become full-time employees, any stigma may remain. Because you are asking an outside company to find your top talent, there’s also a risk that they aren’t hiring workers who are the best match for your culture in the first place.

Should You Use a Recruitment Agency or Recruit by Yourself?

No one can answer this question for you. To simplify the decision, ask yourself what your number one goal is in hiring an outside recruitment agency. If you want better candidates in less time, you may find that it’s your best option. If you have budgetary issues or hold company culture in high esteem, you could find yourself disappointed in the outcomes.

If you want the best of both world, consider an alternative like Comeet’s Elastic Recruiting. Our team of experienced recruiters work directly with your hiring managers to make sure you hire the best candidates — on time.

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Adrienne Smith

Adrienne Smith

Adrienne Smith is a content strategy consultant working with high-growth businesses on their brand messaging, content strategy, and content creation. A digital nomad, she's exploring the world's cultures and cuisines as she works.

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