An Inside Look at Staffing Agencies
and Placement Companies

The reality is that these companies exist to find people for jobs.

This is true no matter what type of placement a staffing company specializes in.

One reason for this misconception lies in the fact that today’s staffing agency evolved from yesteryear’s employment agency.

In case 'yesteryear' was before your time I'll illustrate what I mean.

In the 1970’s I got my first office job right out of high school at the Federal Reserve Bank of Dallas. I was a page which was an entry level position in the mail department. I got the position through an employment agency.

The agency presented me with a contract to sign before they would refer me to any potential employers. I gave the employment agency my first month’s take home pay in exchange for that job.

The recruiting and staffing business has come a long way since then.

Basic Similarities

• Hiring companies pay the staffing agencies.* The applicant does not pay.

  This is true for placement professionals, staffing agencies, temporary agencies, head hunters, and day labor companies alike. Because of this staffing companies are looking to find people for their current openings. Not the other way around.

• Staffing agencies can be viewed as clearing houses for open positions. Agencies basically act as the outsourced recruiting and screening function for all types of industries, companies and positions.

  Every respectable staffing agency has some type of sales effort going on from which they bring in job openings. Open positions come in, get filled and are replaced by other open positions. As a result...

• Top staffing firms are constantly building their talent pools by recruiting employees. Once screened these people are ready to be referred by recruiters as openings come in.

• They only get paid after they put someone to work. The variations on this are the exception rather than the rule.

  Sometimes headhunters have retained search contracts with their clients that allow them to cover the cost of the search as they go along. That said, the vast majority of professional recruiting is done on a contingency basis. (E.g. The recruiter doesn't get paid unless they put someone to work.)

  Hiring companies also sometimes contract with placement or temporary staffing agencies for on-site or other specialized recruiting. (These contracts usually require the client to pay operational fees as well as per employee hired.)

  I would argue, however, that every recruiter is getting paid to deliver a result. And that result is finding candidates the client is excited about putting to work. Revenue is truly earned only after that happens.

Big Differences

• Most agencies specialize by the type of Talent they place. Larger staffing firms will have divisions that specialize in many different areas. Some work in niches narrowed by industry as well as position type.

  For example there are companies who only place people experienced in corporate accounting. While others will specialize in placing accountants with public accounting firms.

  Staffing or temp agencies may specialize in placing customer service representatives or administrative assistants and clerical workers. Others specialize in health care or IT.

  There are also companies that specialize in light industrial positions such as assembly or warehouse work. And then there are day labor companies. The list goes on and on.

• Staffing companies also offer different types of placement. Some staffing firms are full service agencies, meaning they offer direct placement as well as placement on a temporary-to-hire or a temporary basis. Some companies only place people on a temp-to-hire or temporary basis. And others only offer contract employment.

  Most headhunters or executive recruiters only place people on a direct hire basis. There are many hybrids and variations out there.

• Top staffing agencies will have job openings you won’t find anywhere else. At the company I owned we had clients who only hired through us. The hiring authorities trusted that we understood what they were looking for, would screen appropriately, would respect their time and make it easy for them to hire. Which of course we did.

  A few even went so far as to refer people who applied to them directly, back to us for screening. They knew that if the applicant could get through us s/he was worthy of consideration.

  On the flip side, other agencies only have openings being worked by many other recruiters. Some hiring companies will give an opening to any staffing person who calls. Since there are so many recruiters working the positions, it is rare that any of them get much (if any) of the hiring manager's time.

  Generally these easy to get openings are hard to fill for one reason or another. The job function is undesirable, the pay is substandard or the combination of skills and experience sought are impossible to find. Sometimes the work environment is difficult to take. Or the company's hiring process puts up so many road blocks they can't hire effectively.

  My staffing agency wouldn’t touch these openings because we were determined to place the talent we represented into good situations. But there are a surprising number of staffing or temporary companies that do take them.

• There are other important differences between agencies as well. Those include:
  • differences in the way the job seeker is treated
  • differences in the depth of applicant screening
  • differences in what you can expect from the recruiter
  • differences in what is expected of the job seeker.

With all of these variables it can be a challenge to find a staffing company that's right for you. The best way to do this is to first be clear on your individual situation. Then evaluate staffing company or recruiter options based on your own needs.

Placement professionals or placement firms as I use those terms are not the same as career coaches, career counselors, or outplacement companies.

The term ‘placement professional' as I use it is synonymous with staffing person, headhunter or recruiter because these individuals are all striving to find good people to put to work. They do not charge the job seeker for the services they provide.

Career coaches or counselors are generally involved with helping people advance in their career. They may be in business for themselves or they may be associated with an outplacement company. Either way they typically charge the individuals they’re helping for the advice and services they provide.

Bigger companies that have occasion to lay off large numbers of employees may hire an outplacement company to help their former employees find new jobs. The company doing the layoff usually pays for the outplacement services. Job seekers can sometimes pay for additional services out of their own pockets if they wish.

There are other legitimate companies out there who will help with resume writing and similar services. They can be well worth the money. But it is important to know exactly what you're getting for your money. Read the fine print and remember...