Staffing firms: an overview of services offered

By Aaron Green, 4/23/2007

In response to my On Staffing column, I have received numerous questions about the different services that staffing firms provide. The staffing industry has its own jargon and acronyms which can be confusing to those who don't work in the field every day.

To help demystify these terms and services, here is an overview, in alphabetical order, of the list of services that staffing firms offer:

Contingency Search - If you are seeking to hire someone for an open position, you may choose to perform a contingency search with a staffing firm. Staffing firms are paid only for successful searches; payment is typically a percentage of the candidate's starting salary. You should expect a refund of the fee or a replacement if the candidate does not last for a specified period of time at your company.

Contract Recruiting - A company needing to hire a large volume of employees may choose a contract recruiter. Under this arrangement, a human resources professional is hired from a staffing firm to recruit for a client company. The contract recruiter will work at the client company, under the direction of the client company. Typically the staffing firm and contract recruiter are paid based on an agreed hourly rate regardless of the number of candidates sourced and hired for the client company. Contract recruiting is often used as an alternative to contingency searches and it is also useful if the company is short-staffed in human resources and can benefit from having a recruiter on board quickly.

Freelance and/or Contract Help - This is the same as temporary help, but designers, technology professionals and other high level employees tend to refer to themselves as freelancers or contractors.

Managed Services - Under this type of arrangement, a client company will outsource an entire department or function (eg, call center or mail room) on a continuing basis. This service works well when a company does not want to manage a specific area of business and can find a staffing firm that has some particular expertise in the area managed.

Offshore Outsourcing - This is also called "offshoring." When using this type of staffing, the organization outsources certain jobs or tasks to overseas companies. This type of staffing is attractive because it offers a cost savings of up to 50% as compared with salaries in the United States. Offshore outsourcing also offers employers a greater availability of candidates who have in-demand skills.

On-site management - This refers to an arrangement where one or more of the staffing firm's internal employees will work at the client's office. The staffing firm may provide temporary staffing, contingency search, or any number of other services. This type of arrangement is desirable in situations where the client company has a high volume of recurring staffing needs and in situations where a large amount of coordination with company hiring managers is desired.

Outplacement - A company will hire a staffing firm to help manage employment separations and/or to provide assistance to former employees whose employment has been terminated. Companies care about how separations are handled because separations impact how the company is viewed by former employees, current employees, and the wider community in which the company operates.

Payrolling - With this sort of employment arrangement, a client company will identify a candidate but will ask the staffing firm to put the person on the staffing firm's payroll. You may see this service used for summer or casual labor, for bringing back a retiree or former employee, for hiring a consultant where a 1099 situation does not fit, or for situations where budgets or company policy do not allow for a full-time permanent hire.

Professional Employer Organization (PEO) - This is also referred to as "employee leasing" because the client company leases its employees from the PEO rather than having them on their own payroll. The PEO assumes responsibility for payroll, benefits, and other human resource functions. This service works well for companies that don't want to manage administrative functions internally or that could benefit from pooling insurance or other benefits.

Recruitment Process Outsourcing (RPO) - RPO means that the entire process of recruiting for a particular skill level is performed by a staffing firm. For instance a company might outsource the recruiting for support staff while continuing to recruit in-house for managerial and core staff members. This allows the company's managers and human resources staff to focus their efforts on the company's core business while also ensuring a supply of high-quality staff members for all positions.

Retained Search - This type of search is similar to a contingency search except that you "retain" the staffing firm by paying some or all of the fee before the agency begins looking for candidates. In general this service is more prevalent when recruiting higher-level candidates (eg, executive positions). The advantage of retained search over contingency searches is that the staffing firm is more committed to the search. The disadvantage is that you must pay before the agency begins searching and you will not likely receive a refund if you find a candidate on your own.

Temporary Help - This is what comes to mind for most people at the mention of staffing firms. With this type of service, a staffing firm recruits, screens, and hires employees in order to build up a large pool of qualified employees. These employees are assigned to the staffing firm's clients for temporary periods of time and for duties as varied as mailroom coverage to executive level tasks. Most employers opt to use temporary staff because it offers them flexibility and access to talent.

Temporary to Hire - This is also commonly referred to as "temp-to-perm." For companies, it is similar to hiring temporary help except that the client will hire a temporary employee with the intention of evaluating the candidate for consideration as a member of their permanent staff. The advantage is that a client company can try out the candidate before hiring him or her. The disadvantage is that the candidate may continue his or her job search and accept a permanent position before you have made a decision to hire.

This list should help you to brush up on the staffing industry's buzzwords and trends while also helping you to see the variety of options that you have available. Please keep in mind that staffing firms tend to specialize in one or more of these services so don't be surprised if your firm does not do everything on the list.

For more information, see my previous article "Working effectively with a staffing agency".