Staffing companies saw an increase of $12 billion in sales between 2011 and 2013. Staffing agencies employed an average of three million temporary or contract workers per week in the first quarter of 2015, up 5.5 percent from the same quarter last year.
Clearly, employers are using these companies, but what are they and what advantages do they offer? Should you use a staffing agency?
What are staffing agencies?
A staffing agency is a company that helps other businesses fill positions in their company for a fee. Staffing agencies typically handle:
— Hiring and firing
— Employee’s pay rate and schedule
— Disciplinary or performance issues
— Employment Taxes
What are the advantages of using a staffing agency?
Staffing companies offer numerous advantages to their clients. The first advantage they offer is that they take away a majority of liability your business faces over employment decisions.
Staffing firms are usually co-employers with your business. Being co-employers means that, at the very least, you are splitting liability for employment decisions with the staffing agency.
There are now over 2,000 employment laws that businesses have to comply with when hiring. The second advantage of using a staffing company is that they aid you in navigating all of these laws.
This support helps ensure that your business is compliant with every employment law and statue. The need for compliance support is especially crucial when classifying contract or temporary workers, or dealing with the ACA.
High profile cases involving Uber and FedEx have shown that there is a price to pay for misclassifying employees as contract workers. Staffing firms use their compliance knowledge to reduce risks for employers when classifying employees.
Another advantage of a staffing agency is that they save your business time. Staffing companies are responsible for advertising, recruiting, screening for, and filling the position. With all of these responsibilities, your employees are free to focus on work outside of the staffing process.
Staffing firms also save your company time by dealing with employee issues such as pay rate and disciplinary problems. This time allows your managers to focus on more strategic work.
The final advantage of using a staffing company is the potential cost savings. Staffing firms can save your business money through temporary workers. Because these workers are technically employees of the staffing agency your business is not required to provide them with health insurance or other benefits.
Also, while the salaries of these temporary workers may end up costing more than a regular employee on a per-hour basis, they can still save you money. A temporary employee does not receive a commitment of a 40-hour workweek.
This lack of guarantee means that you can use the worker only when needed, rather than paying him or her regardless of if there is enough work for them to prove worth it.
What are the disadvantages of using a staffing agency?
As with almost any decision, there are both pros and cons. The first drawback to using a staffing firm is that there is still some legal liability. As previously mentioned, most staffing firms are considered co-employers.
Being co-employers means that your business is not 100 percent covered from legal liability from employment decisions made by the staffing firm.
The cost is the second disadvantage of using a staffing company. To make up for a lack of benefits contract workers are typically paid more. Couple this with the fees paid to the staffing firm and, as stated before, you may end up paying more on a per-hour basis for a temporary worker.
Finally, the lack of control is a disadvantage when using a staffing firm. The temporary workers a staffing company hires are not technically your employees.
Without being employees, your business has little control over those individuals. Performance issues are harder to address because your firm can’t provide any disciplinary action.
This lack of control also extends to the hiring itself. The entire point of a staffing company is to hire workers, so you don’t have to. Although, your business is then unable to ensure that the candidate who is the best fit for the role, and your company’s culture, is being hired.
Nobody knows your business as well as you do, and anytime you don’t hire a worker yourself, you run the risk of him or her being a poor fit for your organization.
Staffing firms now employ over three million workers daily across all industries. There is a reason that number has continued to grow these past years.
While there are drawbacks, a staffing agency can offer your business many benefits. Ultimately, only you can decide, using a cost-benefit analysis, whether hiring employees through a staffing company is the best decision for your business.