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How Do Staffing Agencies Work?

How Do Staffing Agencies Work: A Comprehensive Guide for Job Seekers and Employers


Staffing agencies help match the right positions with the right candidates. If you are looking for a job through a staffing agency, you know understanding how these agencies operate can be important in landing your next role. 

As you can imagine, they serve as intermediaries between employers and job seekers, facilitating the hiring process to streamline recruitment for companies while assisting individuals like you in finding employment that suits your skills and career aspirations. 

Here’s an insider’s look at the functions of staffing agencies and guidance on making the most out of your interactions with them.

What Do Staffing Agencies Do?

Staffing agencies act as a bridge between employers looking for talent and job seekers seeking employment. Their primary goal is to fill job vacancies for companies efficiently while offering candidates opportunities that align with their skills and career goals. 

Here’s a breakdown of their step-by-step process:

1. Employers Contact the Agency

The process begins when a company reaches out to a staffing agency to help fill open positions. Companies typically choose to do this for various reasons, which can range from saving time on hiring to finding highly specialized candidates. 

Once contacted, the agency will work with the employer to understand the job requirements, the type of candidate they’re looking for, and specifics regarding the role, such as the level of experience needed and the salary range.

2. The Agency Creates the Job Description

A detailed job description is important for attracting the right candidates. The staffing agency will draft a comprehensive job listing based on the information provided by the employer. 

This includes the responsibilities of the role, required qualifications, experience levels,any necessary certifications and more. 

3. Candidates Apply

Once the job description is out in the open, job seekers begin to apply through various channels the agency uses, such as online job boards, social media, or the agency’s own website. 

That is where you, as a job seeker, might come across a potential opportunity and submit your application for consideration.

4. Initial Interview

The staffing agency then reviews applications and resumes, filters candidates based on the employer’s criteria, and conducts initial interviews. 

This step is key to ensuring only qualified candidates are passed onto the employer. The process can vary depending on the role, with some requiring multiple rounds of interviews or skills assessments.

5. The Employer Makes the Final Decision

While the staffing agency does much of the preliminary work, it’s ultimately the employer who makes the final hiring decision. 

The agency presents a shortlist of candidates to the employer, who may then conduct their own interviews or request additional information before choosing the right person for the job.

6. Contracts and Pay

For successful candidates, the staffing agency will usually manage the contractual arrangements, which involve discussing and finalizing employment terms, which may include salary, work hours, and job duration. 

Since staffing agencies often hire for temporary, temp-to-perm, or direct hire positions, the contracts will vary accordingly.

For temporary and temp-to-perm roles, the agency typically handles payroll for the employees, including withholding taxes and covering any benefits that the agency offers.

In a direct hire situation, the candidate becomes an employee of the end company immediately, and all payroll functions are handed over to the employer.

Do Staffing Agencies Take a Cut Out of Your Pay?

A common question among job seekers is whether staffing agencies reduce your potential earnings by taking a cut from your pay. The answer is no. 

Staffing agencies do indeed earn money on your placement, but they generally do not take this money directly out of your paycheck. When you work with a staffing agency, they are effectively your employer. 

Thus, the money that the agency earns is part of a predefined agreement between the agency and the employer company, not something subtracted from your wage after the fact.

In a temp-role scenario, the company pays the staffing agency an agreed-upon rate per hour of your work. You receive your salary or wage from the agency, and the difference between what the company pays the agency and what you get paid is the agency’s gross profit margin.

For direct-hire placements, where a company hires you as a full-time employee based on the agency’s referral, the agency typically charges the company a fee based on a percentage of your starting annual salary.

This fee is paid by the company as a separate business expense and is not deducted from your earnings.

It’s also worth noting that the agency’s ability to match you with the right job opportunity should not come at the cost of your market-value compensation.

That is, your negotiated wage or salary should be in line with what the industry standard is for someone with your skills and experience, independent of the staffing agency’s involvement.

Do Staffing Agencies Charge Fees and How Much Does a Staffing Agency Usually Charge?

Knowing how staffing agencies operate can provide clarity and confidence for job seekers when they looking for a job through a staffing agency.

Why Staffing Agencies Charge Fees

Staffing agencies charge fees because they provide valuable services – from sourcing candidates, vetting qualifications, and managing payroll and benefits, to maintaining compliance with employment laws. This reduces the administrative burden on companies and ensures a smoother hiring process.

Fee Structures

The fees charged by staffing agencies vary based on the type of placement they are facilitating. For temporary positions, agencies often charge an hourly markup.

For example, if a company pays the agency $30 per hour for a candidate’s work, the candidate may receive $20, and the agency retains $10. In direct-hire scenarios, agencies may charge a one-time fee, which can range from 15% to 25% of the candidate’s annual salary.

Why Do Companies Use Staffing Agencies?

Businesses turn to staffing agencies for several strategic reasons.

1. Save Time – Fast Hiring

Staffing agencies streamline the recruitment process, rapidly providing pre-screened candidates ready for interviews. They have pools of candidates ready to work, significantly reducing the time-to-hire timeline and allowing companies to fill gaps and respond to market demands efficiently.

2. Reduce Team Workload

Recruiting is a meticulous and time-consuming task. Utilizing a staffing agency alleviates the pressure on a company’s HR department, freeing them from the exhaustive administrative labor of sorting resumes, performing background checks, and scheduling interviews.

This enables the in-house team to focus on their core functions and responsibilities.

3. Access to Qualified Candidates for Specialized Field Hiring

Specialization is another key draw. Staffing agencies often focus on specific sectors, which means they have a better understanding of the roles they’re hiring for and access to a pool of skilled candidates. This is particularly advantageous for specialized fields where the right qualifications and experience are critical. 

4. Provide Flexibility

Employers value the flexibility that staffing agencies offer. Flexibility is a significant benefit for companies looking to manage varying workflow demands. 

They can bring on staff during peak periods and scale back easily as needs change without the commitment of permanent hires. This agile approach to staffing keeps businesses responsive and competitive.

5. Save Hiring Cost

Working with staffing agencies can also lead to cost savings. Hiring full-time employees involves costs beyond salary: benefits, taxes, and resources devoted to the hiring process itself.

Staffing agencies absorb many of these costs and provide a more predictable expense model, especially for temporary or contract positions.

6. Reduce Risk

There’s inherent risk involved in hiring, particularly with permanent staff. Employers can mitigate this risk through temp-to-perm arrangements common with staffing agencies, allowing them to evaluate employees on the job before offering a full-time position. 

Additionally, because staffing agency workers are technically employed by the agency, the client company is insulated from many of the liabilities and issues associated with workforce management.

Is It Bad To Get a Job Through a Staffing Agency?

Seeking employment through a staffing agency has some misconceptions associated with it, which can make you wonder if it’s an unfavorable route. However, staffing agencies are an excellent resource for job seekers.

1. Networking Opportunities

They can offer networking opportunities that might not otherwise be accessible. A staffing agency can connect you to employers and industries you may not have considered or had access to on your own. 

They have established relationships with multiple companies, which means using a staffing agency can open doors to several potential employers at once.

2. Variety of Opportunities

Staffing agencies provide a variety of job opportunities, from temporary and part-time gigs to full-time positions. This diversity allows job seekers to try different roles and industries, which is particularly beneficial if you’re unsure about your career direction or looking to gain broader experience.

3. Possible Path to Permanent Employment

Many temporary jobs can lead to permanent positions, making staffing agencies a valuable stepping stone to full-time employment. It’s a chance to showcase your skills and work ethic directly to an employer who may be looking to hire long-term.

4. Support and Guidance

Staffing agencies can be an invaluable source of support and career guidance. They want you to succeed—your success is their success—and they can provide resume advice, interview coaching, and constructive feedback throughout your job search and employment.

How To Work With a Staffing Agency

Working effectively with a staffing agency can enhance your job search experience and increase your chances of finding a satisfying job. Here’s how to make the best out of this partnership:

1. Know Your Needs

Before approaching a staffing agency, it’s important for you to clearly understand what you are looking for. Are you seeking temporary work, a permanent position, or something in-between like temp-to-perm opportunities? 

Knowing your career goals, desired salary, work schedule, and the industries or types of roles you are targeting will help the agency find the most relevant opportunities for you.

2. Find the Right Agency

As you can understand, different agencies specialize in different industries and types of placement. Research agencies that align with your career interests. 

For example, if you’re a healthcare professional, look for agencies that specialize in medical placements. If you’re seeking creative work, find agencies known for their connections in the arts, media, or marketing sectors.

3. Check the Legal Aspects

When you work with a staffing agency, you essentially become their employee. Therefore, you need to verify that the agency adheres to all employment laws and standards. This will ensure that you’re protected under labor regulations pertaining to overtime, benefits, and workplace safety.

4. Be Honest

Honesty is key when working with a staffing agency. Be upfront about your experience, qualifications, and what you want from your next role. The more transparent you are, the better the agency can serve you. 

Meanwhile, if there are certain job aspects that you are not willing to compromise on, such as location, hours, or minimum salary, make these clear from the start. 

Your candidness helps prevent misplacements and ensures the positions you’re considered for will truly align with your expectations and needs.

5. Update Your Resume and Skills

A staffing agency can only work with what you provide. Make sure your resume is up to date with your latest job experiences, skills, and accomplishments. 

Furthermore, it’s a good idea to continually update your skills, especially those that are in high demand. Staffing agencies often provide skill assessments and may even offer training opportunities, so take advantage of these to improve your marketability.

6. Practice Interview Skills

The staffing agency will likely conduct an initial interview with you to assess your fit for potential roles. Treat this as a real interview. Practice answering common interview questions and present yourself professionally. The impression you make on the staffing agency is important, as they are your first link to future employers.

7. Keep Communication

Maintain open lines of communication with your staffing agency. If your employment status, availability, or job preferences change, inform your agency contact immediately. 

Good communication also includes responding promptly to agency inquiries and checking in regularly for updates on your job search status. Keeping the agency informed of your current situation can make the difference in being considered for a position that has just opened up.

With these tips in mind, hope you can form a productive working relationship with a staffing agency. Whether you’re in between jobs, looking for your first job, or seeking a career change, a staffing agency can provide valuable assistance on your employment journey.


As a job seeker, understanding the mechanics of how staffing agencies work, from resume submission to final placement, is just the beginning. It’s equally important to actively engage in the process, communicate effectively, and utilize the agency’s resources to your advantage. 

So, whether you’re just starting out, facing a career transition, or seeking that dream job, staffing agencies can be a pivotal partner on your employment path.

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