Staffing agencies provide companies with a way to temporarily fill staffing needs, and make money by charging fees to clients. There are various ways staffing agencies can make money, including through the placement of temporary employees, direct placement staff, and flat-fee staffing. Staffing agencies can also make money through retained searches and discounts.
What Is a Staffing Agency?
A staffing agency is a company that provides companies with temporary employees to fill staffing needs, such as for temporary holiday season roles or new team openings.
How do Staffing Agencies differ from Temporary Agencies?
Staffing agencies are typically larger than temporary agencies and offer a wider range of services. Staffing agencies also tend to be more expensive than temporary agencies.
Staffing agencies typically have a variety of expenses, including the cost of recruiting and staffing employees, the cost of office space and equipment, and the cost of marketing and advertising.
Partnering with Temporary Agencies to Make Money
Staffing agencies have found that a natural partnership exists between them and temporary agencies. Many staffing agencies partner with temporary agencies to increase their profits. Temporary agencies typically charge lower fees than staffing agencies, so by partnering with them, staffing agencies can make more money while still providing quality service.
Ways Staffing Agencies Make Money
In addition to partnering with temp firms, there are a number of ways staffing agencies can make money.
One way staffing agencies make money is through the placement of temporary employees. Temporary employees are employees who are hired for a short period of time, often to fill a staffing need that has arisen unexpectedly. Staffing agencies typically charge a fee for the placement of each temporary employee.
The fee is typically a percentage of the employee’s salary. For example, if a staffing agency places a temporary employee who makes $50,000 per year, the staffing agency may charge a 10% fee, or $5,000.
Direct Placement Employees
Another way staffing agencies make money is through the placement of direct placement employees. Direct placement employees are employees who are hired to fill a permanent position within a company. Staffing agencies typically charge a higher fee for the placement of direct placement employees than they do for the placement of temporary employees.
Flat Fee Staffing
A third way staffing agencies make money is through flat fee staffing. Flat fee staffing is when a staffing agency charges a one-time fee for the placement of an employee. This type of arrangement is common in industries like tech.
Many staffing agencies work on a flat fee basis, charging a set amount of money for the placement of an employee. This can be a good option for companies who only need staffing services for a short period of time, as it eliminates the need to pay an agency fee every time an employee is placed.
Retained searches are when a staffing agency is hired by a company to fill a specific position within the company.
Examples of retained searches include:
- Retained executive search
- Retained legal search
- Retained technical search
- Retained medical search
The staffing agency will typically charge a percentage of the employee’s salary as their fee. This type of arrangement is common in industries such as executive search and law.
Another way staffing agencies make money is by conducting retained searches. In this type of search, the staffing agency is hired by a company to find a specific employee and they are paid regardless of whether or not the employee is actually placed with the company. This can be a lucrative option for staffing agencies, as they are able to charge a higher fee than they would for other types of services.
Staffing agencies can also make money through discounts. Discounts are when staffing agencies offer reduced fees to clients that use their services regularly. Discounts are often given to companies using staffing agencies to fill multiple positions or to fill positions on a long-term basis.
Start a Profitable Staffing Agency
Staffing agencies provide a valuable service to both companies and employees. They help companies fill staffing needs quickly and efficiently, and they help employees find jobs that match their skills and interests.
There are a number of scalable ways staffing agencies make money. The most common methods include placement of temporary employees, direct placement employees, and flat-fee staffing.