Inside a Staffing Agency and How it Works (from a recruiter’s perspective)
As a prior staffing firm owner, temporary employees were always considered first. When meeting with a potential client, the first question I would always ask myself was always, “what can we pay per hour?” Some clients cared what we paid our employees, others did not. Some told us what to pay, while others asked what the best pay rate would be for each role. The intelligent clients understood “you get what you pay for” and ensured their bill rate afforded a good pay rate. This is why our pay per assignment varied quite a bit, and should. The pay rate we offered was based on the employee’s experience and the client’s bill rate. Some staffing agencies pay the same rate to all employees, regardless of either.
I looked to pay as much as possible to our employees. When the employees assigned to work for our clients were pleased, they typically performed well which satisfied our customers. Every staffing agency will have a client who will refuse to allow a bill rate that provided enough room after expenses, to offer a decent pay rate. We knew what came with servicing these clients. A lot of turnover, re-training by their staff, constant recruiting and onboarding and frustrated supervisors. If we took a client onboard in this situation, our goal was to quickly earn their trust that we could provide the service required. If we proved our value (this didn’t happen overnight) we could then increase our bill rate to increase the employee’s pay rate. If we couldn’t, we would invariably discontinue servicing the client.
Most staffing firm’s don’t enjoy a high net profit. Those who think the difference between the bill rate and the pay rate is agency profit, are far off the mark. Most people are completely unaware of all the employer-related expenses a staffing firm is responsible for. Federal and state taxes, (many have local taxes as well), unemployment, worker’s compensation, meeting the ACA health insurance requirement (still required for employers, but not employees) and we offered holiday and vacation pay. This doesn’t include the cost to advertise and recruit, skill test, drug test, reference check and onboard. All these costs are directly related to sending an employee to a client to work and doesn’t include overhead such as office rent and staff payroll.
Another cost and huge focus of a staffing firm is attrition. The number one item most recruiters are looking for in an employee is honesty. The second? Reliability. Temporary employees should be completely honest and decline assignments they don’t want, rather than accept work and either don’t complete or end up not liking a position. Of course, employees won’t always know if they don’t like a role until they begin work. Honestly communicating preferences with recruiters is something all employees should be asked to do. If an employee accepts an assignment they end up really not liking, if they feel free to discuss this with their recruiter then replacement rather than walk-off odds are much better. And, you can continue to work with an employee you can trust to communicate what is going on. Employees who give recruiters a little time to save face with the client and successfully replace them, even better.
Obviously, employees are not an asset without skill and experience. But, without integrity and ethics, conscientiousness and the ability to be trustworthy, they’re not a good resource either. On the other hand, if your recruiters get upset when contract employees decline work, your temporary staff will find another agency to work for. Employees don’t have to accept any work assignment they don’t want. Remember, that’s one of the benefits of working for a staffing firm, being able to work as desired.
Managing thousands of clients, applicants and employees is no small task. COATS Staffing Software has been achieving this mission for 24 years. By listening and learning from our staffing agency clients, we constantly upgrade the latest version of our software with new features that apply across the board to all users.
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