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How to Evaluate and Hire a Staffing Firm

In today’s challenging economy, smart companies are utilizing quality staffing firms to implement a flexible workforce in order to improve operational and business agility. According to statistics from the American Staffing Agency, more than three million temporary and contract employees work for America’s staffing companies during an average week. During the course of a year, America’s staffing companies hire nearly 15 million temporary and contract employees. According to a recent survey by CareerBuilder, fifty-one percent of employers plan to hire temporary or contract workers in 2017.

Companies are using staffing firms for more than just finding temporary and contract employees, however, as these firms can also provide a number of important services to organizations. The main types of positions that staffing firms help companies fill are:

  • Temporary Staffing – a contract assignment that has a set start and end date determined by the customer. These types of workers remain employees of the staffing company, work on the staffing company’s payroll, and typically receive benefits from the staffing company for the duration of their contract.
  • Temp-To-Hire – a temporary contract hire, as described above. When the contract is up, the company has the option to officially hire the employee for a permanent position and transfer them onto their payroll.
  • Direct Hire – a permanent position in which the employee is hired into the company and works on the company’s payroll. In this case, the staffing firm acts solely as a recruiter.

In any industry, an effective partnership with a quality staffing firm can be a cornerstone of your success. A good staffing firm can help you find the optimum workforce solution for your company quickly, giving you access to talented employees when and where you need them. How do you evaluate and select a staffing firm that can best serve your needs and become a partner in your success? The first step is making sure you understand and define your staffing needs as precisely as possible, and communicate these needs clearly to the potential staffing firm partners.

Defining Your Staffing Needs

Does your business just need short-term help during a busy period, or are you looking for a full-time employee? Do you prefer to hire candidates based on education or experience? Are there specific personality traits that work best in your company culture? Do you have a special project that needs to be staffed with highly skilled workers today or in your future? Before you start the search for a staffing firm partner, a company brainstorming session is in order to gather as many defining details of your staffing needs as possible.

A staffing firm wants to help you find the best employees for your organization, but they can’t do that unless you clearly communicate to them information about the following:

  • The kind of positions you are trying to fill (Temporary, Temp-To-Hire, Direct Hire) now and into the foreseeable future
  • Comprehensive job description – responsibilities, required skills and desired skills
    Business policies – hours, dress code, etc.
  • Information about your corporate culture that will help the staffing firm find an effective fit
  • Once you have collected all the information that defines your staffing needs, it is time to perform due diligence in evaluating and selecting a quality staffing firm partner.

Selecting the right staffing partner is critical, as the firm you hire will be responsible for staffing your workforce, and effectively be representing your company with prospective candidates. Below are some questions to ask that will help you identify the staffing firm best suited to meeting your needs and supporting your companies’ success.

Evaluating Prospective Staffing Firms

What are the firms’ service offerings?
You want to make sure that the staffing firm’s service offerings will meet your needs. Do they offer the types of positions that you are looking for (Temporary Staffing, Temp-To-Hire, and/or Direct Hire)?

Does the staffing firm specialize in any particular industries or positions?
The more specialized the position you want to fill, the more important it is to work with a specialized staffing firm. For example, if you need to fill scientific positions within your organization, its best to work with a staffing firm that specializes in scientific staffing within your industry, as opposed to a general firm that offers candidates in many different fields. Specialized staffing firms generally have a larger pool of available, qualified candidates to choose from in the field(s) you are seeking to hire. Specialized firms will also have a better sense of the job seeker marketplace in your industry, along with the ability to effectively evaluate the experience and skills of potential candidates. These firms can give you an edge in locating hard to find talent before your competitors do. You want a staffing firm that understands your industry and work environment, and can send you targeted, highly skilled candidates quickly who will hit the ground running. Additionally, the firm you choose should have the industry expertise to serve as a strategic staffing advisor for your company. Quality specialized firms can effectively act in the role of consultant to you, helping you develop a better overall staffing strategy by keeping you abreast of industry trends.

What are the qualifications of the firms’ recruiters?
You will want to perform due diligence with a staffing firm that claims to have expertise in a given industry or field. Ask for a list of companies in your industry that the firm has filled positions for. Does the firm attend your industry events? Do the firms’ recruiters have backgrounds in the field in which you are hiring? Do they have work experience in your industry? Do they attend trade specific events within their field of expertise to stay up on changing trends? If the recruiter trying to staff your IT department doesn’t have any experience recruiting or prior training in IT, they will not be as effective connecting with and vetting your quality candidates for you.

What is the tenure of the firm’s recruiting staff?
There tends to be a correlation between a firms’ recruiter attrition rate and their performance in delivering quality candidates to you. The best recruiters have been in their position long enough to develop a high level of expertise about your industry, as well as good relationships with a large pool of qualified candidates that they can send your way on short notice. Additionally, you’ll want to work with a firm that has low turnover in their internal staff so you can build a long-lasting partnership. The longer a recruiter works with you, the better they get to know your company, and the better they will be able to match candidates to your company culture as a result.

Does the staffing firm offer its contract employees a good pay rate and a quality benefits package?
The staffing firm determines the pay rate and benefits offered to contract employees. If you are seeking to hire contract workers, you’ll want to make sure the staffing firm offers their contract employees a good pay rate and a quality benefits package which includes Affordable Care Act (ACA) compliant health insurance. The better their compensation/benefit plan, the higher caliber talent they will attract. When hiring contract workers, you’ll also want to make sure that the staffing firm is carrying general liability insurance, workers’ compensation insurance, and has a new hire process in place that protects you by providing all essential training mandated by the department of labor.

What steps does the staffing firm take to understand your needs?
A good staffing firm will want to know as much detail as possible about the positions you are trying to fill, your company and day-to-day operations. Is the staffing firm you’re vetting asking these questions of you? Beyond this, you’ll want to know whether they will do their homework and take the appropriate actions necessary to fully understand your needs. Will the recruiter invest the time necessary to understand your business and qualify your requirements? Will your recruiter visit your location to get a feel for your corporate culture, talk with the department managers who are seeking to hire, and learn important details about the positions that need to be filled? Additionally, are they attentive and inquisitive during their visit? If not, how can you expect them to be attentive once they are working for you? Find a staffing firm that treats your organization like a business partner instead of just a client.

Is the staffing firm transparent about their fees?
The lowest priced staffing firm is not necessarily your best option – make an informed decision based on value, not necessarily just cost. According to a recent survey done by CareerBuilder, 27 percent of U.S. employers reported a single bad hire cost their company more than $50,000. The cost of a bad hire will far outweigh the cost of working with a high-quality staffing firm that will send you the right candidate the first time, every time. That said, if a firm is higher in cost than its competitors, they should provide a value proposition that justifies the cost. You’ll want to get the details on exactly what is included in the firm’s hourly bill rate (for contract employees) and placement fee (for direct hires). Have a good understanding of all costs involved before you make a final decision on a staffing firm.

What is the depth of the firm’s recruiting process?
A staffing firm that only utilizes simple online searches to source candidates is not worth your money. You want to work with a firm that sources both active and passive candidates through multiple channels (advertising, employee referral programs, job fairs, online searches, job postings, social media, blog posts, etc.) and is therefore able to send you quality candidates that you could not find yourself. The firm should have an extensive database of available candidates to help you find the right person for the job quickly. Also, consider whether the firm has a strong national, or even global, network to help you source candidates outside of your local region.

What kind of screening process does the staffing firm use to qualify candidates to ensure that they meet your requirements and fit your company culture?

You want to work with a staffing firm that takes pride in the quality of candidates that they send to you. Be sure to ask about the process its recruiters will use to select the best candidates for your open positions. Is their candidate recruitment and screening process consistent, yet customizable to your requirements? What kinds of background checks and references do they use?  Most staffing firms will give candidates initial skills test to determine what kind of skill sets they have. Ask to review these tests to see if they are adequate for the types of positions you have open. You’ll also want to know if the staffing firm conducts drug testing. Finally, if you are seeking a Direct Hire position, you’ll want to know to what extent you can participate in the selection process.

What kind of metrics does the firm use to track their success?

Any quality staffing firm will track a number of key quantifiable metrics to measure their success. Ask to see these numbers compiled for the last year – if you are not impressed by what you see, look elsewhere. Some of the metrics that quality firms use to track their performance include:

  • Customer Satisfaction Score – the percentage of the firm’s customers that report being satisfied with the firm’s services.
  • Temp-To-Hire Conversion Percentage – the percentage of Temp-To-Hire employees that successfully convert to permanent employees.
  • Average Contractor Retention – the average number of months on the job for the firm’s contract employees.
  • Time to Fill – the average time it takes the firm to fill an open position with an appropriate candidate.
  • Percent Interviews on Resume Submissions – the percentage of candidates submitted by the firm to their customers that received an interview.
  • Percent of Placements on Interviews Completed – the percentage of interviewed candidates that were successfully placed in a position with a customer.

In addition to reviewing the staffing firm’s performance metrics, you’ll also want to gauge whether or not contract employees working for the firm are happy by reading testimonials and online reviews. Dissatisfied employees are much likely to quit their job early, costing you time and money. A quality staffing firm will maintain consistent communication with both the contracting employee and their manager post-placement to help facilitate both contractor retention and job performance.
Can the staffing firm provide you with references?
Has the firm filled positions for your competitors? Before making a final decision, ask for references from your industry, and then call them. An outside opinion can provide the information you need to make an informed decision.

Is the staffing firm willing to do a test run?
Ask the firm to send you resumes for a position you are seeking to fill as a test run. This will allow you to see the quality of candidates that the firm can deliver.

In today’s changing and challenging economy, many companies are seeking to outsource some or even all of their HR department to a quality staffing firm in order to create a more flexible workforce and reduce costs. In order to be successful in creating an effective partnership with a staffing firm, organizations must clearly define their staffing needs, and perform due diligence in selecting the right firm to meet those needs. It’s important that you trust the staffing firm you choose enough to give them access to your company at the level they need to understand your company culture and hiring needs.

The success of any partnership is based on valuing each of the parties involved – the customer, the staffing firm, and the candidates. When this win/win/win philosophy is in place, forming a partnership with a quality staffing firm to realize a flexible workforce strategy can make a valuable contribution to your organization’s operational agility, efficiency and profitability.

About the Author

Mary Schwans is the Managing Director of Astrix Technology Group’s Staffing Division and is a recruiting expert in the Scientific field. She joined Astrix in 2006 where she has been responsible for the startup and success of the division by growing it from its infancy into an emerging leader in the scientific recruiting field. Ms. Schwans has a strong technical background. She graduated with her BS in Biology from the University of Minnesota in Minneapolis and first began her career as a scientist in academic laboratories. Ms. Schwans is also part of several Scientific organizations and has held board positions with ALMA.