A Brief Overview of Staffing and Recruitment Agencies

AdminAssist October 22, 2020
7-minute read
Woman recruiting

The very first staffing agencies sprung out of the wartime vacancies left by military members in the 1940s. Suddenly, there was an alarming number of open positions, and companies needed help filling them with skilled workers. At first, these positions were mostly administrative and targeted women with secretarial, temporary jobs. Today, staffing and recruitment is a much larger business and these organizations assist companies in every industry with their human capital needs.

Here’s a brief description of the history and information surrounding the development of staffing and recruitment agencies.

The Industry Is Large, and It’s Growing Fast

At the moment, the staffing industry is worth approximately $174 billion. That is a fairly enormous chunk of the economy, and it represents more than 20,000 companies in the United States. Only 15 of these companies are publicly traded, which means the rest are smaller or midrange companies. The average annual revenue for a staffing and recruitment agency is about $10 million.

Experts predict that in the next twenty years companies will see a huge increase in the need for temporary workers. The typical 9-to-5 work schedule will soon be a thing of the past. Studies show that gig workers make up 40% of the entire workforce in 2020. Due to economic forces and changing demographics in the workforce, the gig economy is the new infrastructure for businesses of the future. It can make more sense for some companies to bring in temporary outside workers to execute on specific tasks, rather than retain them year-round on full salary.

It’s not only good for companies but it’s good for workers. Many people value flexibility in their professions, whether it means joining different companies or working as a digital nomad. The staffing and recruitment agencies of the future will continue to be relevant, but they’ll need to adapt to the changing demands of future generations of workers and new business models.

Group of people dressed in suits


Changing Semantics Within Staffing and Recruitment

There is a lot of jargon used to describe the same core tasks performed by staffing and recruitment agencies. Many people get confused by the different words in use. Sometimes they change depending on which region of the country you’re in, but mostly they refer to the same central capacity.

A staffing agency is sometimes called a headhunting firm. A recruitment company might also go by the moniker of employment agency. Some companies combine terms, calling themselves staffing and recruitment or headhunting and employment agencies. It’s easy to understand why workers and client companies can get confused! However, they all perform the same tasks, which is placing job candidates into positions within companies.

The specific models for staffing do vary between agencies. For instance, some companies charge a fee upfront to exclusively headhunt for a key vacancy within a client company. On the other hand, some staffing agencies get paid a fee after they successfully place a candidate. Some agencies handle interviewing and assist with onboarding, but not all do.

Recruitment Agencies Work with Excellent Candidates

In the fast-paced environment of a staffing agency, it’s critical that every candidate is highly qualified. There is a common misconception about the types of people who work with staffing agencies. Many people assume that workers choose to find employment through a recruitment agency because they’re unskilled and can’t find work on their own. However, this couldn’t be further from the truth.

The roster of candidates within a staffing agency could include highly skilled professionals who are experts in their field. These people might choose to work with recruitment agencies because they value the flexibility of temporary contracts. It’s also likely that they appreciate the assistance the agency provides when it comes to negotiating the terms of their employment. Many agencies help negotiate the contract and job responsibilities as well as wages.

Laughing business woman in office with laptop


Staffing Is Not Only for Temporary Jobs

It’s true that many staffing and recruitment agencies place people into temporary positions. These are often administrative roles for companies that need office support, but these positions also include short-term contracts that require a specific skill-set to execute.

Additionally, there’s nothing wrong with taking temporary work. A large majority of people reported to the American Staffing Association that they felt that their short-term gigs actually made them more employable. Short-term work can sometimes lead to full-time employment, too. This can be a smart way for candidates to get in the door at a major company and then work their way up to a permanent position.

However, staffing and recruitment agencies are not only for temporary jobs. Some agencies do specialize in temporary placements but it’s not an industry-wide assumption. When working with an agency, make sure to confirm their business model first.

Recruiting Methods Are Changing

As a result of COVID-19, virtual hiring is the newest challenge that HR departments and recruitment agencies are facing down. Without in-person job fairs, it’s far more difficult to impress great candidates and get them on your roster. It’s even more difficult to get a good read on their personality to facilitate good matches with specific client companies.

Staffing and recruitment agencies are now having to innovate new ways to recruit in a fully virtual hiring environment. They are having to spend more time and money on advertising and video conferencing. A large portion of their budget is now devoted to cybersecurity to help protect the information of their clients and workers. Companies are grateful to outsource their hiring to an agency and get another company to take on the burden of virtual hiring.

When it comes down to it, it’s clear that the staffing and recruitment agency model is changing. Nevertheless, it’s equally obvious that this model is here to stay as the gig economy continues to grow and workers seek additional flexibility in their professional lives.

One way that staffing and recruitment agencies can stay competitive is by outsourcing their accounting to another firm. Contact the AdminAssist team to explore how outsourced accounting could help your recruitment agency meet the future with confidence.