Magazine article HRMagazine

The Art of Choosing a Staffing Agency

Magazine article HRMagazine

The Art of Choosing a Staffing Agency

Article excerpt

Due diligence can help you develop effective partnerships with vendors.

Using temporary workers should involve more than just calling an agency and asking the recruiter to send someone over. In evaluating vendors, get answers to the following questions:

What's in the markup? Because the business is competitive, prices can be negotiated. Ask agencies to divulge what costs, such as insurance and benefits, go into the markup, says Gary Campbell, SPHR, director of human resources at Johnson Health Center in Lynchburg, Va. And make sure you know the going rates in the marketplace. "Markups can range from 30 percent to 40 percent to as much as 150 percent. As a rule of thumb, look very carefully at anything over 50 percent," he says.

Kristy Harris, account manager at NCW Resources LLC, a staffing agency in Rockville, Md., says markups for temp or temp-to-perm placements typically range from 45 percent to 60 percent. The fees for finding a direct hire can be 30 percent or below, she adds.

How long does it take to deliver a qualified candidate? "Benchmark against your own data," advises Rebecca Callahan, president of SourceRight Solutions in San Diego. "If it takes you 70 days, the staffing company should produce in 60."

How rigorous is recruiting? Know how the agency goes about finding and attracting candidates. "We screen 10,000 people, interview 10 percent and wind up hiring 1 percent," says Aaron Green, president of Boston-based Professional Staffing Group. Ask if recruiters are tied in to social media.

Does the agency conduct appropriate screening and background checks? Depending on your locale and type of workers, the level of screening and depth of background investigation will vary. Find out what the recruiters do and how they go about it. If they're recruiting immigrants, do they have documentation? Are they using E-Verify? No matter how good a company is at screening, some bad eggs invariably wind up in the nest. How does the agency handle these situations? When a temp has "committed a crime and I look back at the staffing firm's files, I discover that in many instances they didn't do their job," says attorney Joel Klarreich, head of the Corporate and Staffing Group at Tannenbaum Helpern Syracuse & Hirschtritt LLP.

What does the agency consider adequate longevity? Turnover remains a major threat to employers' continuity and efficiency. Find out the agency's annual attrition rate for the people it places. Is it higher or lower than the industry average of 277 percent?

What is the hire-to-interview ratio? Find out how many interviews clients conduct for particular types of jobs. This rate will vary depending on the position.

What is the temp-to-perm ratio? Find out how often tempto- perm placements bridge to employment with clients. Tracy Menefee, HR administrator at Real Time Resolutions Inc., a mortgage collector in Dallas, says a good ratio for her company would be 80 percent.

Does the agency have metrics to show client and employee satisfaction? "You're not doing your due diligence if you don't ask them how they do with their client scores," says Eric Gregg, chief executive officer of Inavero, a research firm in Portland, Ore. "Past performance is a good indicator of future performance. If they've thrilled 75 percent of their clients in the past, they should be able to thrill you."

Agencies without satisfaction data may offer client testimonials, but Gregg warns against giving these too much weight. …

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