A Closer Look on How Staffing Agencies Work

I don't know , man , I can be pretty free to some people . Well , I didn't say you were a good dream , just said you're the dream , so that's what we'll go with . So , Ricky , today we're going to talk about staffing agencies , and now I'm a staffing company owner , you're an HR professional , so let me just get this out of the way . Why do you hate us ?

I hate you guys . I hate you guys . I hate you guys . I hate you guys . I hate you guys . I hate you guys . I hate you guys . I hate you guys . I hate you guys . I hate you guys . I don't know what you're thinking right now . I don't know what you're thinking right now .

As far as I know , I'm the only person who thought of it , because I'm one of the first to say you should never treat a future relationship based on previous experiences right .

I think I've been successful a number of times throughout my career , but it's still a prevalent thought and it's one that I understand at some level , but I also completely reject that idea because we're here to be an asset . We're here to be a resource and an ally of HR , never the adversary .

No , but look , I was overseeing the HR operation for a huge call center in the city north of Orlando , lake Mary Florida , and it's a call center that's in five miles radius of five of the call centers . So we needed to hire 200 people relatively quickly and we were having a hard time . I had a recruitment team .

We were having a hard time picking from the same well as four other businesses were Sure , but the staffing . we just came and made all these promises we have . You're going to need help with the amount of people within the same year away . You're onboarding , ready to get all this ready man . We pulled out all the stops , I think .

I think we got maybe 30% of the people that we were promised and about 50% of them stayed for about half of the time . So it was a huge failure . And , oh , my boss , let me tell you , Pete , I'll take my liquor man , my boss , and before I gave her an opportunity to come talk to me in my office , I went to her office .

I'm like Lena here's what I'll say her name , because she and I get along great . I'm like I messed up . Here you go , here's what happened . So , yeah , I had a big big , a big learning opportunity .

That's the only promise I've ever made , because when people are your product , as as as they are for a staffing company , you don't control a lot of things that happen , but you do control what comes out of your mouth , and so if you promise anything , you better be able to back it up .

But I think today I'd like to spend time on what makes a staffing company valuable to an organization , because we serve a very important purpose as a supplement to what the internal team can do , as you just described , and we certainly don't want adversarial relationships . We want to be seen as a partner Now that word gets overused , we know that .

But it really is a partnership when it's done right , because the staffing company is an extension of the organization . We are representing our clients out in the market , and so if that's not a partnership in the business world , I don't know what is when we're recruiting on behalf of another company .

So let's , let's spend time on that today and just start with the basics of what a staffing agency really is . Now we go by a few different terms depending on who you are , sometimes organizations and times all these phrases are blended together .

Now I could do a whole show and I could talk for an hour about what differentiates a headhunter from a staffing company , from a recruiting firm from a temp agency .

To me , these all have their own time and place to be used , but for this purpose , let's just call staffing company an organization who works on behalf of a third party or on behalf of their client to recruit candidates for a need , be it direct employees or contract employees . So we'll use we'll just use it in that phrase , if that's okay , perfect .

So now , seven years later , owning my own business now and dealing with clients , I see how this , this can be a lifesaver . It can be a lifesaver for small to medium sized businesses who just don't have to ban it .

So even in a candidate's or even an employer's market where you can post and add and receive hundreds of applications we know that happens today . We talked about it the other day on our last podcast about resume reading . But that's the problem . You receive so many applications . You can either ignore them , which doesn't help fill your job .

You try to look at all of them individually . You don't have time to do that not effectively . So the first thing I would say that a staffing company contributes in terms of value is saving time to those who don't have it , because this is all we do All day . Every day , we recruit .

The other thing that we do is provide expertise that you may not have , and if this engineering job that you mentioned , well , you're going to have to get your arms around the criteria for it , understand what a qualified candidate really looks like in that space . Well , if you're an HR professional and you wear a lot of different hats .

It's understandable that you wouldn't have much depth of understanding of these individual roles and so you're starting from scratch , and that's a learning curve . That can be a painful process . Right , and again , add time to the equation where , if you bring in a staffing company , this is what we do all day .

Every day , we take new positions , we work to understand the criteria involved in the hiring process . We look to understand as best we can what a qualified candidate looks like , and then we go . Now the third thing I'll say that it's valuable that we contribute is the tools and resources . This is the world we're in all day , every day .

So , even if you're a competent recruiter in an HR department , a corporate HR department , you still get pulled in lots of other directions . You go to corporate meetings . You have to do all the good corporate citizen stuff , whatever . That is right . You know this world better than I do . Well , we have blinders on right .

Our team in an organization like Four Corner Resources that is a staffing company . This is what we do , right ? This is all we do . We don't get involved in all the other HR stuff , right , that comes along not when things are going well , anyway , we don't .

So there's a lot of efficiencies to be gained and the goal is to deliver as few resumes as possible , as few candidates as possible , as few interviews as possible , to get that higher . And that is what we do , because we screen candidates at a very deep level , only giving you the right one , hopefully as few as possible .

Ideally , that is one in return and get to know that role .

There are companies that only do nurse and desktits , for example . Right , that can be its own specialty . You look in the IT space there are companies that do one specific kind of developer . That's all they'll recruit for and that is their whole business built around that niche . So it depends .

Usually companies I would say for the most part those that aren't that specific tend to stay in a number of places , either like IT , for example , or finance or marketing . Or there's blue collar recruiting firms that do day labor work or construction positions , that's usually . Those don't cross over .

So there is a baseline of expertise that exists in that department or industry generally when you start recruiting , because the important thing from that is that you're not starting from scratch . You're starting with the car already rolling down the road , so to speak , versus having to figure out how to get into first gear , which is where that efficiency comes from .

So staff and companies usually have a large database that they've been in business for any length of time , I think .

For us , we have close to a million resumes in our database right now , with notes on the candidates , with details of what their compensation looks like , what kind of job that they would leave the one that they're in for , what their career goals and objectives are , what kind of commute they're interested in , whether they want to work exclusively , remotely .

So these are all the things beyond the resume that , when done right , the recruiter , the staff and company is already in tune with , and that's why there's such an advantage of speed when it comes to starting from scratch as a corporate recruiter .

Instead of wasting five hours on YouTube trying to figure it out , making five to six trips to Home Depot because I bought the wrong tool , I just sell out the money for an expert to come in and he or she knows exactly when needs to happen , does the job and leaves .

You were competing against all of them Due to professional courtesy . Maybe now you could tell me I'm wrong in this , but generally speaking , you probably couldn't aggressively pursue those employees who were working at those other places . You couldn't call in there , you couldn't go right to their doorstep , so to speak .

But a staffing company can , because we are incited to aggressively recruit on behalf of our clients and we don't have to apologize for that . We don't have to consider those professional courtesies . So that's often an advantage .

I said . It's typically a value that the third party recruiting company can deliver , but not always . I used to be asked all the time when I was selling where do you get your candidates right , where do they come from ? And my answer would be from everywhere . That isn't a client today . That's it . That is where my candidates come from . That's a place .

That's a place Anywhere . That's not my current client . That's where we're recruiting from right , because we are very proactive . What's that ?

We do a lot of finance , we do a lot of marketing , we do a lot of call center , we do a lot of administrative , we do legal , we do HR so pretty much anything you would find in a corporate setting . That's what we recruit for , but our core has always been IT .

clients , but you take the payroll and tax burden for that employee .

So we take care of , we have all the responsibilities that any employer would when it comes to payroll , taxes and insurances and healthcare . So any government mandate and requirement , we have that burden and responsibility .

So that is the nature of the relationship between the contract employee working on the at the client side , or a lot of those are virtual now , of course , and so the way we make our , where our income comes from , is this in our profit is effectively the difference between what we pay the the contract employee , plus taxes and fees that we have to add on to

that , of course , like any employer would , subtracted from the hourly rate that we bill our client , and you know that's where our profit comes from . So we pay a labor rate and we have marked up bill rate and the difference again is how we earn a living .

Because if I have a , if I own a business I own an engineering business and I have a project that I need labor for , right , and I'm only going to use people for about six months , why not go to experts and say , look , I'll pay you extra amount of money , I don't have to worry about taxes , benefits , nothing , and if I don't like how they work , I'll just

cancel a contract . Right , there's no . No progressive discipline possibly would have to follow because they're not an employee . So I know that sounds like it's a lot of money changing hands , but to the size of the business owner , that's the huge cost savings and huge headache that they don't have to deal with .

Not every duration that was expected on the front end is going to come to fruition that way . And no one likes to be fired . We know that no one likes to do the , do the terminating either . Well , you don't have to .

When you , when you're an employer using a contract staffing company , you make the call to the third party , to the staffing company , the staffing company has to handle the terminations .

Right now , for something , Something tells me it wouldn't be quite so popular . I don't know . Maybe I'm wrong .

Because when I worked , when I worked in corporate America , you don't just do that , you've got to go through a process , and that was a huge learning curve for me . I'm like , oh , that's right , this is a contract , you can cancel it for whatever reason .

I didn't want and I'm referring to 2008 , March timeframe when COVID hit , when contractors were getting cut left and right because employees , employees everywhere were getting cut , and so those are .

No matter how many times you do it , it's a call that no one likes to make , but I have to say it is a pro of using a contract staffing company because you don't have to deal with it . It is one less burden on you as an employer when it's just a phone call away without any reason .

Now we still like to give those reasons and , truth be told , as the staffing company in this , we lose out to . So the employee loses their source of income , we lose our source of income as well , and so believe me when I say we don't make a habit of working with companies who would do that regularly . We would avoid them at all costs .

We understand circumstances . What we don't want to get involved with is an organization who doesn't realize the true life impact of that kind of behavior .

When the project's over , the work is finished , when the season ends whether it's a holiday season , a summer season we used to do a lot of recruiting for a company that used to have to ramp up for hurricane season it doesn't matter what the season ends is . When it ends , so does the work , and so a lot of contracts operate that way Now .

Some could be very long , some could be years in duration , but there is no expectation that there will be a I hesitate to use the word permanent , because we know it's not actually permanent but direct employment at the end of the contract period .

On the other hand , there is very often where , rather than hire the employee directly to the company's payroll , they'll Start that individual out as a contract employee through the staffing company again . Sometimes every every variation of this exists .

Sometimes it is a hard and fast time frame , a Three to six or nine or twelve month contract , at which point that individual will be expected to convert to a direct employee .

So in those scenarios the contract employee understands a deal going in and is expecting in those cases to have the opportunity to convert to be a permanent employee and the employer is expecting that individual to To come on their payroll after the contract period .

So the reason to do that you , if in case you were going to ask is it's , it's it's a great on ramp For a number of reasons . It's , you know , call it a try and buy period . That's kind of a crude term but that's used a lot .

Or it's an opportunity for the staffing company to be paid Incrementally rather than in a lump sum , which is what would then be considered a direct hire scenario where right off the bat , the the employee who selected is hired directly on to the employer's payroll , never on the contract staffing companies payroll , and so the staffing company knows cases make their

money With a lump sum fee . That's often a big check to write . That's when we get into these other terms of headhunting , for example , or retain searches . It's a different world than then contract staffing , and so it's .

It's it's sort of a best of all worlds scenario at times for that contract to hire scenario to work and that that happens a lot too , where the situations do change , as we talked about a few minutes ago , and sometimes it's open-ended , right . Sometimes that's con , what I call contract . It may be higher , right , like we don't have headcount .

We think we might at some point . We have the need . Right now we can hire as a contractor and let's see what happens . Where , in those scenarios , there's a lot .

It's a lot more uncertain , there's no Hard and fast expectation on either side , and so what's important in these scenarios is open communication , where what you don't want is for the individual whose livelihood revolves around this . Forget the employer , forget the staffing company .

There's a real person involved who needs to know the deal going in and make a decision accordingly .

So if I'm recruiting you , ricky , and I say , hey , you're gonna work a contract for six months , at which time you'll be able to convert to a direct employee of our client , and we talk about the salary you would be Converted at and everyone's happy , well , you're going to count on that right , and that's going to weigh in to whether you accept the job or are

interested in moving forward In with the opportunity . So you don't want to say it . If you don't mean it , obviously , the other scenario could be though . Hey , ricky , we think there's an opportunity for you to convert to a direct employee . Their client has budget and can foresee work for the next six months .

It's kind of cloudy after that , and so , depending on your situation , that may still sound appealing to you , or it may be reason to to turn down the opportunity if you're gainfully employed somewhere and that's a risk you may not be willing to take . But , man , if there's myriad situations and examples of that .

And so I'll say again , it really just comes down to being open on all sides and communicating accordingly , so nobody is surprised by how things work out .

Sometimes it's an executive search that phrase gets blended in a lot too . So you can have a retained search that's not executive right . You could have an executive search that's not retained , but oftentimes it will go together .

And the way a retained agreement works or a retained search is the employer pays a percentage of the fee upfront for the search to be initiated , and so if the recruiting firm is going to invest a lot of time in that effort more than normal , right , because the candidate pool is small then it makes sense that they would require some portion of the payment upfront

. Because what you run the risk of in the world of contract staffing , everything you do almost , is on a contingency basis , meaning I'm working for free , effectively as a staffing company , until I deliver a candidate , not just that you've hired , but they've walked in the door and they start working .

So if you just run that out , there's a lot of time that can be spent and there's a the likelihood that you're not even successful If your client doesn't end up hiring your candidate . All that work has no income behind it .

So a retained search is one where you ask for a portion of the payment upfront , and that's been really prevalent more so in the last six months as it's been a really tight candidate market . You've seen that happen in for lower level jobs .

There's something that's called recruitment process , outsourcing or RPO , where the organization effectively hands over the recruiting effort to the third party , where they take that on and they really truly act as an extension of their client , representing them in the market .

And then the last thing I'll mention is payrolling , and payrolling is effectively for various reasons at times where there's a known individual who our client wants to hire but they don't have the means of carrying that individual on their payroll .

Maybe it has to do with benefits or compensation or whatever headcount issues they have internally where we as a third party can take on that person as an employee who then works on our client's site . So a lot of different flexible

options . I know that's a lot at once , but I want to do at least put them out there , since we alluded to them earlier .

If no , well , you probably do , because if it means lost revenue or a decreased customer service or putting too much burden on your internal staff who's already working for you , well , there's a big downside to each of those things . So , if you can't keep up with your hiring needs , you need it sounds like a what's the Jeff .

If you might be a Redneck guy , you might need a staffing company if you can't keep up with your hiring or project-based needs . Ricky , if you have a new project that's coming online and you need technical talent to do it that you're not going to need indefinitely , right , once the development effort's done , you don't need those people anymore .

That would be a great reason to reach out . Or if you just don't have the expertise right , there's so many reasons why a position may stay open longer than the business would like for it to , and for any of those reasons , you should ask for help , because you're losing money . If you don't , odds are .

That's such a great way to put it right Back to what we were talking about in terms of we're in this mode all day , every day , and if you're only going to put on this recruiting hat intermittently , you're starting from scratch , and that is going to take a huge investment of time just to catch up . Right , and why would you want to expend that time ?

You wouldn't so . And we haven't even talked about the resources and tools at our disposal as a third party , because this is all our business . Does we're suited for that ? I always use the oil change analogy in these scenarios . You could change your own oil , but you're going to make a mess . You may not do it right , it's going to take you longer .

Is that worth the ? I don't know what is an oil change these days ? Is it , I don't know , like 40 , 50 bucks ? Gosh , I remember when they used to advertise $14.99 for Jiffy Lo , I guess . I guess I don't . What's the organic fuel that has means ? Yeah , well , I drive an electric car , so I don't have to worry about that very much .

But so times have changed . But yes , do you want to change your own oil right and get messy and take time and maybe do it wrong , or do you want to go to an expert who can do it very efficiently and so do you have to hand them the money to do it ?

Yes , but if you value , put a value on how your time would otherwise be spent , you probably would work out in a way where you shouldn't try to do it yourself . Same thing with recruiting . That makes sense . That makes perfect sense . Wow , how do you find them ?

And I know that you're going to get a lot of money and I know that you're going to get a lot of money , and I know that you're going to get a lot of money and I know that you're going to get a lot of money and I know that you're going to get a lot of money and I know that you're going to get a lot of money . No-transcript .

So what are some of the things I need to look for to know this is a legit organization .

So look at that . See who their candidates are , ask what kind of companies they work with today . Do they have testimonials on their site ? Do they have the company logos on their site ? That's a pretty big indication of how well a company is doing and a good indication of how well they could do for you . And then I always recommend going to clearlyratedcom .

Clearly rated is a site that exists to rate staffing companies . They do some other things , but that's one of their core objectives where it is independent . Are you looking it up right now ? I can see that you're looking it up , but clearly rated the way they work is .

They allow candidates and employers who've worked with staffing companies to rate them independently . That's probably as good as any of a source to go to to find out who's good in your market , who's good in your industry . You can slice and dice it that way . Or , if you're listening to this , just use four corner resources . That's probably the safest route to go .

If I'm being completely transparent , here's what I'll commit to anyone listening . If we're not a good fit for you , we'll give you guidance on who is . Because one of the things that we operate based on is we don't take on any position we don't intend to fill . That means we end up turning down a lot of business if it's not a good fit .

Because , if you think back to what I said earlier , most of the time we're working on a contingency basis , so it does us no good to take on a role that's not going to lead to revenue . That doesn't help our reputation , it doesn't help our expenses internally . It's not why we're in business .

I will also back that up by saying don't call a staffing company unless you're serious about using them and ready to hire . Because when we're asked to fill a job , we spend a lot of time qualifying the prospect , the prospective client , to make sure that they're committed and serious .

Because once we say go , once they tell us to go , we're heads down until we produce the candidate . That's how we operate , because we intend to fill every position we take on . Just know that it becomes a very serious thing when you ask a staffing company for their time and effort , because that's the only way they make money .

If you look to help your customer , the sale will come organically . If you look to sell first , you are going to put some people off . You know who was good at that ? Tony Shea . It's the late Tony Shea , because he has since passed away . He was the CEO of Zappos .

Now , this was at a time before smartphones weren't as good as they are right now to find something . So yeah , they'll do that . So he called the 800 number and says , hey , I'm interested in some Nikes . To what size ? So look , I'm in San Francisco . I don't have access to a phone book . I'm looking for a piece of joint . Here's my hotel . Can you help me ?

The guy helped him out .

Maybe not you in particular , because you've worked with us so closely , but other HR professionals may think we operate in a different way than we do . Or maybe I could ask what misconception did you have prior to working closely with us a couple of years ago when we first connected ?

So that's one misconception is that they think that the current recruiter is not working with it . At the end of the day , it's a tool , it's a systems , and if you bring in a third party agency to help out with a class that you need to start in a couple of months , it allows you to recruit it to focus on other things . Again , you're being bought time .

So that's to me that's one of the biggest misconceptions formed from an HR leadership perspective . I don't know if I had a misconception . I'm just being honest here . I just had a bad taste in my mouth from my previous experience .

I'm like where is this magical well of candidates that you have access to that I don't Help me understand . So it's , I think . Again , it's not a misconception , it's more of a learning opportunity of what questions to ask later on . And now I know working with you .

But if you have a hard time producing a sample , you're going to have a hard time doing the job .

Now I expect you to pull a needle out of a haystack ? That's not the business we're in . I would tell you . I would say you have a problem that I may not be equipped to solve . So I would need to dig into that . And I would dig into that by saying , okay , tell me exactly what you've done . Well , I posted it on Indeed .

Okay , that I can note no surprise there , right , that you haven't been able to fill the position . If it's just been a matter of posting job ads , who else did you use as a ? I already tried to use staffing companies . That's a common one that we hear with companies coming to us for the first time .

Depending on who they tell me they've used , I'll make a determination on how good of an effort I think that has been applied . All staffing companies are created equally . So if they give me a reputable company or two and say they've done everything they can . I've done everything I can . Now I expect you to deliver . I'm out right Like that's not .

Again , we're not magicians . I would say you probably aren't paying enough . You probably have a broken process . Your expectations aren't in line with the market . I don't know what's wrong yet , but I know something's wrong and I'm not here to spend my wheels trying to solve it . That's not a reason to use a new staffing company .

That's a reason to check yourself and what you're doing . So use us when you at the forefront of the scenario right . Use us when you've anticipated a problem , anticipate a limitation on being able to fill the positions that you have open with the right quality and the right time frame .

Don't come to us after you've exhausted all your options and expect us to clean up your mess . We're not doing it .

We've been talking about it for years for you to come to class and you talk to my students I'll be there .

So that's really . It starts off the same . The parameters are the same . It's really about what happens at the end of the contract . Do they go on , or do they go on about their way somewhere else , or do they stay on as a direct employee ? So once you get your arms around the concept , I think it makes a lot of it's easy to understand .

And when a relationship's healthy , it's seen that way and it flows that way . There's open and transparent communication and each party's accessible and each party respects the position of the other . So , and I think what I'm just described as any healthy relationship that those things have to be in place for .

But I think the point of all of this is there's a great need at times to call a staffing company , identify when those needs exist . Try to do that as early in the process as possible . Develop relationships that can become partnerships . They don't have to start off that way .

It has to be earned that trust has to be earned in reliability , because that's really what our value is . You have to be able to trust us and rely on us . You experienced the organization that you couldn't trust or rely on .

Okay , I contend that they that's probably because you said it they were too excited with the opportunity without stopping to realize that they have to deliver to make any money . They have to deliver to continue . It's not about getting a contract signed . That's where too many make a mistake early on is hey , I have an opportunity to fill these positions .

Well , that's meaningless right until you actually fill them . So make sure you have a mechanism and a path to actually fill them , not just the potential to fill them , and that's how success happens .

We'll say goodbye so I can figure out who this , the villain of the story , is . So , all right , well , ricky , we did it . We beat the horse on this . I'm sure there's more to come , so long without beating a horse . Well , we , we were due . We were due , so we did not cancel that word yet . But if you have questions , hit us up please .

If you have comments on this show or topics that you want us to talk about going forward , we'd love to hear from you , and that is higher calling H I R E C A L L I N G at four corner resources dot com . Look forward to hearing from you . Thanks again .