The good news is that your company has just picked up a lot of new business and is growing faster than you ever anticipated just two years in. The bad news is that you don’t have the staff on board to handle the business.
Your budget for hiring employees on a full-time basis means that’s out of the question. And honestly, adding full-time staff before you know how your sales will look down the road is a risk you don’t want to take right now.
So the next question is, how much do recruitment agencies charge for hiring temporary employees? What are the trade-offs?
If you start hiring temporary employees, can you be sure they’ll provide the same level of experience, skill, and efficiency your full-time staff does?
Let’s take a look at these questions, focusing on recruitment agency costs, pros and cons.
How Much Do Recruitment Agencies Charge?
The simple answer is that most recruitment agencies pay the temporary worker an hourly rate and add a percentage-based fee to that. The actual billing to the client company is the hourly rate plus the fee.
What that amounts to in real dollars varies widely by job and skill level. In other words, temporary unskilled labour – paid less per hour – will cost the company far less than a fully trained graphic designer.
Depending on the skills and demand for different categories of temporary employees, the percentage-based fees added to the hourly rate fluctuate between 25% and 75%.
Here’s a simple example. If the agency pays a temporary employee $10 per hour and charges a 50% fee to the client company, the client company will be paying $15 per hour for the employee.
Using Recruitment Agencies: Pros
The upsides of using a recruitment agency to get the added staff you need right now are straightforward. First and foremost, adding full-time staff is expensive in the short term.
And although your company’s growing faster than you expected, if there is a downturn and you need to reduce staff downstream, that adds a whole other layer of costs.
There’s a general rule that temporary staffing is saving your company money if you are filling the position for six months or less. That seems to be sensible in your situation, right?
You get the help you need now, and you aren’t spending money on recruitment, training, onboarding, or benefits. Other, less obvious savings include:
Reduced Overtime for Your Full-time Staff
Bringing on temporary help has the added advantage of letting you get better control of overtime. Overtime you’re being forced to pay existing staff because you are shortstaffed can be greatly reduced. Your staff is great, but you don’t want them to start feeling burned out either.
Recruitment Agency Pays the Administrative Overhead
Because the recruitment agency handles all of the payroll and bookkeeping for the temporary labour, your HR department won’t have any added work.
No Unemployment Claims: No Hiring Mistakes
With temporary labour, you won’t have to worry about paying for future unemployment claims in the event business slows down – which means layoffs – or because you hired the wrong person.
Using Recruitment Agencies: Cons
Since we’ve been looking at the plus side of temporary workers and recruitment agency pricing models, what are the possible downsides? It turns out there are several which might not be so obvious at first glance.
Beware the Learning Curve
Unless the jobs you are bringing in temporary labour for are very much entry-level, bringing the temp worker up to speed will take time and training.
Full-time staff will, in all likelihood, be spending some of their time getting temporary workers to a point where they are productive, fully contributing team members.
Are You Getting the Best Talent?
Hiring temporary employees from your local market limits your options. You may – or may not – be getting the best talent since it’s limited to your area. On the other hand, hiring full-time employees lets you broaden the search area.
Impact on Clients and Customers
Using temporary workers in customer-facing roles may have a negative impact. First, customers with existing relationships with full-time staff may resent dealing with new personnel instead of the familiar faces they are used to.
Second, even though you know the company is doing well and growing – that’s why you are adding staff after all – your customers might not know that.
Your customers might see staff changes and turnover as just the opposite – indications that the company is struggling or in turmoil.
Bringing temporary employees into the workplace can have a negative impact on your full-time staff for a couple of reasons. First, and most likely, is that they’ll be perceiving the move as a cost-saving measure.
Beyond that, it can also be seen as an added burden since the newcomers are rarely as efficient or well-trained as existing staff.
An Alternative Course of Action
Now that you’ve taken a look at the costs associated with recruitment agencies, the plusses, and the minuses, you are probably wondering if there’s another way to go.
Deciding that you don’t want to commit to adding full-time staff in the immediate future makes sense, but now you aren’t convinced recruitment agencies are the way to go either.
There is another possibility, and that’s outsourcing. In our increasingly connected global world, outsourcing lets your company bring on the talent you need when you need it.
Outsourcing and taking advantage of offshore resources can be a great alternative with significantly lower costs and a significantly higher level of talent available.
The Bottom Line
Now that you’ve got a better understanding of what recruitment agencies charge, you know that cost alone isn’t the only consideration. All of the hidden costs need to be taken into consideration, too.
What are the impacts on your staff’s morale? How is your customers’ service affected? How’s their perception of the company changed?
Are you limiting yourself geographically in terms of available talent? Is there a way to get top-notch talent and save costs?
There is. Outsourcing and offshoring can save up to 70% of labour costs while boosting the morale and productivity of your in-house people. Contact us today to start exploring the possibilities!