What are Temp Agencies (And How Do They Work?)

What are Temp Agencies? 

Temporary employment agencies, often referred to as temp agencies, connect contract workers with employers who are looking to fill certain positions for a set amount of time. 

This helps employers because they’re able to quickly review and assess available talent so they can fill open positions, particularly if they need to hire workers for short-term projects. Temp agencies also provide a lot of HR services such as recruiting, onboarding, and training, which can be particularly valuable for business leaders looking to scale their team. 

Additionally, temporary staffing agencies help workers find positions they’re well-suited for and help them through the hiring process. By working with a temp agency, people looking for a new position will gain access to dozens of open positions depending on their skillset. It also provides flexibility for those who want it in a job or opens the door for more permanent positions. 

Temp agencies can help employers fill many different roles, but are often used to fill openings in: 

• IT
• Administrative work 
• Healthcare 
• Marketing and Creative
• Finance
• Education

Looking to hire an HR recruiting company? Check out Clutch’s list of recruiting agencies and filter by industry, cost, and location to find your perfect partner.

How Do Temp Agencies Work? 

When a business hires a temp agency, they pay the agency directly to fill specific roles. Once they’ve selected a temp agency to work with, they will outline a contract that includes what roles will be filled as well as payment terms. 

This contract will include everything from the staffing agency’s duties and responsibilities for filling these positions to what services the temp workers will provide and how many hours a week they will work.  

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The temp agency is then responsible for recruiting, screening, interviewing, and hiring people for the positions outlined in their contract. Often, they already have workers on their roster who are qualified to fill certain positions and they may not need to recruit new workers. 

People looking to find new jobs will apply through the temp agency. Then the temp agency will review their resume and conduct an interview to assess their skills and qualifications. Assuming that the candidate is qualified, the temp agency will hire that person directly. 

Even though the workers provide services for the client, the temp agency provides benefits such as health insurance and handles administrative HR work such as payroll and taxes. 

Pros and Cons of Hiring a Temp Agency

Not sure if hiring a temp agency is right for your business? Learn more about the pros and cons of hiring a temp agency to determine whether or not this hiring strategy suits your needs. 

Benefits of Hiring a Temp Agency 

1. Easy to scale workforce as needed
2. It takes less time to fill positions
3. Trial periods allow businesses to test new employees
4. Save money on benefits

Easy to scale workforce as needed

Many businesses will hire temporary workers when they are working on short-term projects because it allows them to scale their team as needed. 

Sometimes, businesses need more staff in order to deliver a product on time, meet demand, or simply to add skills that their internal team doesn’t already have. Yet, when a project ends or demand decreases, these companies may no longer need these employees. 

Contracting with a temp agency is valuable in these instances because they can create a contract that ends when the project is complete or they no longer need additional support.

It takes less time to fill positions

The hiring process can be lengthy. Companies have to advertise open positions, filter through resumes, create a shortlist of candidates, interview them, run background checks, and eventually onboard them. It is particularly difficult to hire a whole team. If a company needs to hire more than one or two new employees, it can take months to get an entire team onboarded. 

Because many temp agencies already have a roster of qualified candidates, they can provide an entire team faster than most businesses can recruit a single person. Consequently, companies can start on projects sooner and complete them in a shorter period of time. 

Trial periods allow businesses to test new employees

Most temp agencies allow their clients to test out workers. If they aren’t satisfied with a particular employee, they can let them go and request someone new to fill their position. This ensures that companies end up with a service they’re happy with and a high-quality product. 

Save money on benefits 

The temp agency pays for the benefits of their employees — such as health insurance, retirement, and PTO — so their clients don’t have to. This can save companies on overhead costs in the long run. 

While some critics argue that this creates an opportunity for employers to take advantage of their workers, a well-established temp agency will ensure that their employees receive appropriate compensation. 

Drawbacks of Hiring a Temp Agency 

1. Less incentivization than full-time employees
2. It may not be the cheapest hiring solution
3. Hiring an outside team may create inefficiencies or communication issues 

Less incentivization than full-time employees

While most temporary workers take pride in their work and perform well, some think that because they’re not a part of the company’s internal team they may feel less connected to the mission of the organization. 

However, with proper management, company culture, and team building, many temp workers still feel like they’re a part of the team. 

It may not be the cheapest hiring solution

Although hiring temporary workers can help cut overhead costs, sometimes it costs more to hire them on an hourly basis. 

Additionally, some temp agencies may require companies to spend a minimum amount, hire a certain number of workers, or have a minimum time requirement. Combined with surprise costs, hiring a temp agency may be more expensive than initially expected. 

Companies should run a careful analysis of their needs to make sure that hiring a temp agency will be more cost-efficient than hiring a full-time employee. 

Hiring an outside team may create inefficiencies or communication issues 

As with working with any third-party provider, it can be more difficult to communicate with temp workers than internal staff, especially if the temp worker is working remotely. 

Additionally, temporary roles often have high turnover rates, which will increase the time and money companies spend on training employees. More than that, high churn rates make it difficult for companies to establish consistency across project management and communication strategies. 

Companies can reduce these inefficiencies by establishing strong communication protocols and trying to retain their temporary employees. If a business leader is worried about turnover during a project, companies may also negotiate that as part of their contract with the temp agency. 

How to Hire a Temp Agency 

From finding employees that fit in with their team seamlessly to handling communication and HR paperwork, hiring the right temp agency can make a project go much smoother. 

Read more to find the perfect hiring partner for your business. 

How to Hire a Temp Agency

1. Review client ratings
2. Find a temp agency that works in your industry
3. Ask about how many employees they have on staff
4. Request information about their employee benefits
5. Create a contract

Review client ratings

Client ratings are a great way to gauge how well an agency works with their clients and how well they place temporary workers. Many temp agencies list client reviews on their site to showcase who they’ve worked with as well as their capabilities. However, these reviews may be biased because they’re listed on the company’s site. 

A more credible way to review a temp agency’s performance is to use third-party ratings and review sites like Clutch.co to assess each potential partner. 

In addition to providing an average client review rating to help companies assess each agency they’re considering for a potential partnership, Clutch reviews provide in-depth detail about the scope of the project, how the temp agency communicated, and how they executed. 

As a neutral third-party, Clutch provides unbiased data to help users find a high-quality service provider. 

Want to hire a temp agency on Clutch? Read company reviews here. 

Find a temp agency that works in your industry 

Some temp agencies specialize in placing workers in certain industries or fields. This is because they’re able to build a vast network in that industry. These agencies fully grasp what hard and soft skills a temporary worker will need to be successful in their roles. 

By working with a temp agency that focuses on placing temporary workers in positions in their industry, companies are likely to be more satisfied with the quality of the candidates they provide. 

Ask about how many employees they have on staff

Understanding the size of a temp agency’s team can help companies grasp how quickly they will be able to scale. In addition to the sheer number of people they have available, companies should ask about their skills, how they vet potential candidates, and who they have available to fill their open roles at that point in time. 

Request information about their employee benefits 

It is a company’s duty to ensure that the temporary employees they’re working with are being treated fairly by their employer. Simply by asking about the temp agency’s compensation policy, businesses show integrity and that they care about fair labor practices. It’s better to work with an ethical temp agency. 

Additionally, how a temp worker is treated by their employer can have a huge impact on turnover rates. By working with a temp agency that treats their employees well, companies can reduce turnover and prevent inefficiencies. 

Create a contract 

Once a company has selected a temp agency they wish to work with, it’s time to outline the terms of their agreement. At this point, you should have already discussed your needs, expectations, duration, and budget for the project. All that’s left is to sign a formal contract to get started on your project. 

Scale Teams with Temporary Workers

Hiring a temp agency can help companies scale their workforce as needed, saving them essential time and money on a project. 

While there can be challenges associated with hiring temporary workers, strong management and communication skills can ensure that the partnership is seamless. By handling all of the administrative work involved in the hiring process, temp agencies allow their clients to focus on the big picture — their business. 

Additional Reading: 

• Employee Happiness: What Do Employees Value Most in Their Job?
• 5 Public Relations Trends for Human Resources Providers
• 4 Cost-Effective Benefits of Using a Healthcare Recruiting Firm