Direct-Hire Staffing: The Pros & Cons

The staffing industry plays a crucial role in the success of companies big and small in just about every industry. Some companies choose to hire personnel using an internal human resources team, while others opt to rely on a reputable staffing agency’s expertise and resources. When hiring for a new position or filling a vacant one, organizations can choose to do so by direct-hire, contract to hire, or contract/temporary hire through a staffing agency. Direct-hire staffing (also known as direct placement) is commonly done by a recruiter at a professional staffing agency, resulting in the individual’s immediate placement on the payroll of the end-user client. It generally involves a full-time position. Direct-hire staffing differs from the other types as it is not based on a predetermined evaluation period or meant to fill short-term needs. Its purpose is more long-term than temporary hire, and it provides significant flexibility by giving the client the option of hiring the contractor after their contract period ends. Also, rather than the worker being on the payroll of the staffing agency, they will be on the company’s where they’ll be working.

The Benefits of Direct Hire Staffing

The candidate is sourced as a full-time employee

When the employee is on the organization’s payroll, it allows the business to avoid the annuity costs associated with contract-to-hire candidates. This may also create stronger buy-in to company goals and culture, which can be more challenging to achieve with a temporary or contract worker who may not be staying for the long haul. Employees with strong buy-in tend to be more productive and stay at the company for a longer time.

Position attract a broader pool of candidates

The majority of job seekers want a permanent, full-time position over a temporary, part-time one, so some won’t even consider a position that’s not full time or permanent. With direct-hire, there will most likely be many highly qualified candidates applying for the role. This can make it easier to hire the right person faster or for a specific skill.

Integrate into their role and with other team members

Temporary staffing is made to secure a qualified person in the position as quickly as possible, which is ideal to respond to sudden changes in demand or workload, but allows for less opportunity for training and team-building than if you were making a permanent hire.

Since a direct-hire is signing on with a company for the foreseeable future, it makes it more comfortable to invest more resources in professional development and skills training. It is beneficial to spend the time making sure they’re the right fit for a team. The feeling of belonging promotes a stronger sense of loyalty to the organization, which can contribute to lower turnover.

Save time and energy sorting through resumes

Sometimes the hiring duties are juggled by someone who already has a set of full-time responsibilities, but even if the organization does have HR personnel handle hiring, they may be overwhelmed with tasks and lots of roles to fill.

Staffing agencies have the resources to lift that burden and deal with the time-consuming process of sourcing and qualifying candidates. This leaves more time to focus on pressing business demands.

Source hard-to-fill positions

When hiring is done internally, it limits networks and sourcing channels, making it difficult to connect with niche candidates, especially if you’re looking for expertise that’s outside of the core industry. A staffing agency’s expertise and access to an enormous network bring the resources and tools needed to connect with such candidates on a client’s behalf, to set up a hire for hard-to-fill positions.

Disadvantages of Direct Hire Staffing

There’s a fee

One potential disadvantage of direct placement staffing is the cost for the service. Typically, there is a one-time placement fee, which varies greatly depending on the staffing agency and position level.

Full scope of new-hire expenses

With direct-hire staffing, the new hire joins the business payroll immediately, meaning it is on them to offer access to a retirement plan, insurance plan, and any other benefits.

More time consuming

It generally takes longer to fill a role through direct-hire staffing than temporary or contract staffing. There is the upfront time that comes with a more in-depth search for the right candidate. Then, there’s the additional time spent onboarding and training a permanent hire. If fast hiring is a number one priority, then a temporary candidate may be the better way to go.

No “trial period”

With direct-hire, there is less time to assess whether the person is indeed the right fit for a role before making them a full-time offer. This is why it is so important that the staffing agency is focused on making the right hire the first time when entering into a direct-hire agreement, and why direct-hire staffing insurance should be secured.

About World Wide Specialty Programs

For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage, we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.