Long before terms like “the gig economy” and side hustle” became part of our everyday vernacular, businesses hired temp agencies to augment their workforces on an as-needed basis. Of course, the entire idea of temporary work has changed with the introduction of on-demand staffing platforms, but temp agencies still do remain an option for select companies and job-seekers alike.
Definition of a Temp Agency
Temp agencies, also referred to as “temp services” and “staffing agencies,” are firms that contract with companies in need of temporary, seasonal, part-time, or temp-to-hire workers. Some temp agencies are general entities that handle the hiring and placement of a variety of workers, while others focus on niche industries. These boutique agencies find temporary candidates of more specialized skill sets.
How Temp Agencies Work
The one major difference between temp agencies and a regular HR department is that agencies handle the hiring, firing, and onboarding of the temporary worker. This means that the contracting company, aka the temp agency’s client, has absolutely no part in paying or providing benefits to the temporary worker. The client simply comes to an agreement with the temp agency based on the number of temporary workers placed. The client then shells out a percentage or hourly rate for each worker provided.
It is the job of the temp agency to negotiate the workers’ schedules, payment, and all other important employment details. If there ever is a problem with the client, the worker will go to the temp agency to report it. On the other hand, if a client is unhappy with the performance of a temp, they must come to an agreement with the temp agency, as they do not have the authority to directly terminate the worker.
Whether full-time, part-time, or seasonal, all temps are employees of the temp agency. It is the agency who provides these employees with benefits, tax status, and more.
Benefits of Temp Agencies
While temp agencies are far from being as cutting-edge as today’s on-demand staffing platforms, like Wonolo, they do still carry a host of benefits for both the clients and the workers.
Let’s take a look at how the company clients profit from the classic temp agency structure:
- The temp agency handles hiring, firing, drug testing, background checks, screening, and even skills training
- If the agency is a large, full-service one, it will be able to deliver last-minute skilled temps
- The agency takes pressure off the company’s internal HR department
- Most staffing or temp agencies offer recruitment services at a fraction of the cost of traditional recruiters
- Temp-to-hire buyout options make for cheaper onboarding processes
And, here’s what temp agencies do for their employees:
- Provide free skills training in the industries they serve
- Offer full-time, part-time, or seasonal scheduling options
- Provide short-term jobs that match employee skill sets
- Very flexible scheduling options
- All placements are completely free for the employee
- Opportunities for temp-to-hire employment
Disadvantages of Temp Agencies
As with most things, there are stark disadvantages that come along with hiring or joining a temp agency, the most obvious being the issue of markups. Markups are the additional cost that is added to each worker’s hourly wage. Although markups can vary from agreement to agreement, it’s not uncommon for markups to exceed 100% of the worker’s hourly fee.
According to HCM Works, some temp agencies have a bad habit of hiding additional fees or misleading their clients into agreeing to extra charges on top of the markup. In light of this, it is advised that contracting clients ask questions about additional fees prior to signing the agreement. Additionally, companies should also ask for discounts for bulk hires, (when a sizable number of workers are requested).
Unfortunately, temp agency employees, or temps, are often forced to face a set of notable drawbacks, as well. For one, it’s unusual for temps to have any level of autonomy in their roles. Oftentimes, these placements are entry-level positions that require few qualifications. It’s a “plus” in the sense that the agencies can easily fill the roles, but it also means that there are hundreds, or sometimes even thousands, of other workers willing to do the job. This scenario can make temps feel expendable and undervalued.
In addition to the lack of autonomy, most temps are rarely provided full-time work. Though this might be a decided advantage for some, this also usually means no benefits, like health insurance, stock options, retirement funds, etc.
As can be seen, temp agencies play a role in our economy. That said, the jury’s still out as to whether or not these firms can stay relevant as the ultra-modern gig economy continues to expand and evolve.