In the April 14, 2020 Ask The Headhunter Newsletter a reader questions the wisdom of working for staffing firms.

Question

staffing firmsI had a contract job with a staffing firm that officially ended a couple of months back. The firm said that they were still looking for other clients to send me to, but just now told me that I’m released.

Do you think it’s even (or ever) worthwhile to get involved with staffing firms like this to look for jobs? I’m also asking because, since a lot of them have “presented” me to their potential clients, my reputation may have been “poisoned” from that. They may have been (probably actually were) “dialing for dollars,” and I never hear anything back from them.

I respect your take on things and I’d like to hear what you think, and what other folks on the discussions think, too.

Nick’s Reply

Staffing firms can be a dicey proposition. You’ve no doubt noticed a trend in the past decade. Companies seem eager to off-load (“outsource”) hiring to “staffing firms” that recruit and hire workers, then rent them to real employers. I have strong opinions about the effects of the staffing industry — also known loosely as the consulting industry — on the overall economy, and I make no bones about it: Consulting: Welcome to the cluster-f*ck economy. But my opinions should not stop you from exploring ways to profit from getting a gig through a good staffing firm — so let’s discuss this.

Why staffing firms?

It seems the key motivation for companies to use rented, or “contract,” or temporary workers is to eliminate certain overhead costs of actually hiring employees directly. The staffing firm handles recruiting, payroll, benefits and HR functions, among other things. When the worker is technically on the payroll of a staffing firm, the employer also avoids certain risks and costs of firing people, because the employer isn’t “firing” anyone. It is merely “sending them back” to the staffing firm.

In my opinion, the biggest risk to companies that use staffing firms is that they relinquish their most important competitive edge — expertise in finding and hiring the very best workers.

The problem with staffing firms

There are so many shady, boiler-room “staffing” operations that the few good ones suffer from the overall poor reputation of the business. The odds are high that any staffing firm that solicits you is indeed dialing for dollars, or to use a more technical term, “throwing spaghetti against the wall.” They are simply not good at matching workers to jobs and companies.

The worst operate massive overseas call centers and are clueless about the work you do. Along with scads of random resumes, they’ll throw the kitchen sink at a client and let it pick the candidates. If someone the client chooses isn’t working out, the worker is quickly replaced. This “churn” practice is supposed to substitute for careful, appropriate placements.

And you’re right, an unscrupulous staffing firm that scraped your resume from the Internet probably distributed it without your knowledge — possibly indiscriminately. That makes you look bad.

Can staffing firms hurt you?

As you suspect, an HR department that receives your resume for the wrong job could tag your record in its database with a big fat X. That could make it harder for you to get in the door later. That’s one reason to work only with reputable staffing firms you trust — not just those that solicit you.

Should you worry about this? You really can’t do much about it. When you post your resume online, it’s fair game. Anyone can forward it to any data dumpster anywhere. But don’t fret. Even if your reputation is thereby “poisoned” at some companies, all it really takes is one very good reference or personal referral to fix that. (This is precisely why personal contacts are so important. Please see Skip The Resume: Triangulate to get in the door.)

I think the worst thing a staffing firm could do to you is put you into a series of wrong short-term assignments over a lengthy period of time. This makes a mess of your work history. Good luck explaining your resume to a real employer.

How should I vet staffing firms?

There are good staffing firms out there. They might be very big and they might be very small and specialized. If this is how you prefer to work — as a consultant — it’s up to you to perform due diligence to identify them. A friend of mine in the staffing business shared some excellent advice many years ago. These 4 tips are still valid today.

  1. Always check references. When you’re deciding on a staffing firm, try to work with people you know and trust who are reputable. They can help you through this whole process. If you have to go to someone you don’t know, check their references. And don’t just use references they’ve given you; use your own contacts.
  2. Talk to your peers. As a potential employee, it may seem weird to ask a company for references, but it’s very important. If I were considering a job with a consulting firm, I’d like to talk to other employees, especially employees who are in a similar role to what I’d have.
  3. Understand the contract. Make sure you read your agreement with the staffing firm (and any subsequent agreement you must sign with the company you get assigned to) carefully and make sure everything you agreed to verbally is documented and signed. It doesn’t matter what the consulting firm is telling you if the contract says something else. Contracts vary all over the board. Make sure you know what you’re signing up for. (Please don’t miss: Bait & Switch: Games staffing firms play.)
  4. Expect the unexpected. Even the best consultants (that’s usually how the staffing firm will refer to you) will encounter problems. Take for example the consultant who didn’t get paid for two months by the staffing firm they’d been with for 20 years. The firm suddenly changed management, and lost its ethics. That kind of horror story can happen to the most experienced consultants. That’s why it’s so important not to become complacent.

How can I find the best staffing firms?

If you want to work through staffing firms, invest a little time to find the best ones. Here are 6 steps to follow.

  1. Select employers. Make a list of the 5 best companies in your line of work, in the geographical areas where you want to live — the actual employers where you would be working every day.
  2. Make a call yourself. Call the HR VP or, better, the head of the department you want to work in.
  3. Introduce yourself. Explain very briefly what kind of work you do; maybe just mention your job title. (Do not turn this into a pitch for a job.)
  4. Get a referral. Then ask, “May I ask you what is the best staffing firm in [IT, for example] that you use for your company’s contract hiring?”
  5. Select, don’t settle. Don’t settle for staffing firms that solicit you out of the blue. Pursue the ones whose clients love them. If the person you speak with names their preferred firm, ask for the name of the representative that handles their account. Thank them and end the call. Now you have (a) identified a reputable staffing firm, (b) you know they work with a company you might like to work for, (c) you have a name to drop (the manager you just spoke with), and (d) you know whom to call next.
  6. Take the initiative. Call the rep at the staffing firm. Introduce yourself very briefly, say that “Your client, So-And-So, recommended that I call you. They said your firm is one of the best in the [IT] field. I’m looking for a new position. Would you like to talk?” When the rep hears that their client sent you, the rep hears dollar signs.

Not everyone you call will tell you which staffing firm they use, but this approach is probably usual and disarming enough that some will. Likewise, not every staffing firm you then contact will help you. But this approach beats fielding calls from fast-talking recruiters at questionable staffing firms you know nothing about. So keep at it.

While I’d advise you to pursue full-time, direct jobs first, I would not tell you to rule out staffing firms. Many employers rely on them heavily. Just know what you’re getting into. In any case, when you make those calls to HR or to department heads, you might end by asking, “By the way, do you also hire direct?”

Get ready

This is hardly an exhaustive discussion about staffing firms and how to deal with them effectively. I expect other readers will share very useful information and raise issues I haven’t even touched upon. But get ready. This is an important topic because the employment world is about to change again dramatically.

The coronavirus crisis has eliminated a lot of jobs — that’s plenty of drama. But as the downturn subsides, the healthiest companies will be desperate to re-fill many of those jobs. It will be a time of opportunity — but also opportunism. Many unscrupulous staffing firms will suddenly appear, trying to capitalize on the new drama. You’ll get a lot of calls. I expect a lot of “churn” as people who are understandably desperate for jobs take positions they should not accept.

Before the lousy staffing firms contact you, find the best ones and contact them.

What’s your experience with staffing firms? What advice would you give this reader?

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15 Comments
  1. I guess that I’ve been lucky to have dealt with a couple of good staffing firms that had established relationships with their clients. The positions to be filled were not advertised on the open market.

    They got to know me.
    Unlike a standard recruiter, they did all the heavy lifting before they submitted me to the client.
    When I finally met with the client, they already knew my background.
    I could then “do the job” in the interview.

  2. I have a rather dim view of staffing agencies. Back in the day, they were referred to as temp agencies. I’ll refer to them (in polite company) as temp agencies. I’ve had some firsthand experience with temp agencies years ago, and nothing positive either. Here’s some points I’ll tack onto this article. These are are my views based on experience and observation.
    1. Temp agencies have generally two types of workers. The first type are often problematic, high maintenance, or subpar workers that can’t hold down, nor want, a permanent job with “skin in the game”. The other is the down on their luck worker who’s desperate for most anything. Temp agencies, and sketchy employers who use them, prey on the later type of workers misfortune.
    2. The empty promise of “temp to permanent”. I’ve experienced firsthand, and witnessed first hand, many people who’ve been strung along for months, and even years, with the dangling carrot of temp to permanent. But, that’s all it is, “flatulence in a whirlwind”. Why would a dubious employer who regularly uses the services of a temp agency want to end a deal totally in their favor? Why would a temp agency want to end their gravy train? These folks aren’t your friends, nor do they have your back, and you’d be naive or foolish to think otherwise.
    3. The temp agencies bill out the client, and take a huge cut of the workers wages. For example, years ago, I worked for a metal fabricator through a temp agency. The guy next to me, doing the same jobs I was doing, had been hired at that time for $18 an hour as a regular permanent employee. I was making $10 an hour, and I discovered that $8 an hour was billed out by the temp agency. That was almost 50% of my wages! The rub was this guy missed a lot of work, was frequently late and left early, and had much lower production and quality rates than did I, and the other grunts on the shop floor. I’m all for capitalism, but I absolutely abhor predatory capitalism! To my surprise, the employer joyously offered me permanent employment with benefits after 90 days. I asked if my wages would go up commensurate with the other guy. “No” they replied. “Your job is reward enough. Plus you’ll have benefits”. “Oh my! Im going to be all over this”, I thought to myself. I coyly accepted their offer, but soon found another job, be it slightly better. I picked up my tool box, never said a word, walked out, and drove away.
    4. If the employer decides they don’t want you, they’re off the hook on terminating you, or dealing with UI. The rub is that the temp agency can take their sweet time in placing you in another position, or completely ghost you. Try to claim UI, and they will contest it, and they will invariably win. Seen it before several times. Slavery, and indentured servitude, were abolished long ago in America, but a form of it still exists with temp agencies, and employers who insist on using their services.
    The vast majority of temp agencies are sleazy. Stay far away from them!

    • Temp to Perm: Sometimes it happens. Usually there is a period, typically 6 months to a year at professional level, during which the client company must buy out the temp from the agency. If they want to hire you they must pay this. After that it’s typically no charge.

      But most of the time it’s an empty promise.

    • Even when the staffing firm bills the worker out with an overage tacked on to the actual wage ($10 worker billed at $15 and paid $10 versus $10 worker billed at $10 and paid $7), where’s the value in the extra $5 cost to the company? They will argue it lowers their overhead costs. But where’s the value in that? A friend of mine calls it “junk profitability.” That’s what happens when, rather than boost revenues and lower costs in a healthy way, a company merely keeps cutting costs to artificially boost the bottom line.

      Staffing firms are often confused with consulting firms, where the latter actually delivers value and expertise AS A FIRM — not just in the person of a warm body.

    • I’ve actually had good luck with temp agencies. A couple of decades ago I REALLY needed a job and got basic clerical assignments that at least paid the bills.

      One assignment turned into a permanent hire within weeks and lasted about 18 months before layoff, with a significant promotion in the middle (independent bookstore in a college town – textbook business went from thriving to shriveled because of Amazon). Another, a couple years later, lasted several months and gave me an inside track to a much better job that lasted over six years until I left voluntarily. There were two different agencies, both local.

      There were about 7 assignments total and, although my positions were obviously at the bottom of the ladder, the variety was interesting and I learned a lot. Plus, short-term assignments give you a chance to check out different companies. Big disadvantage, of course, is that in times of recession you can get unemployed with no safety net in the blink of an eye.

  3. There are two main kinds of staffing firms.

    Consulting companies that may have you “on the bench” when not on assignment. They may furnish entire groups to client companies.

    Temporary agencies, they find you, send you to client company, pay you, but provide no input or support. In that sense, they are just like a temp agency that supplies office clerks or warehouse workers. When the job ends, the relationship ends immediately, until and unless you work for them again.

    • A bit more.

      The best agencies may advocate for you with the client when selection is taking place.

    • @Bob: For the most part, that’s how I see the breakdown, too. The former are supplying real project support. The latter are supplying rented bodies.

  4. The problem is people have to have an attitude that a “consulting”, i.e. temp employee, is just that, a TEMP JOB!!! There’s no guarantee for any permanent placement. A lot of these agencies are full of valley girl or frat boy types who know nothing about the industry they’re trying to fill a work order!! Most agencies disappear within a few years anyway.

    The only time I ever got a permanent position from a temp assignment was the company was introducing a new web application; it was a new job in a career I wanted. I had worked so well as a temp, it was a brand new position I filled for the company. It was the best opportunity for me which allowed me to acquire new skills in my career transition.

    • And it’s these valley girl and frat boy dolts you speak of that don’t bode well for these temp agencies, and for that matter, most any other employer out there, not to mention, keeping qualified and seasoned workers unemployed!

      • I make a habit of checking out the LinkedIn profile of the recruiters that are contacting me (particularly those who claim they found me via that site). I’m amazed how many of them moved into IT recruiting after managing a pizza joint, nail salon, or worked the counter at a health club. They’re always “super impressed” with your background but, given their lack of experience in the field, I can’t help but wonder how well they’d be representing me if they forwarded my resume to that hiring manager when they don’t know what any of the requirements and buzzwords even mean? I suspect all they’re there for is to filter resumes for someone who //might// actually understand what’s on one’s resume — the mysterious “account manager” they refer to — but how can you be sure? It’s very rare to hear from //that// person.

        Late last year I disabled my profile on one IT-related job site in order to see if it would cut down on the number of calls I was receiving (from what typically sound like a “boiler room” operations) from the seemingly infinite number of South Asian recruiters who a.) introduce themselves and almost immediately ask what hourly rate you’re looking for and b.) try to sell me on a three month contract halfway across the country when my profile clearly indicates I’m not interested in those sort of positions. It did significantly decrease the emails and calls I got from recruiters who were, frankly, wasting my time and theirs. (Daily call quotas?) Disabling the profile has cut down on the calls. Of course, being in the middle of a pandemic been pretty darned effective at cutting down on the call volume, too.

        • “They’re always ‘super impressed’ with your background “

          That’s the operative phrase!! Translation: “I don’t understand a word of anybody’s resume — you people are all GENIUSES!!! I’m just glad not to be swabbing locker rooms at the gym any more…”

  5. I first saw the contracting (not temp) business in the late 80’s I saw more and more companies hiring contractors for project work, especially as they were moving from mainframes to minis.

    For a long while there were a number of good recruiting firms doing contracting, especially in the IT world. They could not afford to place junk as it would hurt their recruiting business.

    I once saw a recruiter by the name of Terry Petra (At one time he was one of the best in the business. You might know him Nick.) do a presentation called, “My heart is in recruiting but my pocketbook is in contracting.” Terry kept a small group of contractors that he continually placed. At one point the tenure of a high end contractor was approaching that of a full time employee.

    So please don’t confuse a temp firm with a true contracting firm.

    • Hi, Bill — When the business was just getting off the ground, especially in tech/IT, there were indeed some good, scrappy contracting firms that did a good job. (I don’t know Petra.) There are good ones today. My message is to pick them carefully.

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