Temp Staffing:
Temporary staffing exists to help fill in for a person who is out of the office, or to supplement staff during peak periods of business which demands more help, but not to the level more people must be hired full time.  An example is an Admin Assistant has a baby and goes out on maternity leave for 3 months. The company might hire a temporary Admin Assistant to fill in during that time.

Bill Rate = The hourly rate charged to the customer per hour for the temp
Pay Rate = The hourly rate the temp is paid
Gross Margin = The difference between the Bill Rate and Pay Rate
Net Margin = This is the Gross Margin – overhead costs such as payroll taxes, workers comp insurance etc.

Temporary staffing commission plans are usually based on a % of the Gross Margin.  The incentive is to get the highest Bill Rate, and pay the lowest Pay Rate to obtain the widest profit margin possible.

It is not possible to cold call people and convince them to quit their full time permanent job to switch companies and take a temp job.  That makes no sense.  This means cold call head hunting people at their job is not a viable way to source candidates to fill temp job orders with. 

People who take temp jobs are either Career Temps, or people who are unemployed and a temp job is better than no job.  A Career Temp is a person who does not want a full time job. They want to work when they want to work. They enjoy the flexibility.  An example is a person might work all year as a temp, job to job, assignment to assignment – and then take the entire summer off and travel and not have to worry about being fired.  Then come home from vacation and start temping again.

From a sales perspective the Decision Maker is usually an HR or Office Manager. 

Temp to Perm Staffing:
This is when a company wants to try someone out as a temp first, before they hire them permanently.  I personally think this is a bad way to go, yet it is very common.  Why?  If the job is permanent, then that is how it should be handled.  A staffing firm should not try to talk a company into the temp to perm method of hiring just to boost their temp billable hours.  Yet this is exactly what happens.  Sometimes temp staffing companies will pressure the sales people and recruiters to convince customers to consider the temp to hire method of staffing because this takes the perm fee and converts it into weekly temp billing.  Thus artificially boosting the numbers on the temp staffing side of the company.  What are the drawbacks to this?

No full time employed person is going to quit their perm job to switch companies and take a temp to perm job.  So the temp to perm method of hiring eliminates cold call head hunting as a  method to source candidates. This limits the candidate pool to just those who are actively looking for jobs, and cuts out the passive job seekers. This also means the recruiter is shooting themselves in the foot in terms of where and how they can find people for the job

It is far more profitable to collect a lump sum perm fee then it is to place the candidate on a temp trial period where the company is paying out payroll taxes, workers comp, and paying the staff to monitor time cards, ensuring the temps get paid, taking time solving problems with payroll and invoicing customers.  Why create all that drama if the job really is permanent in the first place? Just to create the illusion that a branch’s temp hours are up?  This is not healthy thinking.

There is a myth that if a company hires a person as a temp and then fires them before 90 days, that shields them from wrongful termination as the temp was an employee of the agency. This is not true. If the employment contract stipulates a 90 day trial period where employment is At Will, meaning either party can terminate the relationship for any reason, that language shields the employer from wrongful termination just as much as using a temp agency.

If the client wants to hire temp to perm, I always tell them this method of hiring limits the options available to me to source good candidates and at least ask them to re-think their decision and consider Direct Hire instead.

Being temp to hire jobs are really perm jobs in disguise, the Decision Maker is usually the manager over the department that is hiring. An example is the Controller might be the Decision Maker if the job order is for an Accounts Payable Clerk.

Contracting:
Sometimes a company has a project planned where they need outside experts to come in and perform work on specific pieces of the project.  An example is hiring Accountants to come in and prepare for an Audit.  Or hiring a Software Engineer to design an application.  This is essentially temp work, but is called contracting.  There is another unique reason for contracting to exist.  Large companies will often have one budget for perm employees, and another budget for contractors.  An example is having 100 permanent employees in the IT department + 25 contractors for a total of 125 people.  This makes it look on paper like the company has 100 employees when in reality there are 125 people working in the department.  Companies will sometimes be forced to lay off permanent employees, but the work still needs to be done, so the managers turn around and re-hire some of these people as contractors.    This way the people are still there doing the work, just being paid out of a different budget.

If the company is smaller to mid size, the Decision Maker is often an internal department manager. As companies get larger usually there is a Vendor Manager who acts as the middleman between the hiring managers and contracting/staffing firms.  This is usually a very painful way to do business because we recruiters want to get to know our clients in person.  A Vendor Manager is a middleman and often times we feel like we are submitting resumes into a Black Hole when we work through a Vendor Manager.  The best Sales Reps and Recruiters find a way around this bottleneck to where they somehow form relationships with the internal managers.  This way they work direct with the internal managers, while also submitting resumes to the Vendor Manager to keep them happy.

Direct Hire or Perm Placement
There are two reasons for this type of recruiting to exist.  First, sometimes companies want to hire a key person, but want to keep it a secret until they find the person to hire.  So they have a recruiter conduct a search to find such a person. Or, the company’s HR department tried help wanted ads, job boards and had no luck finding anyone to hire on their own, and enlist the help of a good Recruiter to track down and find a qualified person to hire.

A problem facing the Direct Hire industry is that for years we recruiters got lucky and made money sourcing candidates off the Internet job boards. Basically we posted more jobs, searched the resume databases more often, and found the few candidates our clients overlooked.  So this conditioned a generation of Recruiter to become far too dependent on the job boards and Internet.

Now, for various reasons the job boards are not producing good results. So the Recruiters who became dependent on these internet resources are now struggling.  The Recruiters who are making money on a consistent basis use the old school approach.  They spend their time making calls to network with LIVE people, rather then sit there all day on the Internet job boards. 

So we are seeing a trend where staffing and recruiting firms are trying to get back to a cold call recruiting methodology and wean themselves off the Internet job boards.

With Temp, the customer may not even interview the candidate. They might just request the staffing company send in a person to start the next day.  With Temp to Perm, and Direct Hire, usually there is a formal interview process.

Guarantees?  Typically staffing companies guarantee candidates for 30 to 90 days.  Often times requiring 30 days to find a replacement, or refund the fee.