Staffing and Recruiting Services: Why Outsource Hiring

The Milestone Team August 4, 2022
staffing and recruiting services

Staffing and recruiting is one of the most common outsourced HR functions, along with payroll. Internal recruiting managers are often unnecessary for small businesses with fluctuating growth, but the function can be too big and critical of a task to divvy up between existing employees. 

What Is the Difference Between Staffing, Recruiting, and Selection?

Staffing and recruiting are typically used interchangeably to refer to the process of attraction and hiring of workers. Some companies may use recruitment to refer specifically to the attraction stage of staffing. Often, staffing is used to describe the temporary staffing of hourly, short time, or parttime workers and recruitment is used to describe the hiring of full time employees. Selection refers to the decision making process between two or more potential employees. Talent acquisition is another term that is synonymous with with staffing and recruiting. 

Staffing Companies

There are two types of staffing solutions companies. The first is a staffing agency. These companies sole focus is finding candidates for open roles. Many staffing companies have robust databases or resources to be able to find qualified candidates. These recruiting agencies typically charge on a percentage of base salary. 

The second type of staffing company is an outsourced HR firm. Outsourced HR firms often take a strategic and holistic approach to recruiting and are focused on helping a firm build out its recruiting process, rather than filling a talent pipeline. Outsourced HR firms may spend time with stakeholders to clarify the job role, hone employer branding, and suggest steps post-placement. Their goal is to help develop a corporate brand and process that allows a company to attract top talent at scale. . 

How do Staffing and Recruiting Services Get Paid?

Many small business owners do not know the extent of options available for pricing models. Below are the four main models: 

Percentage of Base Salary: The traditional way recruiting agencies charge for staffing (and most common) is by taking a percentage of the base salary for the hired candidate. The advantage is the recruiter takes on all risk, but these fees can range from 5-30% of the base salary. This model can get expensive, especially for higher skilled positions. 

Fixed or Flat Fee: This pricing model charges a fixed fee to fill the position. This is agreed upon by the recruiter and owner. In this model, the owner has the most risk depending on when the payment is made. 

Multiple Pay Installments: This pricing model has the client pay the recruiter in three payments at different phases of the process. The recruiter does not get paid fully until a candidate is hired, but the risk is shared between the client and the recruiter. Typically, a third is given upfront, a third after the client receives a short list of candidates, and the final installment once a candidate is hired. 

Hourly Rates: This is a newer model to the recruiting field, often done by outsourced staffing firms. The model charges the client for every hour worked. According to this company, hourly rates are typically 50-75% less expensive than the traditional pricing model based on salary. However, the bill will be paid regardless of placement. This relationship involves trust with the client. 

The average cost of a new hire to be $4,700

What Is The Importance of Recruiting?

This study by the Society of Human Resource Management stated the average cost of a new hire to be $4,700. However,  many employers estimate that the total cost, including time of managers, to be as high as three times the base salary. Recruiting, especially in small business, is costly when it takes away time from employees. 

Beyond the cost, recruiting is important because good people are an essential ingredient for a healthy growing business. In small businesses, an incorrect hire can stymy the growth and success of a business. Strategic recruiting firms help a company establish a process that attracts and converts the right talent into the business. 

Outsource Your Staffing and Recruiting Services with Milestone

Milestone is an outsourced HR firm that will help build your recruiting processes to recruit and retain great talent fit to your business. We help develop practices that can scale as your business grows. Contact us today to learn about how we can help solve your talent challenges. 

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