If you’re new to working with staffing agencies, you might wonder how they operate and make money. Understanding their revenue model can help clarify how these agencies fit into the job market and how they handle your pay. In this article, we’ll break down how staffing agencies earn money and what this means for you as a candidate.
The Business Model of Staffing Agencies
Staffing agencies serve as intermediaries, connecting businesses that need temporary, contract, or permanent employees with job seekers. They typically earn money in one of two main ways:
- Placement Fees for Permanent PositionsWhen a staffing agency places a candidate in a permanent role, they usually charge the employer a placement fee. This fee, calculated as a percentage of the candidate’s first-year salary, is a one-time payment made by the employer to the agency. Importantly, this fee is not taken out of your salary—once you’re hired, you receive your full, agreed-upon compensation from the employer.
- Hourly Markups for Temporary and Contract PositionsFor temporary or contract roles, staffing agencies make money through hourly markups. This means that the agency charges the employer a higher hourly rate than what they pay you, the candidate. For instance, if you’re earning $20 per hour, the agency might charge the employer $30 per hour, with the difference covering their services. This markup ensures the agency can handle the administrative tasks associated with temporary employment, including payroll and benefits.
Why Staffing Agencies Use This Model
The revenue model for staffing agencies allows them to offer a range of services, from candidate sourcing and background checks to onboarding and payroll management. By charging employers either placement fees or hourly markups, agencies can maintain a steady revenue stream while offering valuable support to both candidates and clients.
What This Means for You as a Candidate
Working with a staffing agency does not impact your pay negatively; in fact, many agencies advocate for fair compensation on your behalf. Here’s what to expect:
- Your Full Earnings as AgreedFor permanent placements, you receive the salary agreed upon with the employer, regardless of the agency’s placement fee. For temporary roles, your hourly rate is set between you and the agency, and you’re paid consistently through the agency.
- Transparency and CommunicationReputable agencies are upfront about how they operate, so if you have questions about your pay structure or how much the agency charges the employer, don’t hesitate to ask. Understanding this structure can give you peace of mind about working with a staffing agency.
- Additional Services and BenefitsSome staffing agencies provide benefits, professional development opportunities, or resources to support your career growth. By understanding how agencies make money, you can see the value in their services beyond just the initial job placement.
Making the Most of Your Staffing Agency Partnership
Knowing how staffing agencies make money allows you to appreciate the support they offer and understand their commitment to finding you a job that meets your needs. At Burnett Specialists, we’re dedicated to helping candidates like you succeed and are here to ensure you have a positive experience.
Visit Burnett Specialists to learn more about how we can help you find the best jobs and provide a transparent, supportive job search experience.
