Is Your Staffing Agency Putting Your Company at Risk?

As the number of contingent workers continues to grow, staffing agencies are increasingly responsible for the staffing needs of a diverse range of companies. 

The right staffing agency can provide your business with great return on investment (ROI). However, on the other hand, partnering with the wrong agency and managing them unsuccessfully can expose your company to hidden risk, resulting in rogue spend and poor workforce quality. 

In this article, we’ve listed some of the top ways in which your staffing agency may be putting your business at risk and what you can do about it. 

There are a number of significant benefits why businesses turn to staffing and recruiting firms; some of which include:

• To access a wider range of talent, including candidates with specialized or scarce skills (particularly important during the “skills shortage”)
• To adjust their workforce to meet changing business demands (such as a one off project or seasonal demands)
• To gauge employee culture fit before hiring
• To fill positions quickly

is your Staffing Agency putting your company at risk? 

Ask yourself these questions to assess the risk and what you can do about it:

Q: Are you managing your staffing agency properly? 

One of the most common causes for risk when using staffing agencies isn’t actually the vendors themselves, it’s how you manage those staffing vendors. Unfortunately, the vast majority of companies with a contingent workforce (especially those with smaller non-employee workforce budgets) are managing their staffing agencies on manual spreadsheets. 

These time-consuming methods of managing your staffing vendors lead to human error and fragmented management processes across your organization, meaning hiring managers are left paying rates outside of your company’s standardized vendor agreements. 

That results in absolutely no visibility or control over your externally-sourced workforce, with hidden costs and poor workforce choice significantly impacting your company’s bottom line and workforce quality.

The solution: A vendor management system (VMS) will centralize and automate all of the processes associated with managing your staffing agencies. By consolidating all vendor data into one company-wide platform, your business will have complete visibility and control over how it manages and engages its staffing agencies.

2- Does the staffing agency lack experience in your industry?

There’s a reason why the best staffing agencies specialize in specific industries, so they can get the best results for both the companies and workers they work with. Only a few of the huge staffing agencies have the resources to specialize in all industries. 

A staffing agency that doesn’t have the expertise in your industry will lack the understanding needed to fulfill your workforce targets. On top of that, their pool of talented workers in your industry will be far smaller than that of a staging agency which does specialize in your industry.

The solution: Work with a staffing agency that’s experienced in your industry. Ask for referrals and case studies so you can see first-hand how the staffing agency has helped businesses in a similar position to yours. 

3 - Is the staffing agency charging you too low of a billing rate?

Staffing agencies have two rates. Pay rate is the amount of money that the staffing agency is paying the contingent worker and the mark-up is the additional cost they are adding for their services. Combined, these rates are the staffing agency’s “bill rate”.

At first, it may seem like a great deal that’s saving your company money if your staffing agency is charging you a low bill rate. In reality, a staffing agency that charges a low bill rate is probably cutting corners - and that’s going to affect the quality of your workforce. Suppliers which charge a low bill rate typically cut the workers pay rate, and that leads to substandard quality. 

The solution: A staffing agency that’s willing to negotiate and significantly reduce their bill rate is likely to place poor temps into your business, but, at the same time, overpaying for contingent workers can affect how profitable your business is. You need to find the right balance between saving money and sourcing high-quality workers. 

4- Is the staffing agencies following local labor laws?

Staffing agencies that employ workers on behalf of your organization must comply with your company’s local regulations and laws. Misclassifying workers when lawmakers may see them as employees could have some serious consequences for your business. 

The solution: Using your vendor management system, conduct regular audits on your contingent workforce to ensure every worker is labelled appropriately. Ensuring you capture and manage all info surrounding your workers and your staffing agencies, you’ll be able to significantly mitigate the risk of misclassifying your contract and temp workers.

Interested in learning more about Vendor Management Systems?

Whether you are looking to change your VMS solution, or just getting started, we are here to help. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights). See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour, or Book a Personal Demo Today!