What is a Staffing Agency?
A staffing agency is a company that matches employers with job candidates for temporary, contract, or permanent positions. The agency sources and screens candidates, then presents them to employers for hire, charging either a placement fee or a markup on the worker's wage.
In more detail
Staffing agencies come in several flavors. Temp agencies supply short-term workers and remain the employer of record. Direct-hire agencies place candidates into full-time roles on the client's payroll and earn a one-time placement fee (typically 15-25% of first-year salary). Contract-to-hire agencies start as temp but convert to direct hire after a trial period. Executive search firms focus on senior roles and often work on retainer.
The US staffing industry is a 180+ billion dollar market according to the American Staffing Association, placing roughly 13 million temporary and contract workers each year. Most agencies specialize in a vertical (healthcare, IT, light industrial, finance, legal) because sourcing and compliance requirements are meaningfully different.
Types of staffing agencies
- Temporary staffing: short-term workers, agency is the employer of record.
- Direct-hire: permanent placements onto client payroll, flat fee.
- Contract-to-hire: trial period before conversion to FTE.
- Executive search: retained search for senior or specialized roles.
- Managed staffing: ongoing management plus placement.
Related terms
Common follow-up questions
The employer, not the worker. Fees are either a one-time placement fee (for direct hires) or a markup on the hourly wage (for temp/contract workers). It is illegal in most US states for an agency to charge workers.
For direct-hire placements, fees are typically 15-25% of the worker's first-year base salary. Executive search can be 25-33% and is often paid in retainer installments.
Recruiter is a job title describing anyone sourcing candidates. A staffing agency is the company that employs external recruiters and operates a placement business.