Often, companies need the assistance of external agencies to simplify their human resources processes. However, as a business owner you need to be able to distinguish between which agency you need depending on the service you are seeking. So let’s look at what are the differences and overlaps between payroll, staffing, and recruitment agencies.
Payroll agencies provide services related to compensation, such as making sure that employees are paid on time, cutting checks, depositing funds, calculating employee hours, and verifying that employers comply with all the legal obligations.
The services that payroll agencies provide include: tracking employee time and attendance, creating and adjusting direct deposit accounts, processing payroll taxes and ensuring accurate deductions, preparing and sending electronic payroll records to employers and employees, integrating third-party 401(k) and benefit plans, complying with all state and federal laws governing payroll, and overseeing workers comp payments relating to payroll.
Some payroll agencies might also be able to provide human resources services such as assisting employers with their legal obligations and ensuring compliance with labor laws for company programs.
Outsourcing the payroll process to an external agency eliminates the need for internal payroll departments and enables business leaders to spend the time on tasks that are more important for business growth. Moreover, it guarantees that the company is in line with rules and regulations.
Both staffing and recruitment agencies take care of hiring people, however, the services they offer are different. While recruitment agencies focus on acquiring full-time employees, staffing agencies provide temporary workers.
The function of staffing agencies is to find momentary staff for businesses that need them immediately but cannot afford the hiring process. Staffing agencies are particularly useful when a company has a lot of roles that need to be filled in a short period of time, when the roles have a short duration (such as for projects or events), when no high-level skill set or lengthy training is required, and when compensation is relatively low.
One of the benefits of using a staffing agency is that companies have the possibility to observe potential employees on the job before committing to hiring them. Also, companies transfer the cost of hiring to the staffing agency, and in doing so, they reduce the hiring time.
Staffing agencies will usually have a pool of active candidates, meaning people who are actively seeking a job, that they maintain. They do not take care of such things as arranging benefits, taxes, or even extensive background checks. They often have a limited budget and their focus is primarily on temporary workers who are interested in the duration and compensation related to the position, for unskilled labor, and without high requirements.
Finally, recruitment agencies are used when a company is looking for new talent to guide teams or take over management responsibilities. These agencies handle the recruiting process which involves collecting resumes, interviewing, vetting, and then getting the client’s approval for the hire. As a placement fee, they typically charge a percentage of the new hire’s wage.
The pool of candidates that recruitment agencies retain is primarily composed of passive candidates, who aren’t looking for a job. These are highly qualified talents who care about the company culture and look for personal and professional fulfillment. They generally work in important positions with high compensation.
As opposed to looking for candidates to fill roles that already exist, like staffing agencies do, recruiting focuses on finding individuals with specific skills who can add value to a company. Each of these candidates contributes their own style and system of management. This process is ongoing and it involves more involvement from the organization.
Of course, there is some overlap between the agencies, for example, staffing agencies can find candidates who then become long term employees. Nonetheless, as a business owner it is important to be able to distinguish between these agencies and understand what services they are specialized in to make the best choice for your needs.