Hiring agencies have long been the backbone of the staffing industry. According to IBISWorld, nearly 19,500 hiring agencies were operating in the United States as of 2024. Companies and candidates may wonder how these firms operate. A quick Google search can yield thousands of forum posts from both employers and job hunters, all asking the same question: How do hiring agencies work?
Since hiring agencies operate differently from in-house recruitment teams, clients and candidates are often left wondering what the benefits of leveraging an external agency are.
Today, we will explore hiring agencies’ primary functions and explain the benefits for both candidates and employers once they begin working with an agency.
Primary Functions of a Hiring Agency
The main goal of a hiring agency is to match qualified candidates with suitable job openings.
In terms of supporting employers, hiring agencies are tasked with streamlining the hiring process from start to finish. This process includes screening and vetting candidates through resume reviews, interviews, and skills assessments. Sometimes, hiring agencies will request reference and/or background checks from candidates to ensure they find the most qualified individuals for their clients. A hiring agency may also handle onboarding paperwork once a candidate has passed all the interview stages and received an offer.
Ultimately, hiring agencies are expected to reduce the average hiring time by handling administrative tasks and providing a pool of qualified, pre-screened candidates. These time savings allow employers to focus on final interviews and selecting the candidate who will most impact the role.
On the job seeker side, hiring agencies primarily provide career support and guidance. They can connect active and passive job seekers with relevant openings that align with their skills, experience, and career goals. Agencies can also provide job seekers access to a more extensive network of companies and industries, increasing their chances of finding suitable employment. In the later stages of an individual’s search, they may rely on an agency to help them negotiate salaries and benefits packages.
Advantages for Employers
Beyond the question of “How do hiring agencies work?” lies another, more critical inquiry often asked by employers and executives:
What are the benefits of using a temp hiring agency?
For starters, agencies often have access to a larger pool of candidates. They also possess knowledge of current salary trends, in-demand skills, and industry benchmarks. This knowledge is critical, as it can help employees make informed hiring decisions while remaining aligned with internal budgetary expectations.
Think of temp hiring agencies as hubs for professional relationships. Recruiters proactively build networks with individual contributors, people managers, and consultants. They maintain relationships with these highly skilled, in-demand contract professionals and connect with opportunities when roles open in their client network.
Top contractors and consultants often re-enter talent pools toward the end of an assignment to reduce downtime and provide hiring clients a chance to secure top talent before they officially enter the open job market. Hiring agencies provide elevated access to elite talent and pair it with exclusive market insights, adding an extra layer of value.
Advantages for Contractors
For contractors, temp hiring agencies assign account executives to individual job seekers to understand their goals for upcoming projects and define their needs for those roles. Account executives inquire about various aspects of the role, such as seniority level, core functions, project duration, compensation expectations, and procedural constraints.
Hiring agencies will qualify positions on the contractor’s behalf to identify ideal opportunities. When such opportunities are identified, the agency will partner with the contractor to review the position(s) and project(s) together. These discussions will ensure alignment between the required skills and the individual’s expertise.
If a candidate advances through all rounds of an interview process and expresses a desire to continue with the project, a hiring agency will likely step back to support compensation negotiations. In addition to salary and benefits, the agency might also negotiate per diem rates, travel expenses, and other perks.
Fact or Fiction – Agency Myths
As mentioned earlier, thousands of employers and candidates ask, “How do hiring temp agencies work?” Unfortunately, some answers and search results online may include misleading or incorrect information.
These misconceptions about hiring agencies may drive employers and candidates away from leveraging their services.
One of the most common myths is that hiring agencies don’t provide high-quality candidates because they have access to the same networking pools as every other company. This is far from the truth of the matter. Established agencies will always have some sort of professional network or exclusive candidate database. Agency recruiters and staff members rely upon these exclusive networks to fill roles with superb candidates and encourage repeat business from their clients.
Another misconception is that hiring agencies lack expertise in their clients’ industries. Most agencies specialize in specific industries and have recruiters who are former professionals in said industries. They leverage their first-hand knowledge and expertise to source candidates who are top performers in their respective disciplines.
Many employers are also under the assumption that hiring agencies are expensive. While it is true that hiring agencies do charge fees for their services, these fees are often far less costly than the costs that accrue from job vacancies and the internal inefficiencies they cause. It is more cost-effective for an employer to partner with an agency than to suffer financial losses due to such operational gaps.
How Hiring Agencies Use Technology in Recruitment Cycles
Technology plays a critical role in modern hiring agency operations.
Applicant Tracking Systems (ATS) often automate and centralize the entire recruitment process. These systems manage job postings, applications, candidate screening sessions, and interview scheduling, reducing the hiring cycle’s administrative burden.
Recruiters, account managers, and other hiring agency staff members will primarily communicate via email and phone. In the era of remote work and high frequencies of relocation requests, staying in touch with clients and candidates is essential. These channels and video conferencing software like Zoom have proven to be the most reliable forms of communication for contacting both parties.
It may not come as a surprise, but LinkedIn is also an essential platform for modern hiring agencies. Although agency recruiters may not necessarily use LinkedIn to conduct their initial searches, they will use the platform to view members of their internal networks and check out their recent projects and career progression. Updated LinkedIn profiles increase candidates’ chances of receiving direct messages regarding future opportunities.
The Black Diamond Network Process
At Black Diamond Networks, our team of industry recruitment specialists knows that the question “How do hiring agencies work?” is often followed by several additional queries.
Prospective clients may be curious about how our process drives value for their organization, and individual job seekers may ask how our services can increase their chances of securing employment?
As a national firm, our search process extends nationwide and deep into local markets. We find high-performing consultants with the skills and industry experience needed to fill the niche requirements of our clients’ hard-to-fill roles. The consultants who join our network are often repeatedly placed in new projects and temporary roles due to their strong professional competencies and highly effective performance outputs.
Black Diamond Team members always conduct a comprehensive interview when engaging with a new client or consultant for the first time. This interview helps our recruiters determine clients’ current working environment and skill requirements for open roles. For consultants, it allows the recruiter to appropriately assess technical skills, references, availability, and project interests before proceeding to the next stage of the process.
BDN team members then work to source quality candidates for clients and identify strong role matches for consultants. Once the client has validated a match, our recruiters and account managers will coordinate all future engagements between the two parties. If an offer is extended, our team will finalize the work schedule, set a start date, and continue to monitor the relationship between the client and consultant to ensure optimal performance.
If you have further questions, please visit our contact page to connect with a Black Diamond Networks team member and learn more about our services.