How Temp Agencies Work

A temp agency can play a lot of roles, but essentially the process works like this:

There are several advantages to employers who use temp agencies. They drastically cut the amount of time and effort that must be expended screening applications and interviewing job candidates. Imagine a company that just won a new contract to produce electronic components, but it's a short-term contract, lasting only 3 months. It could take weeks to find and hire qualified workers to build the components, which is very inefficient. A temp agency allows the company to add the necessary workers quickly, and would (ideally) already have workers qualified to build electronics waiting to go to work.

While most companies don't like to admit it, temp workers also save them money because they can put them to work full-time without providing benefits such as health insurance or paid vacation time. For example, Microsoft is known to use thousands of temporary workers -- and lost a class action lawsuit in 2000 that required them to pay benefits to "temporary" workers who had been with the company for 10 years or more [source: Seattle Post-Intelligencer].

Temp agencies have their advantages for workers as well. Submitting your resume to a temp agency can give a worker access to dozens of potential jobs, depending on his or her skills. It's much more efficient than applying and interviewing for multiple jobs. Some companies also use temp agencies to test out workers before offering them a full-time, permanent position. That means temp agencies can provide workers access to permanent jobs they wouldn't otherwise be able to get.

Next, we'll find out what it's like to use a temp agency.

If your business is thinking of using a temp agency, there are several factors to consider. Do you need a large supply of unskilled workers for a job with high turnover? Are you looking for a few highly specialized workers in technical fields? For a high volume of workers, it might be best to contract with several temp agencies to ensure access to all the workers you'll need. However, working exclusively with a single agency can sometimes allow you to negotiate a discount on the agency's fee. If your temp needs are more modest or specialized, there may be other advantages to building a relationship with a single agency. In rare cases, a single contract can become so important to a temp agency that it actually has a full-time liaison working at the client company's facility to oversee the temps.

The specific cost of hiring a temp agency to provide workers varies tremendously. It will depend on the jobs being filled (unskilled jobs like basic office or light industrial work pay less than technical jobs), the cost of living in the region, the agency's particular standards and fee structure, and discounts or deals worked out as part of the contract. Employers always pay the full wages earned by the temps, plus some percentage above that. A good temp agency will be upfront about the wages and fee structure, so you know exactly what you're being paid.

The process of using a temp agency is relatively simple for workers. It's just like applying for a job: You submit a resume (possibly online, depending on the agency), fill out an application, and have an interview. For unskilled positions, this meeting can be very brief; for higher paying jobs, it can be more like a full job interview. There is often a screening phase during which the agency may conduct a background check or require a drug test. Once you've been accepted into the agency's workforce, you'll be offered one or more jobs that fit your skills if there are any immediately available. There may be a delay of several days or weeks until something opens up -- the more general your skills or the positions you're willing to work, the easier it will be to find you something that fits.

Your pay rate is typically determined by the temp agency, and it pays you directly. If you're trying to turn the temp position into a full-time permanent job with the employer assigned to you, you may discuss that with the company. However, the temp agency often negotiates temp-to-perm positions themselves -- your supervisor at the agency will explain how that's handled.

The average temp agency has a large pool of generalized, unskilled workers who can be placed in any basic job position -- the kinds of jobs that require little training and no special schooling, degrees or industry experience. Office workers, production line workers, security guards, janitorial staff and the like all do important jobs, but just about any temp agency can provide them.

Some employers need specific skills for high-level jobs. Maybe they need to update a suite of software for a new client, so they need an experienced programmer to work only for the 2 months it will take to complete the project. A bank might need a highly skilled accountant to assist with a major merger. Once the merger is complete, the accountant's job is done. For these skilled but still temporary jobs, specialized temp agencies can find the right people.

Temp agencies exist for many specific fields. Some of them you might expect: Computer help deck workers, data entry specialists, legal compliance auditors and even staffing specialists are all jobs provided by temp agencies. You might be surprised to find that some agencies specialize in more diverse fields, like natural gas pipeline safety engineers, paralegals, project managers and even doctors. Some agencies are general specialists, offering a wide range of skilled workers, while others serve a narrower niche, like computer science or medicine.

In some ways, highly specialized temp agencies act a bit like recruitment agencies. Instead of supplying large volumes of workers, they offer a smaller number of quality workers with the right education, experience and skills for the lucrative jobs they provide.

Find more information about temp agencies on the next page.