Understanding the Differences Between a Search Firm and a Staffing Agency

Understanding the Differences Between a Search Firm and a Staffing Agency

Author: Chris Frew

At Workforce Genetics we often find that clients and even some junior recruiters we speak with don’t quite understand the difference between Staffing Agencies and Search Firms when it comes to specifics within the recruiting industry.

More often than not, people lump these two distinct businesses into one giant ‘Recruiting Agency’ bucket.

The truth is, the two business models operate quite differently and it can be beneficial to employers and job seekers to understand the difference. When you’re not familiar with the nuances of a field, it’s easy to put one broad label on it.

I understand why this happens and so does our team. We get it.

For instance, my wife worked at AT&T for 20 years, and every time someone learned that they would say something to the extent of, “Hey, can you help me with my phone?” Or, they would start asking about different data or cell plan options. She would always get frustrated because people assumed that just because she was with AT&T she knew about tech support or billing, which was nowhere near what her job was. She ran the operations for large mobility programs so her job was about managing employees, vendors, deliverables and client KPIs… NOT tech support.

AT&T is a huge company with dozens of different business lines that do different things, but people generally default to that with which they are most familiar.

Likewise, the jobs of a recruiter at a Search Firm can be quite different from that of a recruiter at a Staffing Agency, even though most people tend to think of staffing when they think about recruiting.

So, if you are looking to grow your career in the recruiting industry or you’re an employer looking for insights on the right recruiting firm to work with, this will be a helpful and informative article for you.

Let’s explore the differences between these two recruiting business models.

Staffing Agency Recruiting 101

Staffing firms predominantly focus on contract staffing, staff augmentation and project staffing assignments, or very entry level or less specialized positions that are often hired through a ‘contract-to-hire’ model.

These are not permanent positions and the contractors they recruit are actually hired as employees of the Staffing Agency. An ideal client for a Staffing Agency is a large company who has many projects and fluctuating staffing needs. The business model of a Staffing Agency centers on having as many contractors out on assignment as possible.

Since assignments are often short term or temporary in nature, recruiters look for people who are out of work, ending a previous contract, or who prefer working as a contractor where they get more flexible, project-based assignments. They’re not recruiting to find top industry experts or engaging with passive candidates to attract them to a new opportunity like a Search Firm.

Staffing Agencies predominately hire very junior recruiters with little to no recruiting experience whose job it is to use keywords to filter through job boards like Careerbuilder, Monster, Indeed and other similar job search engines. They’re seeking candidates who are wrapping up a previous contract, who will take a new assignment for a few more dollars per hour, or who are unemployed and have the right skill sets for the short term assignment they’re working to fill.

Recruiting at a Staffing Agency is all about volume, activity and timing. Basically, this business model is all about production and transactions. The focus on temporary or project-based talent means that recruiters have less interest in matching a long-term ”fit” to their client and are more concerned about finding any candidate who has the skills and abilities to meet the temporary project’s goals.

This business model is also why Staffing Agencies will most often work through a talent acquisition representative or even work directly through a vendor management software system where they simply upload resumes and match their candidates with available assignments that are posted to a portal.

The Staffing Agency model is very transactional in nature and a recruiter’s job is mostly about production and volume. A few other notable aspects of the  Staffing Agency model are as follows:

  • Employers who work with a Staffing Agency will notice that they most often work through an account manager or account executive whose job it is to get as many job assignments as possible and manage the client engagement and delivery.
  • The account manager will then manage a team of 2-5 recruiters whose main job is to recruit candidates on volume for as many different positions as possible.
  • The two sides are often quite disconnected in that account managers do not have strong relationships with the candidates and recruiters often don’t have strong relationships with the employers.

This model may work for Staffing Agencies, but this would never work for a Search firm.

Note: My intention here isn’t to say that there are no experienced, career-oriented recruiters at Staffing Agencies, just that large Staffing Agencies will often hire right out of school and the job requirements tend to be much more tactical and production oriented. Staffing Agencies employ recruiters, account managers and business leaders who are exceptional at what they do. It’s a very hard business and they provide tremendous value for their clients.

Search Firm Recruiting 101

Search Firms, on the other hand, are usually smaller companies that have a specific niche like life sciences and biotech, for example. Even some of the largest Search Firms still keep their recruiters very focused by dividing up the business into specific practice areas.

  • Contrary to Staffing Agencies, Search Firms only work on direct hires for the employers they support, which means that the candidates recruited by a search firm are always hired directly as employees of their client. The positions they recruit for are usually more highly skilled roles, executive/management positions, or positions that are in very high demand.
  • Contrary to a staffing recruiter whose success depends mostly on their high volume recruitment, success for a Search Firm recruiter depends on their ability to execute a more strategic, tactful and educated approach that can nurture and attract the right passive candidates who are usually already currently employed by another company.
  • A search firm recruiter will also work on substantially less positions at a time but be much more strategic and resourceful in their approach.

A successful Search Firm recruiter becomes an expert in their field, and fosters deep candidate relationships that they nurture so that when the timing is right to make a move they’ll be there to assist.

What’s more, a Search Firm recruiter will work much more closely with clients as a trusted talent consultant. Strong employer relationships are crucial to understanding exactly what a client needs, the culture, the growth potential and other factors that will help the recruiter identify candidates that are the right long-term fit for the company.

In addition, Search Firm recruiters are trained on how to work and consult with their clients to ensure their clients are implementing the best hiring strategies and positioning their open jobs competitively in the market. They provide intelligence on market rates and other factors, and coordinate with their clients directly to establish a smooth and efficient process for attracting, recruiting and hiring top talent in the market.

A Search Firm’s business model differs from a Staffing Agency in other ways as well:

  • A Search Firm’s ideal client is a small to midsize company, a growth-stage company (often venture-backed and high growth), or a large company where they can work as a strategic hiring partner on exclusive searches.
  • Clients tend to look to Search Firms when they are looking for a recruiting partner to help them identify, source, attract, qualify and hire the top talent in the market who fit with their mission and culture.
  • Search Firms will also work directly with hiring managers and with talent acquisition as hiring process partners because employers understand that if the recruiter doesn’t have all of the necessary information they risk not being able to attract the best talent or may not be able to match the right long-term fit to the company.

This is why we refer to our recruiters at Workforce Genetics as “Talent Consultants.” Their role is much broader than just production-based, transactional recruiting. The cumulative nature of the work is often what matters the most in fulfilling a search assignment, especially in today’s candidate-driven market.

These Search Firm characteristics present major juxtapositions to a Staffing Agency model and recruiter role.

Some Final Thoughts

If you’re an employer still trying to determine the type of agency you need to work with, ask yourself these questions:

  1. Is your recruiting need for a temporary project or permanent hire?
  2. Are your open positions core to the company’s long term success or are they simply project critical?
  3. Are the positions you need to hire for highly skilled/highly competitive or lower skilled/less competitive/more entry level?

If you’re a recruiter who is looking to advance your career, I encourage you to think about what you love most about the work you do and what you want out of your profession.

The career ladder in the Staffing Agency often requires moving into a sales or account management role, or a management role where you’re overseeing larger and larger teams because staffing all comes down to volume. So if you’d like management or if you like the sales element, then the Staffing Agency career ladder is built for you.

Conversely, Search Firms provide great career options for recruiters who truly love working with candidates and want to become a true consultant for their clients. If honing the ‘craft of recruiting’ is something that drives you, Search Firms give you the opportunity to do that.

You will work more closely with fewer clients and really get to foster deeper relationships where you’ll see first hand the impact that your recruiting has for the client and candidate. It also gives you more flexibility in control of the business you work on and the clients you work with. If this sounds appealing, then a Search Firm might be a great place for you.

Don’t hesitate to reach out to me if you have any questions or if you want to learn more about what it’s like to work for or with Workforce Genetics.