If a company wants to stay ahead of the competition, they need to hire quality talent who will easily fit in their company culture and be the best at what they do. However, hiring employees comes with risks, not to mention how exhausting and time-consuming the process of recruiting, interviewing, and hiring can be. That’s where direct hire comes in handy.
To help you find the talent you’re looking for, we’ve put together an ultimate guide to direct hire. In this article, we will discuss what direct hire is, its benefits, why companies prefer working with recruiting agencies to direct hire and other important things that will help you make the best choice of hire.
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What is Direct Hire?
Direct hire is a process in which a company directly offers a job to an employee without using a third party. Contrary to temporary or contract positions in which a recruiting agency provides and employs top talent, with direct hire, companies are typically offering job positions to candidates themselves. Nevertheless, recruiting agencies also offer this service.
Direct hire jobs are long-term or permanent positions with wages, paid time off, and benefits such as health insurance, sick days, and retirement accounts. While a recruiting team might handle the hiring process, employees will have to report directly to the hiring company when they accept the job offer.
The process of direct hire can take more time than quickly filling temporary positions because companies are committing to a long-term relationship, and they have to do a thorough job in finding and acquiring the best candidates.
What are the Benefits of Direct Hire?
There are several benefits of direct hire, both for companies and employees. For companies, these include:
- Companies can attract a wider pool of qualified candidates, many of whom are more likely to opt for a permanent position than a contract job;
- The long-term nature of the direct hire position leads to higher commitment and employee retention;
- With direct hire and with using the services of a recruitment agency, companies don’t have to use their own resources to find and screen candidates (no one has time to go through 200 resumes just to find 10 good ones!);
- A recruitment agency that serves a specific industry not only has access to a large pool of top talent, it also has the expertise to screen them and find the best of the best for the company’s needs far more quickly than a company could do in-house; and
- The new hire is on the company’s payroll immediately, this way, companies save the costs of contract hire.
For employees, benefits of direct hire include:
- Companies offer a permanent and secure position;
- These positions come with benefit packages that include paid time off, health insurance, sick days, and other enticing offerings;
- Employees have a great opportunity to pursue their career goals in a permanent position;
- Employees don’t have to spend their time looking for new employment in a regular (and much slower) way; and
- It is a great opportunity for employees to build on their experience in one position.
The Most Common Direct Hire Job Positions
There are a number of positions that candidates are directly hired for more often than others. These positions include:
Positions that require a high level of knowledge or education. Positions such as those in science, technology, engineering, and mathematics industries usually require a high level of education and training to perform. Because of this, employers want to keep these high-quality employees in their positions long-term to avoid having to search for someone else with as much education and experience to replace them.
Management and executive positions. Organizations usually want the management and executive roles employees to stick around for a while, so they will directly hire such employees to promote longevity and foster trust.
Why Do Companies Choose to Direct Hire?
Companies choose to pursue direct hire recruiting, either through their human resources department or a recruiting agency, for a couple of reasons:
- To fill vacant positions that will benefit from a long-term commitment. Because of this, employees in direct hire roles often feel more loyalty to a company;
- To fill management and executive positions;
- To fill special positions that require specific skills;
- To attract the right talent. High-quality candidates are often more likely to accept an offer to leave their current job for a direct hire position with benefits and stability;
- To adapt in times when there are fewer candidates looking for jobs than there are vacant positions. Direct hiring is typically more appealing to skilled talent due to the benefits and job security that goes with it; and
- To avoid extra steps. A company might choose to do direct hiring on its own rather than using a recruiting agency because it wants to avoid fees or commissions and ensure their vision and message is clear.
What is the Difference Between Direct Hire and Contract to Hire?
Aside from direct hire, there is another common type of employment called contract to hire. Contrary to the direct hire scenario, where the selected candidate starts their employment on the company’s payroll, in a contract to hire process, the contract employee begins their engagement on the recruiting agency’s payroll.
Even though direct hire recruiting instantly makes the new hire an employee of the company (recruiting agency’s client), the contract to hire process allows more flexibility by providing an option to hire the contract worker directly after the contract period or choose not to move forward. The length of a contract may vary from short-term to indefinite. In any case, the client can always convert the contractor to a permanent employee if and when it meets their individual needs.
Direct Hire vs. Contract to Hire – Pros and Cons
When comparing these two hiring processes, it is important to carefully consider the pros and cons of each before making the right choice for you.
Direct Hire Promotes Loyalty
One of the biggest advantages of direct hire recruiting is that it allows new hires to feel safe in their position and part of the team – from day one. This naturally promotes a sense of loyalty to the company and can lead to greater retention over time.
Some positions like management and executive roles and those that spend a lot of time with clients aren’t well-suited to many turnovers. Direct hiring can help companies fill positions that require a long-term commitment from the hired talent.
Direct Hire Facilitates Speed
Working with a direct hire recruiting agency allows companies to fill their permanent roles more quickly than they’d be able to do it independently, keeping productivity high and downtime low.
Direct Hire Attracts Stronger Talent
Since a permanent role offers more security than a contract one, direct hire positions are usually more attractive to top talent. This is especially true for passive candidates, who need more encouragement to leave their current job than those actively searching for a job. Candidates also love the appeal of direct hire positions since they offer instant access to the company’s benefits program.
Direct Hire is More Cost-Effective
Because direct hire candidates go directly onto the company’s payroll, they can avoid additional costs associated with the recruiting agency keeping the new candidate on their payroll. While it doesn’t offer as much flexibility, paying a one-time fee to a recruiting agency is usually a better and more cost-effective option.
A direct hire is a great option when companies want to get permanent staff, find qualified candidates quickly, and attract talent who want to stay in the company for the long term.
The advantages of a contract to hire recruiting are:
Chance to Assess the Candidate
Contract to hire recruiting allows the company to assess a potential candidate in action without committing to putting them on their payroll. There’s less risk on the company’s part, allowing them to evaluate culture fit and effectiveness in the position before assuming the added costs of a new permanent hire. However, this also gives the candidate a chance to assess the company, which can also be a positive thing. It lowers the possibility of the wrong hire ending up in a role where they’re not happy or productive.
Faster Interview Process
Although working with a recruiting agency is a proven way to reduce the hiring time for direct hires, its impacts are even faster when it comes to contract hires. Contract to hire recruiting has a much shorter interview process, which speeds up the hiring cycle.
Control Benefits Costs
Since contract workers stay on the recruiting agency’s payroll until the company decides to hire them, there’s no need for the company to add employees in the assessment period to their benefits program. Contract workers are paid hourly and do not go on the company’s benefit plan until they become permanent staff, which can help control costs.
Adapt to Uncertain Workload or Timeline
Contract to hire is a good option for companies dealing with uncertain workloads or timelines. Using this type of hiring allows companies to get someone up and running to fill their immediate needs with the option to keep them on full-time if the demand for their skills persists.
It’s advisable not to use a contract to hire to fill a temporary vacancy, such as a project-based or seasonal position because a contractor will expect an opportunity to become a permanent employee if they perform well.
Why Should Your Company Use Direct Hire Recruiting Services?
The cost of hiring top talent can be high, especially if your company decides to manage its recruiting efforts internally. In that case, there are many things to do, both from a time and money perspective, before a qualified candidate becomes a new hire. The process involves:
- Having an internal HR team to manage the hiring process;
- Creating and maintaining detailed job descriptions;
- Promoting open positions on career sites, job boards, career, fairs, and advertising;
- Screening resumes;
- Managing skill assessments;
- Conducting background checks;
- Checking references;
- Presenting job offers;
- Negotiating; and
- Closing the deal.
After all of this is done, you can finally welcome your new hire and start the onboarding process. As mentioned, the cost of hiring just one new employee can go anywhere from $4000 up to $7000, while replacing a current employee (as opposed to filling a new position) can be even higher. In fact, the hiring cost for a direct replacement can be between 50% and 60% of that employee’s yearly salary!
With such numbers, it is clear why you need to hire the right talent for the job on the first try, especially when hiring for permanent leadership roles. Otherwise, you will pay a lot of money to onboard people who will not stay with your company for long. So, what can you do to help mitigate the pressure of hiring top talent? One solution is to hire a recruiting agency to manage your direct hire placements.
What are the Advantages of Direct Hiring?
Direct hire recruiting is a customized process that delivers only the best-matched, top talent. The process is accomplished through meetings between the recruiting agency and your company, followed by thorough candidate searches and rigorous screening to choose only the most qualified candidates.
The most notable advantages of working with a recruiting agency to direct hire are:
1. Larger Candidate Pool
Direct hire recruiters have a large network of qualified candidates to instantly tap into when filling job positions. Many of those candidates in their network are passive ones who are currently employed somewhere else but open to offers from other companies. This gives recruiters a much wider and better candidate base to work with compared to a company’s internal HR department. Additionally, a recruitment agency is looking for the best candidates to fill the vacant positions, meaning it wants each candidate to be highly qualified for the job and a perfect fit for the company. Also, when recruiting agencies look for direct hire rather than a temporary position, more candidates are interested in the opportunity.
2. Faster Placement
When working with a recruitment agency, direct hiring can happen faster. By diving into their large talent pool, recruiters can select qualified top talent right away. This means there’s no losing time on advertising the position and waiting for resumes to be submitted.
3. Cost Saving
Remember that long list of recruitment duties from the beginning of the article? All those things that need to be done before a qualified candidate is hired? Well, those tasks are not cheap. Costs can add up so fast when managing the recruitment process in-house. But, when working with a recruitment agency, a company doesn’t need to worry about spending money on advertising, background checks, and skills assessments. That’s all taken care of by the recruitment agency. Of course, agency services aren’t free, but a company’s cost savings by partnering with a recruitment agency can be significant.
4. Less Risk
Most recruitment agencies offer a guarantee for their direct hire placements, so there is little risk if the new hire doesn’t suit your company for whatever reason. However, you must know what type of guarantee an agency offers before partnering with them.
5. Stable Work Environment
When a direct hire team member is instantly added to the company and into the existing workplace culture, they have a better sense of stability. This stability leads to a long working relationship and better performance overall. Most temporary employees know that eventually, their contract will end, but that’s not the case with direct hire employees. They are more likely to feel loyalty, exceed expectations, and work hard to make a difference in the company.
6. Benefits Make a Difference
The company’s benefits packages are a major attraction to potential candidates. A recruitment agency can easily show and highlight all of the amazing resources a company has to offer and, therefore, find high-quality talent that fits their client’s needs.
Direct hire can be a great strategy for companies to engage and hire top talent for their organization. However, a company still needs to invest some significant resources into making it work. Most companies choose to work with recruiting agencies because it saves them those resources, mainly time and money.
The agencies advertise the position, sort resumes, screen applicants, and identify a handful of top qualifying candidates. The only thing the company needs to do is choose and hire their best-fit candidate, who’ll go directly on its payroll.
Is your company trying, unsuccessfully, to fill a leadership or niche role? Are you struggling to find top talent in a tight market? If your answer is ‘yes,’ then direct hire recruiting may be the right solution for you.
Hundreds of new candidates are looking for job openings every day, and CIBR Warriors are there to help you find the right one for you. For more help on advancing your career or finding a perfect candidate in IT and Cybersecurity, contact us. We’d be happy to answer your questions and provide you with the best advice for getting started.