Hiring isn’t one-size-fits-all, especially when it comes to professional roles in areas like accounting, HR, IT, and marketing. Whether you’re filling a time-sensitive project or building out a long-term team, it’s important to understand the different types of staffing models available and how each one impacts your bottom line.
This article outlines three core hiring models: direct hire, contract, and contract-to-hire. By understanding how each option works, you can make more informed workforce decisions that align with your goals, budget, and internal capacity.
What is Direct Hire Staffing?
In a direct hire scenario, your company works with a staffing firm to identify and recruit a candidate who is then hired directly onto your internal team. The staffing agency charges a one-time placement fee, typically calculated as a percentage of the candidate’s first-year salary.
Once the offer is accepted, the new employee becomes your full-time staff member, and your business assumes all employment-related responsibilities from day one. This includes payroll, benefits, taxes, onboarding, and long-term performance management.
Direct hire offers maximum control but also comes with the most risk. If the hire doesn’t work out, your organization bears the cost of starting over.
What is Contract Staffing?
Contract staffing allows you to bring in talent on a temporary basis without adding to your internal headcount. The staffing agency serves as the employer of record, managing payroll, benefits, taxes, and compliance. Your company simply pays an agreed-upon hourly bill rate.
This option is especially useful for project-based work, seasonal initiatives, or times when your internal team is stretched too thin to take on new hiring responsibilities. Since you’re not responsible for long-term employment obligations, contract staffing gives you maximum flexibility with minimal risk.
What is Contract-to-Hire Staffing?
Contract-to-hire offers a blended approach. The staffing firm provides a qualified professional who starts as a contractor but may be transitioned into a full-time employee after a trial period. During the contract phase, the staffing agency remains the employer of record.
This model is ideal if you want to evaluate a candidate’s performance and cultural fit before extending a permanent offer. Many staffing firms offer reduced or waived conversion fees if the candidate is hired after meeting a minimum number of hours on assignment.
Which Staffing Model Is Right for Your Business Financially?
The best option depends on your immediate needs, long-term goals, and risk tolerance. If you need a full-time internal employee for a core role, direct hire may be the best fit. If you’re staffing a short-term project or want to limit liability, contract staffing provides flexibility without commitment. And if you’re somewhere in between, contract-to-hire gives you a structured way to test the waters.
Professional roles often require specialized skill sets, which can make the hiring process longer and more resource-intensive. That’s why many companies use a combination of models, leveraging contract staffing for urgent needs while taking a more measured approach for permanent roles.
Want help determining which model works best for your next hire? Explore more articles in our Learning Center or connect with our team to talk through your options.