Temporary vs. Direct Hire: Finding the Right Fit

When building a workforce, employers must choose between different types of employment. Temporary hires offer flexibility for both the employer and the candidate, while direct hires provide greater permanency and commitment. Understanding the differences between temporary and direct hires will help you make an informed decision for your organization.

What Is a Temporary Hire?

A temporary hire is an employee who is hired for a specific project or a predetermined period. When sourced through a temporary staffing agency like Career Group Companies, these employees remain on the agency’s payroll. The recruiting firm acts as the “Employer of Record,” so the end-user company doesn't need to worry about payroll taxes, benefits administration, workers’ compensation, or unemployment insurance. Instead, the hiring company pays an all-inclusive hourly bill rate to the recruiting agency, covering both the employee’s pay, payroll services, and the agency's fees.

Temporary Hire Pros

Immediate Availability: Temporary hires can be quickly available for last-minute coverage, whereas permanent hires often take longer to secure. According to SHRM, the average time-to-hire in the US is 63 days, which can be even higher in some industries.

Access to Expertise: The temporary model allows employers to access high-level consultants on a per-project basis, avoiding the need to increase headcount and incur additional expenses.

Flexible Workforce: Employers can adjust their workforce size up or down as needed without committing to permanent positions.

Attractive to Candidates: Many candidates enjoy the flexibility of temporary or freelance roles, which offer:

• Greater schedule flexibility
• Opportunities to explore different roles and industries
• The ability to work with multiple clients
• The chance to enhance their resumes with reputable companies

Faster Hiring: Temporary roles often have quicker hiring processes, which benefits candidates seeking immediate employment.

Temporary Hire Drawbacks

Smaller Candidate Pool: There may be a smaller pool of candidates interested in temporary roles compared to those seeking permanent positions.

Temp-to-Hire Option: For those needing more flexibility but still looking to attract candidates for longer-term roles, a temp-to-hire model might be suitable.

For Candidates to Consider: Benefits and Taxes. Temporary hires working as independent contractors (1099) do not receive benefits or have taxes withheld., Those employed through a staffing firm may receive some benefits and have taxes withheld if they’re working on a W2. Independent contractors must also manage their own quarterly taxes and might earn less overall if working on a project fee rather than an hourly rate.

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What Is a Direct Hire? 

A direct hire is an employee hired by an employer for a part-time or full-time position and onboarded directly into their organization. Even if the employer utilizes a recruiting firm to secure the employee, that organization (not the recruiting firm) is the employer of record. These positions are permanent and don’t have agreed-upon end dates. Though recruiting agencies often source these candidates, the employer is responsible for onboarding, paying, and administering benefits to them.

Direct Hire Benefits

Direct hires can be easy to integrate into your workforce with more of an opportunity for extensive training and team-building. Regarding temporary vs. direct hires, the latter may have a greater sense of commitment to the profession, role, and company. Additionally, offering a permanent position may increase the size of your  candidate pool.

Direct hire candidates are thought to have more job stability, even though most direct hire jobs are still considered at-will employment, meaning either party can terminate the relationship at any time Permanent hires often feel more confident about building relationships and experience a greater sense of  career advancement.

Direct Hire Drawbacks

Direct hiring could be seen as a drawback because, despite employees being at-will, there is typically a greater emphasis on training and long-term retention, which can reduce flexibility in adjusting headcount  quickly.

For Candidates to Consider: If you are coming from a previous freelance role with a lot of flexibility in your schedule, direct hire roles tend to be more rigid with set hours. If this kind of schedule is important to you, it’s important to seek out an employer known for prioritizing employee well-being and flexible scheduling options.

Comparing Temporary vs. Direct Hiring

This chart can help you make an informed decision as you decide whether to hire temporary vs. direct hire employees.

Successfully Onboarding Temporary vs. Direct Hires

Onboarding is a critical aspect of the hiring process and differs for temporary and direct hires.

Onboarding a Temporary Hire

Recruiting agencies typically manage all onboarding and compliance paperwork. Employers can speed up the process by preparing compliance documents and providing a clear overview of company policies and expectations. Pairing temporary hires with experienced employees can offer additional support.

Onboarding a Direct Hire 

Onboarding for direct hires is managed full by the hiring company. Recruiting firms may assist in running background checks or reference checks upon request. Onboarding sessions for direct hire employees may include  information sessions covering topics like start dates, team introductions, and workspace setup. Support from co-workers and corporate orientations are also helpful with direct hire onboarding.

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Work With Career Group Companies to Find Your Next Hire

We manage the entire hiring process, from applications to onboarding, and offer access to a well-vetted candidate pool for quick and effective role fulfillment. Choose Career Group Companies as your recruiting partner and streamline your hiring process.

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