Direct hires are employed by a company for long-term or permanent roles.
Direct hire usually refers to the hiring of long-term employees with benefits such as pensions and paid holidays. Here we have focused in its definition as an alternative way to describe the process whereby a staffing company finds permanent recruits on behalf of a client.
Sometimes, however, it is used to describe the recruitment of an employee directly by a company without involving a recruitment agency/third party company at all.
History of direct hire
During World War II large numbers of young men were called up to fight and this meant the number of people available to work in production declined sharply. Despite a high demand to produce munitions there was a skills shortage. To fill the gaps staffing agencies began to source and assess people and lead them to companies that might need their skills.
After the war, however, there was a huge increase in globalisation, industrialisation and consumerism and there was a rise in the need for exactly the right talent. Staffing companies were still helping candidates find the right kind of job, but it became clear that it made more sense to work for companies. They set about finding people to meet the needs of specific companies and the modern concept of direct hire was born.
Recent trends in direct hire
While contracting has become popular among STEM professionals in recent years, a difficult economy has more recently led to a greater focus on job security. Many candidates are now seeking long-term or permanent roles with benefits. At the same time, growing skills gaps have made it more difficult for companies to find the people they need to fill critical roles.
As a result of these two trends direct hire has become more popular because of the ability of staffing agencies to match candidates within their networks to clients who need their particular skills.
Advantages of direct hire
Quality of talent: Direct hire usually offers greater job security and can therefore be attractive to leading talent that may need greater incentives to leave their current roles.
Cost efficiency: Direct hires go directly onto a company payroll and so avoid any costs associated with keeping them on the payroll of a staffing agency. Companies usually pay a one-off fee to the agency instead.
Retention: Loyalty can be one of the benefits of direct hire because the recruit feels they are one of the team and this can lead to better retention over time.
Disadvantages of direct hire
While temporary or contract staff remain on the staffing agency’s payroll, direct hire means that the company is immediately responsible not only for their salary but also benefits like a retirement plan and insurance.
And while the right staffing agency is likely to be skilled in identifying the right people it is still likely to take longer than filling a contract role. Unlike other models such as contract-to-hire there is also no trial period in which the company can assess the candidate.
Use case
Schneider Electric designs and manufactures sustainable products that help households and businesses use energy more responsibly, resulting in less wastage. When the company wanted to recruit a new engineering team leader they approached staffing agency Computer Futures, an SThree brand. Computer Futures recommended Kathleen Dunham and she was appointed in 2021, the first team woman had held and engineering tam leadership toles at the company.