What is Direct Hire?

October 7, 2013

inhouseadmin

A direct hire generally refers to the traditional means of hiring an employee: you advertise the position, interview the candidates, and extend a job offer. But the major difference between a direct hire and other hiring methods is that you don’t involve an outside source in the employment process, such as a temp staffing or contract staffing agency. A direct-hire employee is employed by you, not anyone else. Here are some factors to consider when hiring direct.

Pros and Cons of Hiring Direct
To decide if hiring direct is right for your company, consider these pros and cons:

Pros

  • Complete control over hiring process
  • Upfront cost savings – no recruiter or staffing agency fees
  • Employee commitment
  • Availability of low cost staffing systems

Cons

  • Time investment of finding candidates, interviewing, screening
  • Ongoing costs of payroll taxes, providing benefits
  • Liability for workers comp, unemployment, and other insurance

If you decide to find candidates yourself, where you do you start? Posting the position on job boards and career websites, or running an ad in the local newspaper are all viable options, but you may be overwhelmed with a large number of under-qualified candidates. Using a good staffing system will be effective in organizing and screening candidates. As a small business owner, networking and spreading the word among your own employees are good places to start. Attend a local networking event or two, and you may find that a casual social connection may give you a lead or even turn out to be a great candidate themselves.

The True Cost Of An Employee

According to estimates, the true cost of hiring an employee adds anywhere from 40% to 60% to an employee’s payroll dollars, including employer payroll taxes, workers’ compensation insurance, unemployment insurance, health insurance, and other voluntary benefits. When you hire direct, you are responsible for not only paying the employee their salary, but paying for benefits, insurance, and taxes, too.

Ongoing Responsibilities

After the employee is hired, the real work begins. There are ongoing administrative tasks such as running payroll, remitting and filing employee and employer taxes, educating and enrolling them in benefits, etc. There are also managerial tasks such as training, motivating, giving feedback, addressing performance issues, managing conflict, etc. These skills don’t always come naturally, so it’s wise to seek out training for yourself and learn about managing employees. Talk to other business owners for tips and guidance. Stay current by reading blogs, articles, and books on employment issues or taking courses on employee management.

Partial Outsourcing of the Hiring Process

Even if you hire direct, you could still use other methods to assist you with the hiring process. Besides using an online staffing system, you can use a recruiter to find candidates, but hire the candidate direct. You can also find candidates yourself, but “try before you buy,” essentially allowing the employees to work on a trial basis while you evaluate them in the role.

How to get started

Find out as much as you can about a candidate by checking references, conducting background checks, and careful interviewing. Learn how to find the best candidate: read Candidate Screening Tips and Interview Tips.

Hiring Resources

Hiring Methods