Direct Hire (Staffing)

How it works

Direct hire, in a staffing context, is a placement where an agency recruits and screens a candidate who is then hired directly onto the client company's own payroll from day one — no temporary or trial period through the agency.

The agency handles sourcing, screening, and often initial interviews, then presents finalists to the client; once the client extends an offer and the candidate accepts, that person becomes an employee of the client company immediately, never passing through the agency's own payroll at any point. The agency's compensation is typically a one-time placement fee — often calculated as a percentage of the new hire's first-year salary — rather than the ongoing markup an agency earns on a temp worker's hourly pay rate over time.

In staffing & high-volume hiring

It's typically used for permanent roles where the client wants a candidate as a full employee right away, and the agency's value is entirely in the sourcing and screening work up front. Fee structures for direct hire are usually a one-time placement fee (often a percentage of first-year salary) rather than the ongoing markup an agency earns on a temp or temp-to-hire worker's pay rate.

Common mistakes

• Confusing direct-hire fee structures with temp-to-hire conversion fees, which are calculated and triggered differently.
• Assuming direct hire is always cheaper than temp-to-hire for the client, when the right choice actually depends on whether a trial period before commitment is worth the alternative fee structure.
• Not clarifying guarantee terms (what happens if a direct-hire placement doesn't work out within the first few months) before the placement is made.