Secure a Stronger Future for Your Staffing Agency Now

Mar 10, 2025 | Being the Leader In Your Firm, Business Goals, Growing Recruiting Revenue | 0 comments

In today’s shifting economic landscape, staffing agencies face immense pressure to sustain growth and revenue. As Dan Morey from Staffing Monthly recently noted, many have begrudgingly embraced the “flat is the new growth” mentality, especially with declining revenues and shrinking margins. But is there another way? In a recent interview, Mike Gionta, founder of The RecruiterU and author of Grow Your Recruiting Business, shared actionable strategies to help staffing agencies expand their horizons by incorporating direct hire and permanent placement services.

Why Direct Hire Is the Opportunity You’ve Been Overlooking

Mike believes staffing agencies can boost their business by adding a direct hire (or permanent placement) division. He notes that staffing and recruiting firms are fundamentally different. This means they serve different purposes, even if they seem similar. Companies may need both staffing and permanent hires, but the talent pools often don’t overlap. This means that each requires a different approach to sourcing talent. Success in direct hire isn’t just about adding it to staffing—it’s about creating a separate, strategic business line.

“Think of it as developing an entirely new practice,” Mike explains. Staffing contracts often originate from HR and Talent Acquisition Departments. This makes successful perm placements come directly from hiring managers. Understanding this difference is crucial for breaking into the direct hire market.

Practical Steps to Launch Your Direct Hire Division

Mike shared several practical approaches for staffing agencies to get started with direct hire:

Leverage Existing Relationships: Begin by tapping into your current client base. Ask hiring managers where they face challenges with permanent roles. Consider conducting a hiring survey to gauge the market. A few questions like “Do you plan to increase, decrease, or maintain staff size in the next six months?” or “What are the two most challenging roles to fill?” can provide valuable insights.

Target the Right Companies: Mike advises focusing on businesses with less than $250 million in revenue. These companies tend to have less HR infrastructure, which means less bureaucracy and more direct access to decision-makers. This makes them often more flexible with fees.

Create Partnerships with Venture Capitalists: Private equity and venture capital firms are often looking for talent to execute their growth strategies. Position yourself as a resource to their portfolio companies. Mike suggests offering to introduce yourself through a brief presentation at a board meeting or even a simple Zoom call. “If you meet or exceed expectations on a search, ask for an introduction to their venture partners. “These connections can lead to viral growth for your business,” he says.

Rethinking Candidate Engagement: A Gap-Focused Approach

Direct hire recruitment requires a different approach to candidates. Mike’s strategy is rooted in identifying and addressing gaps in a candidate’s current situation. He recommends starting every conversation with a simple, non-threatening question:

“I have no idea what’s going on in your career right now. I just wanted to see if you’d be open to hearing about something potentially stronger than your current situation. What are your thoughts on that?”

Once candidates express interest, avoid jumping straight into the job pitch. Instead, dig deeper: “If you had to describe one or two minor imperfections in your current role, what would those be?” This approach uncovers dissatisfaction and sets the stage for aligning your opportunity with their vision for their career.

Structuring Your Team for Direct Hire Success

Mike also addressed the operational side of building a direct hire division. The rise of global outsourcing offers a cost-effective solution for many staffing agencies. Companies like HiKinex, which Mike has partnered with, provide skilled teams in locations like the Philippines and Brazil to handle tasks like sourcing and pre-screening candidates. This model allows U.S.-based recruiters to focus on higher-value activities, such as closing deals and building relationships.

Outsourcing isn’t just a cost-saving measure—it’s also a powerful retention strategy. By providing top-performing recruiters with resources that amplify their productivity, firms can make it harder for them to leave for a competitor or strike out on their own.

The Value of Asking Questions (and Hiding Your Ignorance)

One of Mike’s most impactful pieces of advice for recruiters venturing into direct hire is simple: Ask more questions. “Stay in question mode,” he says, “Because in question mode, you never reveal your ignorance.” Whether you’re approaching a venture-backed CEO or a candidate, thoughtful questions position you as a consultant and problem solver, not just a service provider.

Final Takeaways

Mike’s insights reveal a three-pronged strategy for staffing agencies looking to expand into direct hire:

Business Development: Use tools like Crunchbase to identify venture-backed companies or conduct hiring surveys to uncover market needs.

Candidate Engagement: Shift the focus from selling jobs to uncovering career gaps and providing solutions.

Team Structure: Leverage global outsourcing to streamline processes and boost retention.

As Mike concludes, these strategies don’t just drive revenue—they build long-term relationships and create a more holistic staffing solution for clients.

If you’re ready to explore these ideas further, consider reaching out to Mike directly at MikeG@therecruiteru.com or check out his book, Grow Your Recruiting Business, for a deeper dive.

P.S. Whenever you’re ready… here are 4 ways I can help you grow your recruitment business:

1. Grab a free copy of my Retainer Blueprint

It’s the exact, step-by-step process of getting clients to give you money upfront. https://get.therecruiteru.com/lm​​

2. Join the Recruiter Think Tank and connect with firm owners who are scaling, too. It’s our Facebook community where smart recruiters learn to make more money and get more freedom. https://www.facebook.com/groups/there​​…

3. Join me at our next event

3x a year, I run a 3-day virtual intensive, sharing the 9 key areas that drive a 7-figure search firm. Click here to check out the dates of our upcoming event. https://get.therecruiteru.com/live

4. Work with me and my team privately

And if you ever want to get some 1:1 help, we can jump on the phone for a quick call and brainstorm how to get you more leads, more placements, and more time. https://get.therecruiteru.com/scale-now​

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