For decades, companies have relied on staffing agencies to help build their permanent workforce. One of the most common and widely adopted models has been Temporary-to-Permanent (Temp-to-Perm), also known as Contract-to-Hire.
This model has historically delivered meaningful value to employers. While there are many advantages, the most frequently cited benefit is the ability to “try before you buy.” In other words, before making a long-term employment commitment, employers require workers to prove themselves on the job before being offered a full-time, benefited role.
At its core, the temp-to-perm model is a low-commitment hiring strategy for employers.
While there are some benefits to employees, this model has disproportionately benefited employers, primarily because it shifts cost, risk, and uncertainty away from the company and onto the staffing agency.
Specifically, employers benefit because:
Recruitment Cost Absorption
- According to SHRM, the average cost per hire is approximately $4,700. In a temp-to-perm model, the staffing agency absorbs the full recruitment cost. These costs are recovered gradually over the life of the assignment. If a worker is not a fit, the employer can end the assignment and request a replacement, without incurring additional recruiting expenses.
Workers’ Compensation
- Temp-to-perm employees are employees of the staffing agency, not the client. As a result, workers’ compensation insurance, claims management, and premium volatility are the responsibility of the staffing agency, not the employer.
Risk Mitigation
- Employment-related risks, such as early turnover, bad hires, performance issues, and certain compliance exposures are largely transferred to the staffing agency. The employer pays only for productive hours worked.
Payroll Taxes and Benefits Burden
- Staffing agencies handle payroll processing, employer payroll taxes (FICA, FUTA, SUTA), benefits administration, onboarding compliance, and timekeeping, reducing administrative complexity and financial exposure for the client.
Unemployment Insurance
- Because the staffing agency is the employer of record, unemployment claims and their long-term impact on tax rates generally fall on the agency rather than the client.
The Model Has Changed
The temporary-to-hire model has been ruptured.
It has been disrupted by shifts in workforce demographics and expectations, particularly among a new generation of workers who increasingly view temporary employment as undesirable or unnecessary, especially in a tight labor market.
Today, the unemployment rate in Georgia is approximately 3.6%, meaning roughly 96.4% of people who participate in the Labor Market are already employed. Of the remaining 3.6% who are unemployed, an estimated 25–40% face significant employability barriers that make them difficult to place in many roles. These barriers often include:
- Criminal backgrounds
- Substance abuse issues
- Transportation challenges
- Reliability and attendance problems
- Behavioral or interpersonal challenges
- Health constraints
- Skill mismatches
The Reality of Today’s Labor Market
At 3.6% unemployment, employers are not competing for unemployed talent. They are competing for people who are already working, who have options, and who are increasingly unwilling to accept temporary employment as a prerequisite for full-time work.
As a result, a model that once reduced risk for employers is now restricting access to talent, slowing hiring, and filtering out qualified candidates who can choose more direct paths to employment.
What Replaces Temp-to-Perm for Permanent Hiring
If temporary employment is no longer an effective gateway to permanent roles, the natural question becomes: how do companies preserve rigor, speed, and risk management without asking candidates to accept provisional employment? The answer is not less discipline. It is earlier discipline.
In this model, companies hire employees directly from day one, while outsourcing the most complex and resource-intensive parts of the hiring process: sourcing, screening, assessment, coordination, and onboarding execution. Evaluation happens before the offer, not during a trial period.
Rather than transferring employment risk to a staffing agency after the hire, companies transfer process risk ahead of the hire. Recruiting expertise, data, and structure replace temporary status as the risk mitigator. This approach preserves what employers valued most in temp-to-perm: speed, scalability, and protection from bad hires, while aligning with what today’s workforce demands: stability and commitment.
The result is access to stronger candidates, faster hiring decisions, and permanent employees who start with confidence rather than contingent mindsets. Temp-to-perm was a rational response to yesterday’s labor market. Direct hiring with earlier, more disciplined evaluation is the rational response to today’s.
