Recruitment Insights

5 challenges with managing temp and contract recruitment

August 8, 2023
5 challenges with managing temp and contract recruitment

Adding temp and contract recruitment to your agency's services can yield significant benefits; it enables you to diversify revenue streams, boost client satisfaction, and improve business resilience. With the industry in Australia valued at $21 billion in 2020, it’s worthwhile considering the benefits of adding contract recruitment to your firm.

While there are numerous benefits, temp and contract recruitment agencies also experience distinct challenges, demanding a blend of speed, quality, and adaptability. From financial concerns to compliance and candidate relationship management, each aspect requires careful consideration and strategic planning.

Understanding and effectively managing the challenges enables you to get results when adding contract recruitment to your services. Here are five challenges to watch for:

Cultivating relationships with your temp workers

ou have a lot of people temping for you, and you need to understand each person's expectations and career goals. If they experience issues with their current placement, you also need to be available for them to raise that with you.

Clear and regular communication is key to meeting this challenge. Keep your candidates updated about job opportunities, changes in company policies, and industry trends. Providing feedback and recognition for their efforts can also go a long way in making them feel valued and connected. Additionally, being responsive and supportive is crucial when they need assistance or have concerns.

Fostering strong relationships with your temp workers is vital for several reasons. A positive relationship can influence a worker's productivity, engagement, and overall satisfaction with your agency. A satisfied temp worker is likelier to recommend your agency to their peers, aiding your recruitment efforts in future.

Managing cash flow and profitability

Misunderstanding the financial aspects of running a temp and contract desk can hinder your firm’s success. For example, if you do not understand the difference between margins and markups and how they impact your business over time, you could compromise the business' financial stability and profitability.

In addition, temp recruitment agencies often struggle with late payments from clients while they still have to meet payroll for their temp workers. To maintain cash flow, you need to understand and account for lengthy payment periods and the impact of a client paying late. Miscalculations can quickly snowball into major losses, compromising your operations and damaging your business.

So, you must educate yourself and the relevant team members on getting these calculations right. It’s also best to conduct scenario planning exercises to understand the potential impact of events like delayed client payments.

Meeting compliance and employer responsibilities

Contract recruitment agencies have employer obligations like setting aside superannuation, withholding tax, and compensating candidates for work completed.

Failing to meet your obligations could result in fines and legal issues. Moreover, not following these rules can harm your reputation and relationships with temps and clients. People who have their paychecks missed or feel mistreated will have doubts about working with you, and you could lose current temps and anyone they might have recommended work with you.

To avoid these problems, keep up with changes in labour laws and make sure your team does too. Ensure your accounting team understands the necessary laws and has the right software to manage these duties and reduce mistakes.

Handling candidate expectations

Temp and contract workers often have varied and specific expectations regarding their roles, from the duration and flexibility of contracts to remuneration and potential for permanent employment. These expectations can differ significantly from those of permanent workers, adding a layer of complexity for contract recruitment agencies.

Misalignment between a candidate's expectations and the realities of a role can lead to dissatisfaction, decreased performance, and high turnover rates. It can also affect your agency's reputation, as disappointed candidates may share negative experiences or not recommend your agency to people in their network.

To effectively handle candidate expectations, be open and upfront about the details of each role, including contract length, job duties, pay rates, and potential for extension or permanent employment. Regularly check in with your candidates to ensure you are across any changes in their expectations. It's also helpful to provide candidates with a realistic picture of their specific industry's temp and contract work landscape. By managing expectations effectively, you can enhance candidate satisfaction and maintain a positive reputation.

Balancing speed and quality in the recruitment process

In temp and contract recruitment agencies, the demand for quick placements often clashes with the need for high-quality candidates. As many client companies require temp or contract workers to fill immediate gaps or meet project deadlines, recruitment agencies face pressure to deliver quickly. However, speed must not compromise the quality of placements.

Speed without quality can lead to mismatched placements and reduced productivity for your clients. Conversely, a stringent focus on quality can slow down the recruitment process, potentially causing delays in project timelines and loss of business opportunities.

Maintaining relationships with your candidates will support you in balancing speed and quality. Having a pool of pre-screened candidates that you can place speeds up the initial stages of recruitment. Additionally, technology such as applicant tracking systems can expedite recruitment without compromising quality.


Managing temp and contract recruitment comes with unique challenges, including managing cash flow, meeting compliance and employer responsibilities, cultivating relationships with temp workers, handling candidate expectations, and balancing speed with quality in the recruitment process. Each challenge requires careful attention and proactive management to ensure a smooth and successful operation.

Overcoming these challenges is critical to the success of any recruitment agency. Navigating them successfully improves operational efficiency, enhances your agency's reputation, strengthens relationships with clients and candidates, and contributes to business growth.

APositive’s solutions support temp and contract recruitment agencies

Our Invoice Finance solution alleviates the financial pressures faced by contract recruitment agencies. Rather than wait 60 to 90 days for a client to pay your invoice, our solution gives you access to the funds invoiced within 24 hours. So you can focus on meeting your employer obligations, placing the right candidates and maintaining a healthy cash flow.

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