Direct Hire
What direct hire means in staffing, how a direct hire position differs from temp-to-hire, how placement fees and guarantees work, and what agencies track.October 8, 2026
3 min read
Running an Agency
Written by the NextCrew team
Definition
Direct hire is a staffing service where the agency recruits a candidate who goes straight onto the client's payroll as a permanent employee from day one. The agency never employs the person. It earns a one-time placement fee, usually tied to the candidate's first-year pay, and often backs the placement with a guarantee period.
What is a direct hire position?
A direct hire position is a permanent job the client fills through an agency's recruiting. The agency sources, screens and presents candidates; the client interviews, makes the offer and employs the person. Taxes, benefits and workers' comp belong to the client from the first day.
| Direct hire | Temp-to-hire | Temporary | |
|---|---|---|---|
| Who employs the person | Client, from day one | Agency first, then client | Agency |
| How the agency earns | One-time placement fee | Bill rate, then a conversion fee if owed | Bill rate for every hour |
| Trial period | No, a guarantee instead | Yes | Not applicable |
| Typical roles | Supervisors, specialists, office | Hourly roles with a path to permanent | Event, peak and fill-in work |
How are direct hire fees set?
The placement fee is most often a percentage of the hire's first-year base pay, and the percentage rises with how hard the role is to fill. Some agencies charge a flat fee for hourly roles instead. The fee is due when the person starts, and the agreement sets the payment terms.
Illustrative example: a client hires a warehouse supervisor at $60,000 a year through an agency charging 20%. The placement fee is $12,000. If the supervisor leaves in the first 60 days and the agreement has a 60-day guarantee, the agency owes a replacement or a refund under its terms.
What do agencies track on direct hire?
- Submittals per hire, to see how much recruiting effort each placement takes.
- Time to fill, from the job order to the accepted offer.
- Guarantee dates, so a fall-off inside the guarantee is caught and replaced quickly.
- Fee collected per recruiter and client, since direct hire revenue arrives in large, uneven amounts.
How NextCrew fits
NextCrew's applicant tracking system follows each candidate from application through submittal to placement, with the job order and the client attached. Candidates who aren't hired stay in the talent pool for the next order. See staffing ATS software for how the pipeline works.
Frequently asked questions
Related terms
- Placement fee: how the agency is paid on a direct hire.
- Temp-to-hire: a trial period before the permanent hire.
- Fall-off: a hire who leaves inside the guarantee.
- Submittal: presenting candidates to the client.
- Time to fill: how long the search takes.