Turn Over Formula

Measure, then improve turnover of temporary employees in 8 steps

People are an organization’s most important asset.  It’s said all the time, but do companies actually do anything about it?  Is it ever really looked at, paid attention to, reviewed or measured?  Can people be any more essential than the temporary employees of a staffing firm?  They are “the” service being provided to the staffing agency’s clients.  Nothing is more important for a staffing company.  Even though businesses in any industry know that their long-term advantage resides in their people, the majority don’t measure employee retention or turnover.

But, to play devil’s advocate, here’s why: it’s not easy to figure out how to measure the impact employee retention has on your company.  People tend to optimize what they can measure, so it’s necessary, but it seems there are many ways to calculate turnover.  And if it’s complicated for a typical company with full-time employees, imagine the task for staffing firms with employees working temporary assignments that vary from one day to years. According to Statista, the average employment tenure of contract and temporary employees in the United States during 2019 was 10.1 weeks.

“Fundamentally, temporary assignments are not permanent, and don’t lend themselves to a meaningful annual-based calculation metric that will help a company manage and continually improve its operations.” Barton Staffing Solutions notes a better measure for staffing firms where employees work short term assignments, is to measure the “average number of employees who leave before their assignment ends.”

I completely agree.  If an employee starts and successfully ends an assignment, why should that be counted as turnover?  That is what the staffing industry offers, employment of individuals to work assignments that are temporary.  The goal is to have employees work more than one assignment or work long term assignments to benefit all parties as well as possible permanent hire for those who are seeking regular work.  But in the meantime, turnover in the staffing industry and how it’s typically measured is abhorrent.

Turn Over FormulaBarton Staffing created a turnover formula that is much more exacting to determine “regrettable” turnover rather than including assignments that were completed as ordered. With a good front and back office software, any temporary staffing firm should be able to calculate this:

(Total Annual Assignments Vacated Before End) / (Total Annual of Job Assignments) * 100 = Turnover

Here’s an example:

(750 employees separated pre-assignment end) / (3550 total job assignments) * 100 = 21% Turnover

This calculation shows that of the total 3550 temporary assignments, only 21% incurred the replacement costs – or the negative aspect of turnover that companies want to avoid.  This is much more realistic for the aggregate industry average for turnover calculated for all industries.  This method considers assignment duration, and the successful completion of that assignment.

Success StepsEmployees are not only company assets on day one but are appreciating assets that become more valuable over time, another reason why not losing talent is critical and why measuring your turnover should become as consistent as evaluating your rent and office expenses.  The appreciating asset is exponential in a temporary employee as the learning curve flattens as your employee learns to understand how you operate and how they bring and receive value working the job assignments offered.

How then, do you improve turnover specifically for a staffing company and temporary employees?  It really is quite different from permanent staff turnover.  After 30 years in staffing, these are the tips I found to be most applicable and realistic to our unique industry:

Jobs AdImprove your job post with accurate job descriptions – include experience and education required, pay ranges, work requirements that reflect what the actual job entails to create better matches while ensuring the candidates understand the expectations of the work assignment.   If candidates need to be able to use a certain tool or software, for instance, make this absolutely clear. “The more in-depth your job post is, the more likely the best talent—those that know they only need to apply for a certain number of roles—will choose your job ad to apply to.”

Coffee MeetingAsk the right questions – screen candidates in person to ensure the best match for each of your client’s open positions.  Making sure the candidate is competent for a role isn’t good enough, you want to make sure they are also the right fit for your client. Not asking the right job interview questions can add to turnover.  Assess skills, look to see if their goals are in line with the client’s assignment and if they match your client’s company culture and work environment.

Compensation – research the local job market, what your competitors are paying and offering the talent you seek and adjust your wage and benefit package as the market indicates.  Many client companies like to think they can require the staffing firm to pay less than the current pay rate and justify doing so by giving the employee a raise once hired onto their payroll.  The problem is temporary, hourly employees will typically jump to another job paying only an additional 25 cents/hour.  Show your temporary employees they are valued members of the company.  A competitive salary increases production, and the company can demand a higher quality of work in exchange for higher wages.

Benefits – benefits attract employees, retain talent and improve productivity and morale. Offering benefits to a temporary employee is not an easy feat due to expense and paperwork, but many quality staffing firms make it happen, regardless.  Electronic employee onboarding alleviates paperwork, in fact, replaces paper, makes the process not only much easier but 100X faster.

Machine ShopIntroduce candidates to the work environment – give prospective candidates a tour of the workplace and if you can go a step further, have them spend time with the team they will be joining. Our staffing firm would not only tour two of our largest clients manufacturing facilities, but we would also conduct a brief assembly of some actual parts used in the production process.  This type of client specific detailed screening is paramount to not only eliminating those candidates who show no interest or lack dexterity, but also affords employees the opportunity to decline when the position is just not the right fit for them.

Work culture – can improve employee retention. Ensure you work with clients that have a good work environment where your employees will be recognized as a valuable member of the company.  Partnering with quality companies makes recruiting so much easier as you will find applicants will come to you to apply with the sought-after client, they know you represent.

Training – promotes individual growth and development where employees can improve upon their skills and in turn are more effective and productive in your client’s workplace.

Calculator FiguresMeasure – how effective each of your Recruiters are in attracting, hiring, and retaining new talent and use this data to improve your efforts moving forward.  Then, measure turnover, year over year and chart your progress keeping notes on the positive and negative occurrences that contributed to your numbers.

The benefits to reducing turnover in any company are obvious, so we won’t go over those here.  I’ll just leave you with the average expense to replace an employee paid $8.00/hour is $3500.  It’s expensive to replace hourly, temporary employees as well as permanent full-time staff.  Any work you put in to reducing turnover increases your bottom line.

COATS Staffing Software can help you track and measure employee turnover.  And our all-in-one staffing software solution, provides a multitude of remote hiring tools to reach  the 93% of job seekers who conduct their employment search online.  Improve your job postings with our online job posting software with 70% of employees using job boards as their number one employment resource.

Lynn Connor, COATS Staffing Software

Business Development (800)888-5894

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