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Temporary Staffing Turnover – Factors To Consider

In our last blog, we learned a new way to calculate turnover rates in parity with full-time rates, and that have direct meaning with operational costs and financial metrics. Today we want to bring share a short list of temporary staffing turnover factors to consider as you develop your own business-specific factors.

Human resources professionals know the value of bringing real data to the table that the COO and CFO can understand. Turnover rates that are measured in 100’s of percentage points are alarming, and do not reflect human resources successful management – or reality.

In addition, bringing depth to numbers enables human resources professionals to understand and more effectively convey to management how these numbers and their associated costs, come to bear – and therefore set a course to manage and control them. Finally, understanding these and other factors provides a more valid approach to compare one staffing agency’s turnover-rate claims, and each agency’s unique driving factors, against another.

Yes, it’s complicated. It’s also very important. Variables that make a difference in turnover rates include:

  • Managing a temporary workforce follows your regular employee performance policies. A client company with a 2 strikes termination policy will drive higher temporary staffing turnover rates than client companies with a 5 strike policy.
  • Is the approach of the client company to use temporary workforce as a temp-to-hire mechanism for all permanent employees, or is it an long-term strategic component of the workforce? Temp-to-hire mechanisms tend to lower turnover rates.
  • How does seasonality of the agency’s clients and the required workforce change? Variations with shorter time-frames will adjust turnover rates artificially higher.
  • Industry differences. One analyst suggests that Leisure and hospitality has a 70+% turnover rate, while temporary workforces in industries like utilities, have only an 8% turnover rate.
  • Base pay rates from company to company. It’s very easy to attract a temporary worker from one firm to another with only marginal pay rates. Companies that compensate temporary workers on the low end for their industry drive higher turnover for the staffing firm. These low-pay will also increase the company’s turnover costs, resulting in lower production and quality, overall. Being the lowest paying firm on the block, is often an operational cost risk.
  • Second and third shift incentives that many firms offer will attract temporary workers from one company to another, driving the turnover rate higher for the firm with no or lower incentives to work non-standard shifts.
  • Bad hire and bad fit employees drive turnover rates higher for firms that send over bodies rather than well qualified candidates for well defined roles in the client company.
  • Weak or no job descriptions at the client company increase job dissatisfaction for temporary workers who won’t know how they can be successful and measured to achieve results for their employer and drive higher turnover rates.
  • Weak supervisory leadership, or too many bosses telling temporary workers different directives on the shop floor drives higher turnover rates for temporary employees and their staffing firm.
  • The method for calculating turnover rates for temporary staffing is poorly defined and varies agency to agency and often not relative to the operational costs a company has interest in controlling through strategic use of temporary staffing.

The list of these factors is longer, for sure. These are a few to think about, and even these have significant variation. Comparing turnover rates from one firm to another is never a direct apples-to-apples comparison. The simple fact that the two agencies have histories serving different clients drive turnover rates in varying ways. One agency’s turnover rate may be artificially low, and the next agency may be artificially high.

As we discussed in the previous blog, Barton Staffing Solutions is available to discuss these issues and help find the true nature of an agency’s turnover rate. More importantly, we can help you understand better what the specific factors your company needs to consider more closely. We’re interested in being your partner to develop your own measures for assessing the quality of your temporary staffing agency in terms of turnover rates. Call us today.