Calculating Temporary Staff Turnover Costs

Last week, the Barton Staffing Solutions’ blog posted two articles on temporary staff turnover. As we engage as a partner with our clients, it’s our obligation to share our knowledge and experience in this area to the collective good of the partnership. For our clients, we want to cut through the nonsense out there, and back up turnover numbers with definitions and real understanding of the costs.

Last Wednesday’s post: “Calculating Temporary Staffing Turnover Rates – It’s Complicated” and Friday’s post: “Temporary Staffing turnover – Factors To Consider” laid out some strategic fundamentals for hiring managers, human resources professionals, and CFOs and COOs to consider when looking at, and differentiating, the turnover rates and other factors concerning temporary staffing providers. These posts sparked some additional questions about the business costs.

I mentioned in the first article, the general costs due to separation, rehiring and retraining of a replacement temporary employee. In reality, for firms that rely on staffing companies for semi-permanent labor or professional temporary workforce over the long term, the real costs model the same costs that full-time equivalent (FTE) employees on the company’s payroll incur for turnover.

While I did not mention it in our first blog article, clearly turnover directly affects production and quality. Whether it is to produce manufactured units or other measure of enterprise productivity (calls handled in a call center, or digital productivity in terms of lead or case management) – turnover costs time, which results in lost units and lost quality due to organizational burdens noted below.

The Society for Human Resources Management provides a comprehensive template, that looks similar to the cost calculator template from the US Department of Labor. Using these sources, we have developed this fairly comprehensive list of costs to consider. Your company may not have all these costs or you may have others not listed here. This is an outline to stimulate thinking about your company’s specific costs:

HARD COSTS
Separation Processing
Administration time Hours ____ x Wages $______ = $__________
Vacancy Costs
Exit interview and analysis Hours ____ x Wages $______ = $__________
Co-worker burden Hours ____ x Wages $______ = $__________
Overtime; added shifts Hours ____ x Wages $______ = $__________
Engaging with temp agency Hours ____ x Wages $______ = $__________
Selection and Sign-On
Sourcing Hours ____ x Wages $______ = $__________
Interviewing Hours ____ x Wages $______ = $__________
Reference checking Hours ____ x Wages $______ = $__________
Drug screening Hours ____ x Wages $______ = $__________
Background checking Hours ____ x Wages $______ = $__________
Skill testing Hours ____ x Wages $______ = $__________
Orientation Hours ____ x Wages $______ = $__________
On the job training Hours ____ x Wages $______ = $__________
TOTAL HARD COSTS SUM: Hard Costs $_________
SOFT COSTS
Pre-Departure
Lost productivity of departing employee Hours ____ x Wages $______ = $__________
(exiting employee performance <50%)
Lost productivity of co-workers Hours ____ x Wages $______ = $__________
Increased time discussing organization Hours ____ x Wages $______ = $__________
(increased workload for employees)
Lost productivity of supervisor Hours ____ x Wages $______ = $__________
During Vacancy
Lost productivity of vacant position Hours ____ x Wages $______ = $__________
(overtime and added shifts)
Lost productivity of supervisor Hours ____ x Wages $______ = $__________
(time spent filling in)
Recruiting administration Hours ____ x Wages $______ = $__________
(supervisor’s time, scheduling, overtime)
Selection and Sign-On
Lost productivity during training Hours ____ x Wages $______ = $__________
(replacement requires support)
Lost productivity of co-workers Hours ____ x Wages $______ = $__________
(existing employee distraction)
Lost productivity of supervisor Hours ____ x Wages $______ = $__________
TOTAL SOFT COSTS SUM: Soft Costs: $_________
TOTAL HARD + SOFT COSTS ADDED TOTAL $_________

 

Barton Staffing has significant experience depth in the staffing industry and breadth of experience across industries working with clients who diligently focus on reducing these costs for temporary staffing alongside fulltime employee turnover costs. We can share a cost calculator specific to Temporary Staffing to help you understand the costs you experience today. Call us today to learn how we can help minimize those costs.

In the end, we strongly recommend exploring with your current staffing company their understanding of turnover, and how it is calculated for their temporary workforce they provide. Ask for evidence indicating their experience in relating their turnover rate to your costs for turnover and ensure they are as focused on minimizing turnover costs at the same level you are.

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