Staffing Turnover

Reducing Turnover Rates for Staffing Agencies

Lynn Connor

Staffing agencies play a crucial role in matching employers with temporary employees who possess the necessary skills and expertise. However, one common challenge faced by staffing firms is turnover among their temporary workforce. High turnover can lead to increased costs, decreased client satisfaction, and a negative impact on overall business performance.

According to the Statista Research Department, “In 2021, the turnover rate for temporary and contract staff was 415 percent, a decrease from 443 percent in 2020. The turnover rate refers to the percentage of employees in a workforce who leave within a certain time period.”

In 2022, the turnover rate for temporary and contract employees was 419%, according to data from the quarterly ASA Staffing Employment and Sales Survey, up 4% from 2021. The average tenure for staffing employment was 10.0 weeks in 2022, down only .1 from 2021.

Employee turnover is an important statistic for staffing firms because it helps you determine how often you will need to hire new employees. When your turnover rate is high, your employees average a shorter tenure with your firm. When the turnover rate decreases, your average employee tenure goes up. Tenure, the duration of employment, is based on turnover, and these two metrics are inversely related.

What does this mean for your staffing agency? When your turnover rate is lower, your agency spends less on advertising, interviewing, new-hire paperwork, orientation, placements, and training. Client and employee satisfaction increases, and recruiters are less stressed and overworked when turnover is low. Lower turnover also results in increased profit margins for your firm. Let’s explore the importance of calculating turnover rates for staffing agencies and discuss strategies to reduce turnover.

Calculating Turnover Rates:

Calculating turnover rates allows staffing agencies to measure the extent of employee churn within a specific period. By using a simple formula, agencies can gain insights into the effectiveness of their employee retention efforts. The formula is as follows:


Turnover Rate = (Number of Temporary Employees Separated / Average Number of Temporary Employees) x 100

This formula provides a percentage value representing the turnover rate. The number of separated employees refers to those who have left the staffing agency, and the average number of temporary employees is calculated based on a specific time frame (e.g., monthly, quarterly, or annually).


Importance of Knowing Turnover Rates:

  1. Cost Implications: High turnover rates can be costly for staffing agencies due to the expenses involved in recruiting, hiring, and training new employees. By understanding the turnover rate, agencies can evaluate the financial impact and make informed decisions to mitigate the associated costs.


  1. Client Satisfaction: Consistently replacing temporary employees can negatively impact client satisfaction. Frequent changes in the workforce disrupt operations, hamper productivity, and increase the burden of retraining. By knowing the turnover rate, staffing agencies can proactively address client concerns and ensure stable and reliable workforce support.


  1. Retention Strategies: Calculating turnover rates provides staffing agencies with valuable data to identify patterns and underlying causes of turnover. Armed with this information, agencies can develop targeted strategies to improve employee retention. For instance, they can focus on enhancing the onboarding process, providing ongoing training and development opportunities, and fostering a positive work culture.


Reducing Turnover in Staffing Agencies:

  1. Employee Engagement: Actively engaging temporary employees by fostering a sense of belonging and recognition can positively impact their job satisfaction and desire to stay. Regular feedback, opportunities for growth, and transparent communication channels are essential to building employee engagement.


  1. Competitive Compensation: Offering competitive pay rates and benefits is crucial in attracting and retaining talented temporary employees. Conducting market research to ensure that your compensation packages align with industry standards can help reduce turnover.


  1. Skill Enhancement: Provide training programs and opportunities for temporary employees to upskill or cross-skill. This investment in their professional growth not only benefits the individuals but also enhances their loyalty and commitment to the staffing agency.


  1. Effective Communication: Clear communication channels and regular updates help employees feel informed and connected to the staffing agency. Establishing open lines of communication encourages employees to voice their concerns and allows the agency to address issues promptly.


  1. Exit Interviews: Conducting exit interviews with departing temporary employees can provide valuable insights into the reasons behind their departure. By analyzing feedback, staffing agencies can identify areas for improvement and implement the necessary changes to reduce turnover.


Turnover rates are critical indicators for staffing agencies to assess the effectiveness of their employee retention efforts. By calculating turnover rates and understanding their implications, agencies can make informed decisions, improve client satisfaction, and reduce costs. COATS Staffing Software can help calculate turnover and provide other key performance indicators needed to run a successful staffing agency.

Strategies can be implemented to help your agency reduce turnover and build a more stable and motivated temporary workforce. COATS Staffing Software enhances your operational efficiency, delivers exceptional service to clients, and fosters long-term success. Contact us for details.

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