Any way you look at it, employee turnover is expensive. Recruiting workers, training them, and evolving them into productive workers can cost double or sometimes triple their salary.
Not surprisingly, retail claims the highest turnover. For hourly store employees, the rate is 65 percent, followed by retail distribution jobs at 23 percent and corporate positions at 18 percent, according to WorldatWork. Hospitality ranks slightly lower at 17.8 percent and perhaps a bit scary – 17.5 percent of newly licensed registered nurses quit after their first year on the job.
On a basic level, turnover rate tells you how many times the same position was occupied by a different employee throughout the year. Consider a restaurant manager who has held that job throughout 2016. The turnover rate for that position during 2016 would be zero. In other words, there was no change in the person who held that job. But if two people held that same position throughout the same year, the turnover rate would be 100 percent.
However, temporary and contract assignments are generally shorter than permanent positions so the formula for determining staffing employee turnover rates is a bit tricky, considering the different types of workers who are hired and assigned to different positions throughout each year.
You first need to figure out your average weekly or monthly temporary and contract employment, which determines how many staffing employees your company placed on assignment in an average week or month during the year, says Cynthia Poole, director of research at the American Staffing Association (ASA). To ensure you’re comparing apples to apples from year to year, she says pick the same week in a month to average or use an average of the weeks in each month.
The calculation process for turnover rate includes tracking the number of temporary and contract employees assigned each week and the number of Forms W-2 your company issued during the year to those employees.
For example, let’s say your staffing firm placed 3,200 temporary workers on assignment on average each week in July and issued 14,500 W-2s in 2016. Divide 14,500 by 3,200, which equals 4.53. Multiple that number by 100, which is 453 percent, and then subtract 100, which equals 353 percent.
This reveals that throughout 2016, temporary and contract assignments turned over roughly three and one-half times, explains Poole, adding that based on the quarterly ASA Staffing Employment and Sales Survey, the industry turnover rate was 352 percent for temporary and contract workers in 2016.
How does your firm’s rate compare? If it’s significantly higher than the industry average, this can be caused by a variety of factors.
Consider adjusting your screening or placement process to do a better or more thorough job of matching a worker’s personality and skills with employer culture and job fit.
Perhaps high turnover is constant at specific organizations. Check if the wage is commensurate with the job skills required and tasks being performed. Maybe employers need to update their job descriptions. It’s also possible that the boss is a poor manager, which ranks among the top reasons why people quit their job.
Although calculating your firm’s turnover rate may be a time-consuming or difficult task, it’s worth the effort. It can help your firm save money by gaining valuable insight into your recruitment and placement processes and staying current on what it takes to make effective placements for temporary and contract workers.