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How to Calculate Employee Turnover Rate for your Staffing Agency

By Timerack

June 6, 2022

High employee turnover is a common issue for staffing agencies. It can be tough to overcome, but the first mitigating step is to calculate your agency’s specific turnover rate. Once you’ve determined where you stand, there are several approaches that will help reduce the rate and boost employee retention.

It’s important to note that employee turnover in the staffing industry sits around 25%, meaning one in every four employees is likely to leave annually. Ideally, you would like your turnover rate to be lower than the industry average to remain competitive. High turnover rates are expensive, between revenue lost from not having the staff to fill vacancies as well as the time and money spent recruiting and on-boarding new employees.

What’s more, if you have recruiters and account managers constantly rotating in and out the door, these constant adjustments can irreparably damage client relationships. A client may be accustomed to communicating with one employee who leaves unexpectedly. Suddenly, the client is expected to bring a new account manager up to speed on their needs and expectations. 

It’s therefore essential to get a grasp on your turnover rate and how you stack up to other staffing agencies. So, how can you calculate your turnover rate and then determine what’s acceptable for your staffing agency? Let’s take a look. 

Metrics to consider

Employee turnover rate is a key statistic for staffing agencies to monitor, helping them determine the number of employees who left their organization in a specified time period. The number allows agencies to predict the amount of time and resources needed to hire new staff annually, while also providing insights into employee satisfaction. Turnover is an indicator of how you’re faring currently and where you can do better.

When it comes to crunching the numbers, let’s first think about it simply: if you had four employees at the start of a quarter, but two employees left during that period, that would be a 50% employee turnover rate. 

How did we determine that? You take the number of employees that departed during a select time period and divide that by the total number of people employed at the beginning of the time period, and then multiply the result by 100. For instance, if you started with 96 employees and had 91 employees at the end of the quarter, your turnover rate would be 5.2%. Five employees left during that quarter, so you compute 5 ÷ 96 X 100 = 5.2.

But it gets more complicated when you have multiple roles, different types of departures, and other confounding factors to consider. Consequently, when calculating turnover rate, you should consider performing separate computations to determine:

  • Overall turnover rate
  • Voluntary turnover rate
  • Involuntary turnover rate
  • High-performer turnover rate

Often, employee turnover statistics lump voluntary and involuntary turnover rates together, despite having vastly different impacts and reasons. The former is employees who quit for whatever reason, while the latter is employees who were let go, whether fired or laid-off. 

So, when computing turnover rate, it’s often best to calculate them separately: voluntary turnover rate speaks to employee dissatisfaction, while involuntary turnover rate speaks to the rate of inadequate hires and underperformers.

It’s also wise to calculate turnover rate for high performers: determine the most productive 5% of your workforce and calculate the turnover rate for this subset in the same manner. For reference, the annual high performer turnover rate across industries is approximately 3%. 

Reducing your turnover rate

Once you’ve computed your agency’s turnover rate, ask yourself: how do I stack up to other agencies? If you’re concerned by your agency’s results, feeling the rate is relatively high, try to determine the causes of departure and gauge internal dissatisfaction. 

Consider sending out anonymous worker-satisfaction surveys. Ask staff to rate a variety of metrics and provide written feedback. For instance, do employees feel stagnant? Do they not see any opportunities for advancement? Are they dissatisfied with compensation and benefits? How do they feel about the workplace environment and general culture? 

Once you have a sense of why staff members might be dissatisfied, it’s time to do something about it. But resist the urge to simply make changes by fiat. A far more effective strategy would be to solicit feedback from staff about what would make your agency a better place to work. Not only will this help you benefit from the “wisdom of crowds,” as it were, it will also give employees a sense of ownership over any changes that the process produces. The same exact changes emerging from staff members, as opposed to upper management, will be that much more effective because you’ve taken the time to get buy-in from your staff.  

While staffing is inherently a transient industry, agencies that take better care of their employees will naturally have a lower turnover rate. Offering perks and flexibility, like paid parental leave and remote work options, is one sure way to boost employee motivation and dedication. 

As a staffing leader, you need to determine the employee turnover rate and the reasons behind it. If you don’t like the results, consider the figure a wake-up call. The most important thing is simply to listen to your employees and provide a venue for feedback, allowing you and your agency to do better in the future.



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