What is a Good Employee Turnover Rate for Staffing Agencies?
June 30, 2022
It’s a fact of life: employees come and go. Consequently, turnover is not always the fault of management unless the rate is suspiciously high, which could be indicative of problems with the work environment. And yet the acceptable level of employee turnover is different for every industry, so it’s best to understand the rate relative to your competitors.
That being said, the average turnover rate in the staffing industry is often pretty high.
Nationally, the average employee turnover rate for staffing agencies is around 25%. That means one in every four of employees is likely to leave annually, which is pretty substantial.
What’s more, this figure only accounts for permanent staff turnover—recruiters, account managers, technicians, etc.— not the flood of temporary workers that routinely fluctuate. Taking temporary staff into account, that figure balloons to somewhere around 430%.
Of course, staffing is inherently a transient industry. People are hired to work temporary jobs, whether for days, weeks, or months, and then are free to depart when the temp job is completed.
Nonetheless, staffing agencies should dedicate more time and resources to retaining administrative staff, as they’re responsible for recruiting temporary workers and managing client accounts. Without a reliable workforce to keep your agency afloat, you simply won’t attract enough job seekers to fill vacant positions for your clients.
So, let’s get to the fundamentals: what’s a good employee turnover rate, and what other numbers should you examine to get an idea of your agency’s productivity?
Understanding the numbers
Ideally, you don’t want one in every four permanent employees leaving your agency. That would mean that, if you had 200 employees, 50 would depart your agency during the year. Replacing employees is expensive and time-consuming between recruiting, training, on-boarding, etc. To avoid wasting time and resources, you want to establish a healthy and acceptable employee turnover rate, which across industries is generally about 10%.
However, employee turnover figures tend to include both voluntary and involuntary departure—whether employees leave of their own accord or are let go for underperformance. It’s therefore best to calculate voluntary and involuntary turnover rate separately, as the numbers provide distinct insights.
If you have a high involuntary turnover rate, that could indicate there is a problem with your hiring process. Recruiters and hiring managers simply aren’t attracting and selecting adequate workers, and you only later discover worker incompatibility when you’re forced to let them go.
Conversely, a higher than average voluntary turnover rate indicates a problem in the workplace. If workers are choosing to leave en masse, there is clearly some sort of underlying dissatisfaction, be it low pay, lack of benefits, inflexible hours, or a generally unpleasant workplace culture.
Metrics to consider
Overall turnover rate is a bit simplistic, so it’s best to dive further into the numbers and examine turnover by type. You can set expectations for each measurement and then see how your agency is currently measuring up. Every staffing industry leader should consider tracking:
- General turnover rate
- New hire turnover rate
- Voluntary turnover rate
- Involuntary turnover rate
- Turnover rate of high performers
- Average employee tenure
Employee tenure is particularly insightful as it helps you predict the time any given employee is likely to spend at your organization. Nationally, employee tenure tends to hover around 4.1 years.
New hire turnover rate speaks to the success of your recruitment strategies and hiring process. Try calculating turnover rate for employees only hired within the last six months. Is it above or below your general turnover rate? If it’s a bit above, that’s to be expected. Remember, about 20% of employees leave within their first 45 days.
Perhaps the most crucial metric to track is turnover for high performing employees. These people are the cream of the crop, so to speak, so you ideally want your high performer turnover rate to be less than 3%. At least, that’s the national turnover rate for superstar employees, and you want to be better than the national average in order to stay competitive.
Overall, you should aim for turnover rates that are lower than those of your competitors, painting you as a reliable agency to work with. To ultimately succeed as a staffing agency, and match job seekers with suitable placements, you need a dependable workforce behind you: not employees who come and go at whim.