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Managing High Employee Turnover in the Staffing Industry

Lauren DeBisschop
Feb 20, 2024
10 min

Table of Contents:

Staffing agencies are challenged with the high rate of employee turnover. In 2022, the turnover rate for temporary and contract workers in the staffing sector rose to 419%, a 4% increase from the previous year.

This constant flux of employees is an inherent aspect of the staffing business, necessitating efficient management solutions. Let's explore the essential tools that can streamline operations and improve employee data management.

Understanding Employee Turnover Rate

Employee Turnover Rate is a measure of how quickly employees leave a company and are replaced by new hires within a specific period.

For staffing companies, the high turnover rate is a result of the steady flow of workers moving through different job placements. As contracts or assignments end, workers "leave" your organization, directly impacting your turnover rate.

Calculating Employee Turnover Rate

To calculate turnover rate, divide the number of employee separations during a specific period by the average number of employees during that same period, then multiply by 100 for a percentage.

number of employee separations divided by average number of employees time 200 equals employee turnover rate.

Generally, a lower turnover rate signifies strong employee retention within your organization.

Example: Suppose you want to calculate your employee turnover rate for the second quarter (Q2) of the year 2023.

  1. Determine the number of workers who completed their contracts or left the agency during Q2 of 2023. For instance, assume that 50 workers finished their contracts or left during this period.
  1. Calculate the average number of temporary workers you had throughout the same period. Let's say you started the quarter with 200 workers and ended with 230. So, (200 + 230) / 2 = 215.
  1. Now, divide the number of workers who left (50) by the average number of workers (215) and multiply by 100 to get the turnover rate as a percentage:
50 divided by 215 times 200 equals 23.26%

In this example, your employee turnover rate for the second quarter of 2023 is 23.26%. This indicates that approximately 23.26% of your workforce either completed their contracts or left the agency during that period.

Challenges in Managing Employee Data Due to High Turnover

High turnover in staffing companies presents challenges that can be overwhelming, consuming valuable time and resources that could otherwise be used for strategic business activities.

  • Risk of Data Errors: Frequently updating employee data increases the risk of errors in your payroll system.
  • Increased Chance of Misclassification: High turnover heightens the chances of misclassifying employees or contractors, potentially leading to costly penalties.
  • Mistakes in Pay: Turnover amplifies the risk of pay discrepancies, such as overpaying former employees, underpaying new hires, or miscalculating benefits deductions.

High rates of employee turnover and the challenges that come with it stress the importance of having efficient business processes.

Role of HR and Payroll Software in Managing High Employee Turnover

Payroll and HR solutions play an important role in managing business processes within staffing organizations facing high employee turnover. These systems automate and enhance critical processes to ensure data accuracy and improve overall productivity.  

In-House Payroll

In-house solutions offer control and flexibility, allowing you to tailor the payroll process to your business needs. Reduce the risk of errors during employee data management utilizing features such as:

  • Automatic compliance updates to stay ahead of regulations
  • Built-in validation features to ensure accuracy in data
  • Seamless integration with HR systems for efficient information flow

Time Tracking Software

Time tracking software simplifies managing a diverse workforce, accommodating employees across different locations, pay scales, and schedules effortlessly. Enhance your time management and payroll accuracy with:

  • Simplified recording and approval of work hours, making it easy to track employee time
  • Direct integration with payroll systems to sync time data automatically
  • Configurable alerts to ensure compliance  

Analytics Tools

Analytics tools enable teams to monitor and manage Key Performance Indicators (KPIs) effectively. Your organization can optimize resource allocation and focus on core activities like recruitment and employee management by leveraging these insights to:

  • Identify trends to anticipate staffing needs
  • Pinpoint inefficiencies in your current processes
  • Make data-driven decisions to improve operational efficiency

ATS Integrations

An Applicant Tracking Software (ATS) integration saves your team valuable time that can otherwise be spent managing employee placements, improving recruitment efforts, and other critical tasks. Enhance your efficiency and reduce manual workload with capabilities that:

  • Automatically transfer employee data to payroll and HR systems
  • Reduce manual data entry, cutting down on errors and saving time
  • Streamline recruitment processes, improving the candidate experience  

In the face of challenges caused by high turnover, evaluating which tools can support your operations is important. These solutions enable your team to focus on strategic initiatives rather than wasting time on back-office tasks.

Enhance Efficiency with Greenshades Payroll & HR

Embracing the right tools and technologies to navigate the challenges of high employee turnover is crucial for overall operational success. Greenshades’ configurable in-house Payroll and HR solution grants staffing agencies the flexibility and control needed to meet the unique demands of your industry.

  • Streamline complex payroll tasks: Navigate the dynamic payroll requirements of the staffing industry with ease.
  • Ensure multi-jurisdictional compliance: From uncommon taxes to complex compliance needs, Greenshades has you covered.
  • Receive support beyond payroll: Improve both front and back-office tasks by optimizing your staffing payroll, HR, and tax processes.
  • Tailor your payroll processing: Configure the Greenshades solution to align with your specific business preferences.
  • Enhance budgetary control: Gain control of your organization's banking and cash flow.  
  • Gain flexibility in your processes: Operate payroll and HR on your schedule.

Greenshades empowers your team to focus on what truly matters: strategic growth and sustainability. Discover the Greenshades difference by scheduling a demo today.

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