You, of course, realize many of the tools available to motivate and incentivize full-time workers simply aren’t available with temporary workers. Likewise, the normal issues of managing any workforce are more difficult when dealing with temporary workers, especially when it comes to turnover.
The Impact of High TurnoverControlling the rate of turnover in any business is a critical issue. It easily costs 150 percent of an individual’s annual salary to replace a full-time employee. These costs include such elements as hiring, training and productivity losses. It might seem reasonable to think those costs aren’t as great for temporary workers. However, numerous studies show the opposite.
According to American Staffing Association, the average turnover rate for temporary workers in 2012 was 294 percent. This average rate is much higher in some industries and where professional management of the workforce is absent. You will also find labor cost greater in jobs where the workers have more responsibility.
When temporary workers have to be continually replaced, their impact on true cost includes:
The Bureau of Labor Statistics regularly shows the rate of accidents and safety violations increases proportionately to employee turnover. The impact is greatest with temporary workers. This includes the losses due to the indicated increased risk of accidents which can result in additional penalties for OSHA compliance, insurance and other items.
While the labor costs vary by industry, virtually any position has direct training costs that can last for a few hours to months. An IBM company, Kenexa, provides a method for calculating such training costs. The formula, (Number of Months Spent on Training/12) x Turnover Rate x Compensation, provides a rough estimate of those costs. This does not include the additional indirect costs mentioned next.
Even with comprehensive (and expensive) training, it takes time for a new temp worker to reach an expected level of productivity. On average a temporary associate works at 75% of standard when fully trained and are typically 60% of standard during the training period.
Temporary workers may see themselves as part of an ongoing stream of short-term workers in a high turnover environment. These workers have little incentive to show any commitment to the tasks at hand. Additionally, they see little or no opportunity to benefit from making any other than minimal effort. Also, mixing unmotivated temporary workers with additional workers, even on a seasonal or peak basis, often has lasting negative effects on the operation.
The combination of these factors often mean you end up filing vacant spots or making up for lost production with expensive overtime costs.
Management Opportunity Costs
Every moment spent by management remedying issues created by turnover is time not spent on positive, productive issues.
Providing an Alternative
Fortunately, you can find proactive and effective solutions to the issue of high temp staffing turnover. Companies such as Insource fill a critical market niche, providing performance- based flexible labor that is priced on an agreed unit of measure. The model creates accountability, removes many of your concerns by taking over the training and management responsibilities and promotes motivation by providing associates with performance incentives – all within the budgeted costs.
If you’re grappling with the ongoing issues of high turnover, poor productivity, and increasing labor costs, you can effectively address these issues by collaborating with a flexible labor partner that has the resources and operational know how to deliver the results important the success of your operation.