Why is staff turnover so high in the recruitment industry?
This burning question was often raised by recruitment industry professionals throughout 2017. We uncover the facts and address the reasons why a churn and burn approach is costing many agencies.
Staff turnover in New Zealand is at an all-time high, while Australian recruitment agencies aren’t far behind, new Staffing Industry Metrics data shared with APositive shows.
Results from 105 Australian and 16 New Zealand agencies reveals recruitment businesses are struggling to retain staff.
Staff churn measures the overall turnover in a recruitment agency’s staff as existing members leave and new people are hired. It is usually calculated as the percentage of employees leaving the company over a 12-month period.
While some staff turnover is inevitable, the current high rates of churn are costly – affecting both the bottom line and team morale of many agencies this year.
Finding, hiring, inducting and training new staff takes significant financial and emotional outlay with research showing new hires are not fully productive for nine to 12 months.
The chart below reveals staff churn in Australia peaked at 48 per cent in April this year, but has slowly been improving to sit at 43 per cent in September.
In New Zealand, staff churn has historically been close to 30 per cent, however 2017 has been a year of change with staff churn climbing rapidly to 50 per cent in the past three months.
Who is worst affected?
Small teams have been hardest hit, according to data collected from May 2016 until May 2017, with staff churn reaching an all-time high of 50 per cent. However, with improvements now being recorded, it has improved to 43 per cent.
Teams of 11 to 20 staff experienced worsening churn throughout 2015 right up until it peaked at 52 per cent in May 2016.
Six months of improvement saw churn fall to 36 per cent at the end of 2016. However, 2017 has seen it increase to 41 per cent – the second weakest result of the team sizes analysed.
Teams of 21 to 40 staff experienced worsening churn throughout 2015 right up until it peaked at 61 per cent in September 2016. Although, 12 months of improvement has seen churn drop to 34 per cent – the second best result of the team sizes analysed.
Teams of 41 and above experienced their worst churn in April 2015, but since then churn has steadily fallen to 28 per cent. This is easily the best result of the team sizes.
So, why is staff turnover so high in the recruitment industry?
A high rate of employee turnover is often indicative of problems within the business, this can include:
- Poor employee selection;
- Uncompetitive pay and reward systems;
- Inadequate training;
- Archaic systems;
- Ineffective management practices; and
- Unreasonable expectations.
These causes when combined will lead to high and unacceptable levels of staff turnover.
P.S. If you found this article interesting, you might also like to read: Get-your-staffing-priorities-right.