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Why is staff turnover so high in the recruitment industry?

Posted by Nigel Harse FRCSA on 5 December 2017
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 to staffing is hurting 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 agencies are struggling to retain their staff.

Staff churn measures the overall turnover in a recruitment agency's staff as existing members leave and then new staff are hired. It's 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 and 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.

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?

When you talk about change it's the smaller teams that have been hardest hit with churn climbing from 30 per cent in 2015 and peaking at 50 per cent in May 2016. Improvements can be seen from May 2017 with churn falling to 43 per cent by September 2017.

 SIM Staff churn by teams or 10 or less


Companies with 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 followed this peak with churn falling 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.

SIM Staff churn for teams of 11 to 20

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 which is the second best result of the team sizes analysed.

SIM Staff churn for teams of 21 to 40

Teams of 41+  experienced their worst churn in April 2015 when it sat at 49 per cent, but since then churn has steadily fallen to 28 per cent. This is easily the best result of the team sizes.

SIM Staff churn for teams of 41 and above

So, why is staff turnover so high in the recruitment industry?

A high rate of employee turnover is often indicative of a number of problems within the business, these can include:
1. Poor employee selection;
2. Uncompetitive pay and reward systems;
3. Inadequate or ineffective training;
4. Archaic systems;
5. Ineffective management practices; and
6. Unreasonable expectations.

These causes combined can 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.

Author: Nigel Harse FRCSA
About: Highly regarded and widely sought after for his knowledge, unwavering passion and innovation, Nigel is a 40-year veteran of the recruitment industry.
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Tags: Return On Investment Insights Blog Staff Turnover Team Size Staffing and Recruitment

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