If a recruiter’s job is to recruit the right people, then how could we explain the recruitment industry’s high employee turnover rates?
Despite growing year on year, the UK’s recruitment industry struggles with a whopping 43% staff turnover rate: miles above the 15% national average. Shocked? Before jumping to any conclusions on the competency and quality of recruitment services, let us elaborate on this phenomenon and find out what lies beneath it.
REC’s annual Recruitment Industry Trends report for 2018/19 shows that the industry’s turnover reached £38.9 billion. The number of recruitment businesses and the number of people working in recruitment grew (from 2018). In March 2019, there were 31,140 firms in the industry, up 2% from the previous year (2018). The total number of staff rose by 3% to 119,000 people, approximately the population of Colchester.
REC Chief Executive, Kevin Green, says: “The recruitment industry is bigger than ever before and contributes more to the UK economy than advertising, arts and recreation and the food and beverage industry. Our industry is the engine that drives the UK jobs market, enabling people to find the right job and businesses to find the talent they need to succeed.”
Although a normal turnover can benefit a company, since it prevents employee stagnation and leaves space for labour flow, a high level of turnover is troubling and costly.
The financial impact from the turnover, based on shorthand formulas, is between 30% and 400% of the annual salary of an employee. However, the accurate cost of employee turnover is determined by a combination of various parameters.
These include current pay and performance, the workload that needs to be delegated to other colleagues plus recruiting and training.
Maybe one of the keys to understand the turnover of the recruitment industry is finding out whether or not the industry:
- lives up to the recruiters’ expectations
- motivates employees and focuses on retaining them
Why do people enter the recruitment industry? The answer is simple; to help people find a job. It is basically a sales position: you find the right candidate for a specific job opening. This leads to a lot of pressure, targets and, inevitably, disappointment and turnover. Unless the recruiter has a sales mindset, he might find it hard to cope with the expectations, the competition, the placements and the rejections. So, it comes as no surprise that most of them shift towards other agencies or sectors.
Average costs to replace an employee are:
16% of annual salary for high-turnover, low-paying jobs (earning under £30,000 a year)
For example, the cost to replace a £10/hour retail employee would be £3,328.
20% of annual salary for (high turnover) and midrange positions (earning £30,000 to £50,000 a year)
Other reasonable questions include: Is the recruitment workforce motivated? Do they feel that their skills and experience are valued? How can this industry attract top talent, retain it and reduce turnover rates? Loyalty is the answer behind all of them.
Aside from permanent staff, temps also perform better if they feel valued, recognised and cared for. Besides the usual retention tactics a company could use, such as attractive remuneration packages and opportunities for career advancement, there is another great option when aiming to retain your employees: benefits and rewards.
Benefits and secure pension schemes can prevent your workforce from seeking new employers, or at least think twice about doing so.
Centralus offers a targeted solution to the recruitment industry for the ultimate competitive advantage: an engaging workplace that retains top talent and reduces turnover rates. By joining our community, agencies gain an array of VIP benefits for employees including 24/7 access to doctors, a confidential helpline as well as discounts for shopping, travel and leisure. Our offer stands for both permanent and temporary staff in order to increase loyalty. We also provide workplace pensions so employees can secure themselves a flexible and rewarding retirement plan.