In today's fast-paced job market, understanding employee turnover is crucial for effective workforce management. Temporary or contract workers, by definition, have higher turnover rates due to the finite nature of their employment; however, it's common for these workers to depart before their contracts end, often leaving you scrambling to find a suitable replacement.
It’s not surprising that industries with some of the highest percentages of temp workers also face some of the highest rates of turnover. (For example, see our blog on addressing turnover at call centers.) However, there are some common reasons temporary workers leave prematurely.
Factors Contributing to High Turnover
Job Insecurity
Temporary workers assume that their employment has an end date. While some workers are happy with this arrangement, many continue to search for full-time work while on contract, and they’re ready to leave as soon as a more stable position becomes available.
Lack of Engagement
Temporary workers often do not receive the same level of attention, inclusion or investment in their development as permanent staff, leading to a sense of alienation and eventual departure.
Limited Advancement Opportunities
Usually, temporary workers are not knowledgeable about career progression paths within the company. They often feel, rightly or wrongly, that these opportunities are not available to them.
Compensation Discrepancies
Temporary workers often receive less compensation and fewer benefits than their full-time counterparts, making them more likely to leave for better offers.
High Turnover Has Far-Reaching Effects
High turnover, whether among temporary or permanent staff, can have detrimental effects on your entire organization:
Disruption of Operations
Frequent turnover can lead to operational disruptions, as remaining employees must cover additional duties until new hires are adequately trained. This can result in added stress, decreased morale, and inability to meet production quotas or service standards. The disruptions are likely to continue even when a new worker joins the team, depending on how long the onboarding process takes.
Increased Recruitment and Training Costs
The cost of recruiting and training new employees can be substantial. Advertising job openings, conducting interviews, and performing background checks all require resources. High turnover means these costs are incurred more frequently, impacting your bottom line.
Loss of Institutional Knowledge
Though this is less prevalent with contingent workers than permanent staff members, there is a knowledge vacuum when a worker leaves. The longer a worker has been with the company, the more institutional knowledge they’ve gained regarding past projects, overall strategies, ways of working, etc. These impacts are difficult to measure but important to keep in mind.
Diminished Team Cohesion
A high rate of turnover can affect team cohesion and dynamics. Integrating new members can disrupt established relationships and slow down workflows. If turnover is frequent, morale begins to suffer, causing even more workers to leave.
How to Mitigate High Turnover Among Temporary Workers
Your organization can implement several strategies to address turnover among temporary workers:
Enhance Job Security and Engagement
- Clear Communication. Clearly communicate contract terms and the possibility of permanent positions, if applicable. This transparency can reduce anxiety and improve job satisfaction.
- Inclusion Initiatives. Whether or not conversion to a staff position is possible, temporary workers should be made to feel like a genuine part of the team. Foster an inclusive workplace culture by encouraging participation in team events and meetings.
- Feedback Mechanisms. Implement regular feedback sessions to understand temporary workers' concerns and aspirations. This engagement can help identify potential retention strategies.
- Worker Recognition Programs. An employee-of-the-month program, with or without a small monetary award, lets employees know that they are valued. It also promotes friendly competition between coworkers. Other ideas include badges for completing online courses, milestone celebrations, or an upgraded parking spot.
Offer Competitive Compensation and Benefits
- Fair Compensation. Ensure that temporary workers receive fair compensation that reflects their contributions. Also, consider offering benefits that are typically reserved for permanent staff, such as health insurance or professional development opportunities. Many staffing firms provide such benefits to their associates, and these are powerful incentives.
- Flexible Work Arrangements. Flexibility is a top priority for many temporary workers; for some, it’s the reason they’ve chosen an “alternative” work arrangement. It’s important to provide flexible options such as remote work, adjustable hours or job sharing to these workers.
Rethink the Hiring Process
- Review your job descriptions. Many times, a temporary employee arrives on the job and finds that their duties, or the company culture, are not as advertised. Make sure your job descriptions are clean and accurate.
- Comprehensive Onboarding. 70% of all new hires decide whether the job is a good match within the first month. A poor onboarding process can set the stage for an early exit. Develop a thorough onboarding process that includes training, introductions to team members, and an overview of company policies and culture.
An Example
One of Manpower’s clients, a global transport and logistics company, was plagued with no-shows and very high turnover in the first week among their temporary staff. Additionally, management was unhappy with the quality of the candidates being hired. Manpower met with the client to understand their needs and developed a more in-depth picture of their desired candidate. We developed “pre-job training” for strong candidates, to ensure they were committed to the assignment. Those who failed to qualify during the training were omitted from the pool.
The result of this process? No-shows were completely eliminated, and first-week turnover was reduced by 50%.
Meeting the Challenges
Elevated turnover in your temporary workforce presents significant challenges, but there are plenty of opportunities for improvement. By understanding the factors contributing to turnover and implementing effective retention strategies, your organization can enhance workforce stability and performance.
The temporary workforce is here to stay. A global Dayforce executive survey reveals that 80% of respondents said their organization uses contingent workers—and 65% expect their organization's use of these workers to increase in the next two years.
For a look at the pros and cons of perm vs. contingent workers, see Contract, Contingent or Perm: What’s the Right Workforce Mix?
