How Important is Fill Ratio for Staffing Companies
With the rise of temps, on-call and on-demand workers, contractors at companies, independent contractors and freelancers, long gone are the days of lifetime employment and a gold watch at retirement. Today, companies are more interested in hiring specialists on a temporary basis to fill short-term needs to reduce their overall staffing costs.
The desirability of temporary workers in American business is such that in May 2015, the number of jobs in the temporary help services industry reached an all-time high of 2.9 million, which accounted for 2.4% of all private sector jobs in the US economy, according to data published by the Economics and Statistics Administration of the US Department of Commerce.
The rising demand of temporary workers in the US is also fuelling the growth of the staffing industry. In 2015, the global staffing industry generated $409 billion, according to data published by Statista.
Staffing Companies in the US
The hiring of temporary workers is mostly done through staffing companies that operate within the business services industry. These staffing services providersspecialize in finding temporary and contract based workers for client companies that require staff for short-term work assignments, such as to compensate for a permanent employee’s maternity leave or during periods of high demand in the company.
Even the aspiring employee trusts these staffing companies for their placement, quite evident from the fact that more than three million temporary and contract employees work for America’s staffing companies during an average week.These companies hire nearly 15 million temporary and contract employeesduring the course of a year,according to data published by the American Staffing Association.
Importance of Fill Rate
Staffing companies see fill rate as an essential metric for understanding their firm’s efficiency. Fill rate is the ratio of job orders received to job orders filled. When the fill rate begins to decline, it should be taken as a warning sign, says an expert at Talent Plus Staffing, a company that takes pride in their 85% fill ratio, as compared to the industry average of 46%.
Experts state that there are 4 types of fill rates, reviewing which a staffing agency is able to determine the balance of quality, quantity, accuracy and speed that they provide, highly crucial for their success.
1. Time-to-Fill-Rate: Time taken by an agency to fill an order. The time is calculated from the day the job order has been placed, till the date the employees are shortlisted.
2. Temp-to-Hire-Rate: Calculated on the successful accomplishment of the assignments by the hired employee, proving that the staffing firm gave the company the right candidate.
3. Re-Fill-Rate: In case the hired employee fails to perform, the staffing firm needs to look for a replacement, which only extends the duration of the job order fulfilment.
4. Success-Fill-Rate: Performance for any staffing and recruiting company is the total number of placements made, which determines its success fill ratio. It is through these successful placements that the firm is able to make money.
According to Undercover Recruiter, more than 75% of staffing and recruiting firms met or exceeded their revenue goals for 2016, and the vast majority of staffing and recruiting professionals felt bullish for 2017. They did not seem concerned about talent shortages in fields like Engineering and IT, orglobal economic uncertainty, such as currency fluctuation, refugee displacement, international trade and Brexit. This is because most staffing firms heavily rely on repeat business. And more than 80% of the firms have predicted that more than half of their 2017 revenue will come from existing accounts.
However, a staffing company can only acquire clients and get repeat business from existing ones if they see customer satisfaction as the most important measure of their performance.