Many factors affect your business’s success or failure. One critical factor is the hiring process, which is why there are several KPIs revolving around the employees of a temp staffing agency.
Different temp staffing agencies may use different KPIs but there are some common to everyone. The best way to keep your agency on the track to success is by achieving these different KPIs, but what are they?
This article will explore 10 KPIs that will help your business.
1. Cost per Hire
Cost per hire is one of the most commonly used by hiring agencies that include the expenditure on the recruitment process, supporting equipment, travel, and administrative costs. When you look at the overall costs of hiring a temporary employee, you must also look at the hiring manager’s abilities as many hiring managers can be extremely good at marketing but fail to find the best talent.
2. Revenue per Employee
The revenue per employee metric is a great way to keep your bottom line tight while not draining your organization’s cash reserves. Revenue per employee is a measure of the total annual revenue divided by the company’s current number of employees. This ratio is often used to compare the revenues with the competitors. By keeping an eye on these aspects, you will be able to maximize your profits.
3. Average Hours Per Employee
This is another important hiring metric to consider how much time your team spends interviewing every potential employee. If you are spending way more time hiring than the ideal process, you certainly need to implement a better hiring process to make the most out of your organization’s precious time.
4. Employee Turnover Rate
When temporary staff are hired, they work on a contractual basis and get paid for their services only when hired. Hence, there are many risks associated with these employees as the possibility of them leaving a company within specific time results in high turnover. If your agency’s employee turnover rate is high, your staffing agency will have a bad reputation and huge impact of agencies finances.
5. Employee Demographic
You need to collect all the data from new employees working for your agency. You can also manage the potential candidate’s demographics to help you understand whether or not the candidate fits into your company’s culture and determine if that candidate has the qualities your business is looking for. This will enable you to analyze the location that supplies you with potential employees to fill the positions.
6. Cost per employee
Another component that you can track is the cost per employee. If you’re a small staffing agency, then this ratio may not mean much to you. However, if you’re a large entity, then this metric can be significantly affected by your employees’ skill set. The more skilled your employees are, the more they are likely to charge you, which will create a pool of talent for your company’s growth in the long run.
7. Margins per Employee
The common profit model used by staffing agencies is Mark- up on hourly rate. Although the difference between Employee pay rate and billing rate is not direct to staffing companies. Agencies must factor in overhead cost directly associated with employee in pay structure. This approach is a pretty good alternative to bring in more returns and boost healthy working capital ratio.
8. Back-office Costs per Employee
Your back-office functions will include administrators, support staff, HR, IT, and accounting that supports your employees. This function is inevitable to run your business; however, they do not generate any revenue. Hence, you need to keep this ratio optimum to work efficiently. Data-driven staffing models and automation can save a significant cost on this metric. BillMyTask can provide you with an integrated Platform for back-office tasks such as CV collection and formatting, scheduling interviews with staff, and HR documentation.
9. Total Hours
If you have employees who work on-site for your business, you need to track the amount of time they spend working. Use the average number of hours per week to determine your cost per employee. Do you have employees who work a minimum number of hours or overtime? Consider the average time they work per week and adjust your salaries to reflect this. Your cost per employee should be sensitive enough to provide an accurate picture of your expenses.
10. Average Days to Pay by Client
Last but not least – this metric performs calculations on your client’s paid invoices to determine the average number of days for each client to pay invoices.
- Average days to pay per client = Sum of the paid days for all invoices / Total number of invoices paid.
This metric gives you a brief idea of the setting up due to date for the invoices depending on the calculated average days to pay. BillMyTask generates and sends the client invoices automatically by processing the timesheets after getting approved by Xero