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3 Ways To Combat Contractor Churn

Posted by
Pankaj Jindal
November 13, 2021

Contractors come and go – it’s a fact of life in the temporary workforce business. At the same time, the number of contractor positions continues to grow by leaps and bounds; back in 2011, the Department of Labor reported that staffing agencies were adding 25,000 jobs each month over a 12-month period.

As the number of contractor positions grows within staffing agencies, the fight is on to hire, deploy and retain good, qualified contractors. It’s no easy job. Our research shows that 15% of contractors will leave midway through an assignment, and only 10 to 30% of contractors stay with their hiring agency after the initial engagement, if they make it through the entire term. So, why are staffing agencies churning through their contractor pool so quickly? What is the solution?

Why the churn?

To start to figure out why contractors move through staffing companies so quickly, we need to look at the reason why someone leaves a corporate job to work as a contractor. According to Forbes magazine, there are five reasons someone becomes a contractor:

  • Flexibility to choose their own schedule
  • Flexibility to control their earnings
  • Flexibility to choose their projects
  • Flexibility to set their own terms
  • Flexibility to live life to the fullest

Contractors choose this way of life to feel more in control over their lives. They don’t go fully into a freelance lifestyle because they want the certainty of earning a certain amount of money for a longer period of time. By the same token, though, they are more willing to leave an engagement partway through because it doesn’t fit one or more of the reasons they became a contractor in the first place.

The number one reason contractors leave, however, has to do with a simple concept that’s not as simple to execute—good communications. Our research shows that 20% of contractors will leave between offer and initial engagement, most often because of a lack of communications between the contractor and the staffing agency. Lack of personal communications, job status, assignment updates, and an inability for front-line agency staff to answer questions were most often cited as reasons for leaving in the early stages of an engagement.

Of course, each company and each contractor is different, but the bottom line is the same – communication is key. And while there is no magic pill to keep contractors from leaving, the more your agency can create an atmosphere of open communications, the more likely you’ll reduce the amount of churn you experience.

Combating churn where it lives

There are three areas where your agency’s communications style can be improved to combat the problem of contractor churn.

Problem:  A single point of contractor contact

Does your agency maintain a single point of contact for your contractors? Do contractors talk only with the recruiter until they are engaged and then are left on their own until the engagement is over? This strategy is the easiest to fix, by adding more points of contact with each contractor.

Why is this a problem? Think about it this way – you’re a contractor. You talk to your recruiter from the day you were just a candidate. Then, the recruiter leaves or gets promoted. You’ve spent time talking with this recruiter. You’ve built a relationship. Now, you’re having to deal with someone new, someone who doesn’t know you. Worse yet, the agency doesn’t replace the recruiter immediately and you’re left hanging, with no point of contact with the agency.

The Solution:  Maintain several points of contact with each contractor throughout their tenure with your agency. The recruiter can be the entry point of contact, but it’s important to add other contacts within the agency to ensure a continual, consistent flow of communications, regardless of whether someone leaves or not. Also, it’s critical to record the contractor’s feedback, and job satisfaction over time so you know exactly what’s happening with your workforce. This is exactly what our contractor engagement platform, Sense, does.

Problem: The zombie contractor

Your recruiting team onboards a great contractor. They go through the process of joining your agency, are quick to get an assignment and—suddenly—they stop communicating. They show up for their assignment and do a good job, but they aren’t as forthcoming as they were at the beginning. When they leave, often in the middle of the assignment, your contractor care team is at a loss to say why the contractor left. Next thing you know, the contractor is leaving a bad review on websites all over the internet.

The point at which a contractor turns into a zombie—someone simply going through the motions, without personal engagement in the work they’re doing or with your agency—is often overlooked. Why? Perhaps your contractor care team relies on the contractor contacting them and believe “no news is good news.” Nothing could be further from the truth. No communications from the contractor is a sign of a disengaged, zombie contractor, not a good thing.

The Solution: The best way to keep your contractors from going zombie is to start from the very beginning of an assignment by setting up and executing a cohesive contractor success plan. The Contractor Care team stays connected to the contractor throughout the beginning stages of their engagement and beyond, giving the contractor the sense of belonging to a team instead of being cut loose, leaving them to fend off the zombies for themselves.

The Contractor Care team is also essential to ensuring any issues a contractor may have are addressed in the early stages, before the contractor becomes disenchanted with an engagement or the agency. Identifying and dealing with issues as early as possible keeps them from festering and growing into giant problems.

Problem: No references

A sure sign of a happy contractor is when they refer other contractors to your agency or when they bring on new clients. When a contractor stops referring other contractors to you or never brings in a new lead to your sales team, it’s a sure sign the contractor is disengaged from your agency and, ultimately, the client. The quality of their work goes down and they stop communicating, all of which are certain signs of a contractor getting ready to leave your agency. The more a contractor struggles to feel part of your agency, the less value they see in referring others.

The Solution: Once again, communications is key. Your Contractor Care team must have an open line of communications with each contractor in their care. Your contractors also need to feel like they are part of something larger than this one assignment and this client. Being part of your agency’s team will attach a contractor to your team and to your agency, making them more loyal to you and likely to refer others.

Another way to encourage your contractors to refer others is to find ways to make them part of your marketing team. Gamification is increasingly becoming part of the referral strategy, where the more referrals a contractor makes—be it other contractors or clients—the more likely they will get a bonus, or invites to special networking events, or points toward gift cards and other prizes.

As a staffing agency, it’s a fact of life that contractors leave, for a wide variety of reasons. The best way to guarantee your agency is able to move forward and deal with contractor churn is to look for ways to improve communication between contractors and a variety of teams within your agency. The closer they feel to your agency, the less likely they are to leave and the more likely they are to refer.

Want to see how Sense makes sense for your agency? Request a demo today.

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