Why “Attrition rate” is an incorrect KPI for Flex-workers

With changing trends and shortages in the labour market, many businesses and staffing providers choose how they approach their partnerships by allowing for more flexible working arrangements. While turnover for any organisation is all but inevitable, the data support that employees with an active voice in their employment schedules are increasingly more engaged, productive, and reliable. For instance, instead of filling your vacancies with ten people working 40 hours a week, envision filling those same positions with 15 to 20 people working modified schedules of their choosing. The result here is fewer vacant seats, albeit using more employees. A high "return rate" accurately measures hiring success and a healthy work environment. Not all attrition is terrible, but bad attrition can be mitigated with empowered employees who contribute to your business.

One of the most common metrics to measure hiring success is attrition rate—defined as the number of people who start an assignment who are still working after a set period. This is a good metric of success when people are only placed in full-time positions with the same schedule each week. Still, the metric breaks down when you start to allow for flexible work, which inherently requires flexibility and attrition.

Many companies are allowing for flexible work now because it opens a much broader swathe of the workforce to their positions and allows them to attract higher quality employees who may already have jobs. Attrition rate doesn't work well, though, when evaluating flexible work as employees may take a day or a week off, and it looks like they have attrited by traditional attrition metrics.

A more practical method of measuring success in these scenarios is the "return rate."  The return rate is the number of shifts that have been filled in a given week by someone who has already worked at that company. Generally, if someone has already worked for a company, there is a much smaller investment in training and managing them than if they are new. This investment is what the attrition rate captures with full-time hires but does not correctly translate to flexible workers.

Based on feedback from tens of business leaders who have embraced flexible working and operate in industries with traditionally high attrition rates and a notorious lack of flexibility, I've found that pivoting to Return-rate as a primary KPI has improved how we envisage success.

Simply put, the success of any hiring initiative is the ability to achieve the least amount of vacant positions within an organisation while maintaining a tight bottom line. Continuing to measure that success based on attrition alone leaves gaps in the data to contribute to ineffective management and poor financial decisions. Rather than measuring your hiring success by how many people fail to return during a period, consider measuring success based on how many people could return or stay onboard if offered shifts that fit their schedule. Many people don't or can't maintain a 37-hour week schedule. Some may only be able to contribute 16, 24 or 32 hours a week but can return to work every week for those shifts. This workforce segment is consistently overlooked in current models' hiring process and readings.