As a staffing agency, tracking performance beyond some obvious metrics, such as making new placements and bringing in new clients, can be difficult. This can lead to many agencies' poor understanding of how to improve and ultimately prevent growth. 

Increasing your revenue and gross profit is desirable. However, it shouldn’t be considered the only marker of business health. For example, you may get many new clients, but if you can’t fill their positions quickly, you will eventually lose them. 

If you don’t understand where inefficiencies are in your workflow, it can be difficult to identify areas for potential improvement or even areas where your agency is losing out.

This is where Key Performance Indicators (KPIs) come in. Staffing agencies should monitor a few key metrics to evaluate their performance versus competitors and ensure they are operating as efficiently as possible. By measuring these metrics, staffing agencies can ensure they’re on track to achieve their strategic goals. 

Time-To-Fill and Fill Rate 

Time-to-Fill and Fill Rate are generally considered the benchmark statistic for evaluating staffing agency performance. They evaluate how many orders you can fulfill and the time it takes to get them done.

Time-to-fill refers to the time it takes for your staffing agency to fill a position for a client. In temp staffing, agencies measure this by tracking the time it takes for a client to accept an offer after a role has been created. According to Staffing Industry Analysts, this is normally four to fourteen days, with the median being nine. 

When measured by the time it takes for a candidate to start on a job, the standard range is ten to twenty-four days with a median of fourteen.

A lower time-to-fill will lead to higher client satisfaction, as clients have their needs filled more quickly, which is generally an indicator that your staffing agency is operating efficiently. 

In contrast, if your time-to-fill is above the median rate, it’s likely that both your client and candidate will be unsatisfied, and you may even lose them. In fact, according to the SIA, 43% of staffing clients say that time-to-fill is the most important factor in judging staffing agency performance. 

A variety of bottlenecks can cause an above-average time to fill. A shortage of qualified candidates, a poor tech stack, and poor communication can all lead to filling a position taking longer than expected. 

While there is no universal solution to improving a staffing agency's time-to-fill, they can adapt a few key strategies that may help them improve. 

The first is to expand your talent pool of qualified candidates. This can be done by proactively reaching out to new candidates or widening your pool through second-chance hiring. By increasing the size of your talent pool, your staffing agency will have more resources to fill client positions quickly. 

Automating time-consuming tasks like resume screening and onboarding can also help to reduce your time-to-fill. Tasks like onboarding a candidate to your applicant tracking system can take much time, especially if you’re doing it at scale. By leveraging automation solutions to carry out admin tasks, you can mitigate this and get your candidate placed much more quickly. 

Finally, a common cause of a high time-to-fill is candidate ghosting. In essence, this is when a promising candidate stops all communication with a staffing agency, forcing them to find a suitable replacement. This is common when a staffing agency's communication isn’t up to par, and a candidate isn’t aware of how far along the hiring process they are. The solution is embracing a more transparent recruitment model with constant communication. 

It can also be useful to use an Applicant Tracking System, which gives talent a dedicated suite to gain insight into their current position in the recruitment process.

Time Per Step 

Staffing agencies can develop their understanding of time-to-fill by analyzing the time spent on each hiring process step. For example, if an agency finds candidates quickly, but the hiring process is delayed by four days due to resume screening, then you can identify this as a bottleneck. Consequently, you find a solution that automates resume screening and lowers your time-to-fill.

Fill Rate

A staffing agency can calculate their fill rate as a percentage of job orders your staffing agency fills within a certain time frame. This can be measured as the number of positions filled for a specific client or across your staffing agency. 

For example, if your staffing agency receives eighty job orders over a period of six months and fills 60 of them, then its fill rate will be 75%. The average fill rate across the staffing industry is 45%. 

Much like time-to-fill, a low fill rate can reflect the quality and size of your staffing agency's talent pipeline and operational inefficiencies. Moreover, it may highlight problems with your agency’s outreach processes if you struggle to find qualified talent. 

Improving your fill rate can be difficult; however, increasing your talent pool's size can help. Leveraging referrals to find new talent and proactive LinkedIn networking can widen your talent pool and give you the right candidate for your clients. 

Furthermore, strengthening your matching process can also help improve the fill rate. It’s important to have a strong understanding of both your candidate pool and your client needs. By developing this understanding, you may be able to find a potential match that you may have otherwise overlooked.

Retention Rate and Turnover

Retention rate is one of the most significant markers that the permanent placements your staffing agency makes are successful. In essence, the retention rate is the percentage of candidates you place who stay in the position for the entire contract. This reflects how successfully your agency matches candidates to suitable roles. If your candidate leaves the position early, they were likely not a good fit in the first place.

In 2023, the average retention rate for staffing agencies for permanent placement (direct hire) was about 90%; a retention rate lower than this is generally a cause for concern. You can make a few improvements to boost your staffing agency’s retention rate. For example, improving the assessment process for candidates will help avoid mismatches—consider not only obvious factors like skills and experience but also more abstract elements such as career goals and preferred workplace culture. Additionally, offering support throughout placement by maintaining open lines of communication can help resolve minor issues before they become reasons for early departure.

However, in the realm of temporary staffing, where most assignments last only a few weeks or months, turnover becomes a more relevant metric than retention. Temporary roles naturally have shorter tenures, which means employees will transition out sooner—either because the project ends or they move on to another assignment. In 2023, the industry’s average tenure for temporary staff was just 10.1 weeks, and the turnover rate reached a notable 414%, according to the American Staffing Association. These figures underscore the rapid cycling of temporary employees through various assignments.

For measuring turnover in temporary staffing, consider using the formula:

Turnover Rate = (Total number of W-2s issued / Average weekly employment * 100) - 100

By tracking turnover closely, you can identify patterns and uncover root causes—such as assignment mismatch or subpar onboarding processes—that contribute to high turnover rates. Ultimately, while retention remains crucial for permanent placements, turnover is a more accurate KPI for shorter-term assignments. Keeping a pulse on both allows agencies to refine their placement strategies, reduce unnecessary churn, and better align candidates’ skills and goals with appropriate roles.

Client and Candidate Satisfaction

One of the best ways to understand how your staffing agency is performing is to ask your clients and candidates. Regularly conducting both formal and informal reviews can give you insight into the quality of your placements. 

Something as simple as a quick email to your client asking how a placement is going and if there’s anything they’d like to improve in the hiring process gives you a look at areas factors your agency can improve. 

You can even complete this scale by converting qualitative questions into quantitative ones. For example, you can ask how they would rate the speed of our hiring process out of ten and then develop an overall score across all of your clients. 

Moreover, by soliciting and truly listening to feedback from your clients and candidates, you’ll improve your relationship with them, as they will feel you’re truly concerned about what affects them. 

By conducting regular satisfaction tests for clients and candidates, you can also identify any consistent problems that you may have overlooked. For example, if your candidates constantly score your agency's communication at a 3/10, you can circle that as an area to improve. 

Offer Acceptance Rate & Submission-to-Hire Ratio

Offer Acceptance Rate and Submission-to-Hire Ratio are also a good measure of your agency's effectiveness in aligning the candidates with the right placement. In essence, Offer Acceptance Rate refers to the percentage of offers your candidates accept, while submission-to-hire refers to the number of candidates your clients agree to hire. 

A ratio of about 4:1 for every rejection is considered the average for staffing agencies. If yours is lower, it can mean a few things depending on the context. 

For lower-paid roles that require less skill, it can be that you took too long to bring a talent or an offer to the table, which leads to either your client or candidate going elsewhere for quicker service. 

However, a low offer acceptance rate can also mean that your staffing agency has failed to find an effective match for a role. This could be because of cultural differences, differences in qualification expectations, or even failure to consider industry requirements. 

For example, in Florida, nurses must be licensed, and if you submit an unlicensed nurse for hire, a client will likely reject it. 

Ultimately, the solution to an improved offer acceptance rate and submission-to-hire ratio depends on the reasons for rejection. However, it’s worth considering how you communicate and consult with clients and candidate needs before making a placement decision to avoid rejection.

Cost Per Hire 

Staffing agencies can use Cost-Per-Hire to evaluate the efficiency of their hiring process. Cost-per-hire refers to the total expense a staffing agency incurs to recruit candidates and place them. This can include anything from outreach fees to agency fees, agent salary, and onboarding costs. 

While there is no industry standard cost-per-hire, the ultimate goal for staffing agencies should be to deliver as much return on investment as possible. If each candidate you place returns a loss, you’re not positing your staffing agency for sustainable growth. 

Utilizing more cost-effective sourcing channels can lower your cost-per-hire. For example, many staffing agencies pay for pay-per-click advertising on job boards. However, this can lead to many unqualified applications and raise costs significantly. 

Something like programmatic advertising, which uses data-driven algorithms to make ads more targeted, can result in fewer wasted clicks and ultimately lower costs. 

Moreover, automation tools such as CRM can help save time spent on repetitive tasks. This means that your recruiters spend less time on a single hire, ultimately lowering the costs you put into one job placement. 

Lowering your cost per hire could be as simple as comparing the price of outreach software to its competitors. It’s all about finding cost-effective tools that don’t limit your operations.