This excerpt is part of Entrepreneur.com's Second-Quarter Startup Kit which explores the fundamentals of starting up in a wide range of industries.

In Start Your Own Staffing Service, the staff at Entrepreneur Press and writer Krista Thoren Turner explain how to start and run a successful staffing service. In this edited excerpt, the authors reveal the four ways you can reward employees for a job well down and make them want to keep working for you.

Keeping your employees once you have them is a thorny problem in the staffing services industry. The difficulty in retaining temporary employees (i.e., external staff) gets most of the press, but there's also high-turnover for permanent employees (i.e. internal staff).

So how do you keep your employees for the long haul? There are numerous strategies you can use:

1. Offer training.

Although training's usually discussed in reference to temporary employees, you should offer skills enhancement to all your workers. Offering training to your temporary workers not only helps retain them but also makes good business sense. After all, a more skilled worker commands a higher pay rate. The higher the pay, the greater your profit.

As for your permanent employees, the staffing services industry continues to change rapidly, and your staff members need to stay abreast of these changes. New technology, new selling techniques, changes in employment laws, and the huge impact of the internet are all compelling reasons to keep permanent employees in the loop.

Following are some ways to provide your employees with training:

  • Computerized training. You've invested in computers and a variety of software packages; make sure they get good use. Every employee can benefit from added computer skills.
  • DVDs, audiotapes, books, articles and pamphlets. The American Staffing Association offers a variety of all these to its members. Your local library may also have useful resources.
  • Mentoring programs. These can be informal (within your own company) or more formal (involving local businesses, universities or colleges).
  • Outside seminars and classes. Community college tuition is usually inexpensive. Look into seminars and classes your employees could take. This training method could be offered as an elected benefit (e.g., instead of vacation time) to either permanent or temporary employees.

2. Pay employees well.

In addition to offering training, staffing firms can retain good employees by offering attractive pay rates and salaries. What you pay your employees, both office and field staff, will depend on the following factors:

  • Employee skills and experience. Salaries and pay rates are consistent with the employee's experience and the skill level of the work performed. In "hot" segments of the industry, like information technology or the professional sector, skilled workers are receiving top dollar for their services.
  • Supply and demand. Salaries rise in a labor shortage, and you'll pass on the cost of field staff to your clients by adding a markup percentage. Therefore, high employee earnings are good news for your staffing service. In addition, some locations have particularly high demand for specific types of workers. This factor also increases pay rates.
  • Geographical location. The higher the cost of living, the higher employees' salaries will be. Generally, the Northeast (especially New York City) and the West Coast (especially California) have higher pay scales. Similarly, workers in cities earn more than those in small towns.
  • Worker seniority. A good employee who's been with your service for at least six months deserves to receive better pay than someone you just hired. Also, senior staff often get first crack at higher-paying assignments.

3. Provide attractive benefits.

The benefits you provide employees can go a long way toward helping you retain workers. Benefits you should consider providing include the following:

  • Health insurance. Most staffing services provide some kind of health insurance.
  • Life insurance. This is one of the less common benefits, but it's offered by some companies.
  • Paid vacations and holidays. Almost all staffing services offer this benefit, at least once the temporary employee's worked a certain number of hours or days.
  • Tuition reimbursement. As training becomes increasingly important, you may consider it worthwhile to pay for, or contribute toward, your employees' continuing education.

4. Offer a variety of bonuses and incentives.

The staffing industry is one that lends itself particularly well to a merit-based pay system, especially for permanent employees. Many staffing services offer permanent employees the chance to significantly enhance their base pay rates via a variety of bonuses. Here are some typical bonuses awarded in the industry:

  • Acceptance bonus. If your service needs a worker for an especially hard-to-fill position offered by a valuable client, it may be reasonable to offer a bonus to the employee who takes the position. Depending on how important the client is -- and how desperate you are -- this bonus would be paid instead of, or in addition to, a higher hourly rate.
  • Performance bonus. This incentive is common in the industry. This type of bonus could apply to both permanent and temporary employees, although it's more frequently given to the former. It's usually handled as a percentage of the base pay rate.
  • Referral bonus. Most staffing services give bonuses to both permanent and temporary staff for the referral of qualified applicants.