Consider these statistics from the Wynhurst Group (2007) and Cornerstone onDemand (2010):
- 22% of staff turnover occurs in the first 45 days
- The cost of losing an employee in the first year is estimated to be at least three times their salary
- 25% of Fortune 500 managers change jobs once a year
- A well-designed onboarding program can make employees 58% more likely to stay with an organization beyond five years
Costs to Consider
Lost productivity
Not only will you lose productivity while the job is vacant, the interviewing and training process can also consume resources and time.
Recruiting costs
Don’t forget somebody’s time to place an advertisement. They must check what the organization is looking for, prepare information, verify copy, send the ad to the newspaper, and then handle phone calls, inquiries, and resumes.
Screening costs
This includes reviewing resumes (based on a resume short-listing guide that has been prepared by someone, we hope). Also included is the cost of responding to directed inquiries and requests for information. Don’t forget any letters of regret you send out, including paper, postage, and time to create and sign.
Interviewing costs
This includes time spent contacting candidates, arranging interviews, preparing for the interviews, and conducting them. You’ll also need to create, sign, and send letters of regret.
Testing costs
If you do testing, there is a cost associated with monitoring and rating the tests. Doing group testing? Divide total cost by number of candidates who will be interviewed.
Evaluating costs
This includes time spent evaluating, checking references, and making the selection.
Offer costs
The cost of making the job offer. Figure in time spent negotiating with the candidate, arranging start date, and other arrangements that must be made before the candidate arrives. (Business cards? Supplies? Locker and keys?)
Training costs
The money associated with taking the time to meet the candidate; introducing him/her to others; providing an orientation; and providing training.
Other costs
As well, consider the cost of reduced efficiency as the new employee learns the job, including time spent by someone answering questions and showing him/her the ropes. There may also be other employee turnover costs associated with your organization.
Add these costs up to get the total cost of replacing one employee.