The True Cost of Employee Attrition by Brian Patrick Cork
If you are looking for accountability in terms of “specifically for results” this is another reason why Retained Searches are more efficient.
Allow meto offer an example of why not using recruiting services (and using monster.com, an in-house recruiter – or, employees) can be costly in terms ofemployee turnover…
In 2006 we conducted a survey of client CFO’s and CTO’s in Birmingham England, Northern Virginia and Los Angeles – and, challenged them to calculate/1 internal costs for recruiting against attrition across four disciplines (Sales, Development, Business Analyst and Production Control). Some positions (depending on how they impact sales) can vary – but, not by much.
For the purpose of this article, let’s look at the average internal cost of losing and recruiting an .NET Developer…
The real internal (in-house recruiter + hiring manager) cost for a company to recruit a replacement, includes, but is not limited to lost productivity, recruiting and interviewing time, candidate travel and expenses, and escalated salary and benefits will equal $28,390.
The actual cost of this resource’s departure, including vacancy, exit interviewing, processing, and severance, will cost, on the average, $9,485.
The cost to train the replacement averaged $6,570, and the cost of lost productivity (development) during the 60 to 90 days it took to locate the replacement averages $40,545.
And, with lost sales due to the vacancy estimated at $56,600, the total cost of losing this .NET Developer was $141,590.
Most CFO’s can tell you that the two greatest cost elements to a company are facilities and Human Capital (people). Venture Capital is another great topicfor another article.
Note: When it comes to Finance and Accounting leadership (i.e. CFO’s), there is typically a 12 (possibly 18) month productivity gap. For example, it takes 6 months to figure out a CFO is a bad fit, and another 6 months to get rid of him/ her. There might also be aseverance. But, what is the cost of loss productivity and Company-wide morale?
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/1 Man Hours x Average DisciplineSalary x Loss of Productivity (this is only part of the formula – its actually proprietary).
Filed under: Articles By Brian Cork, Business
[...] field. One of the presentations covered return on investment for human capital interventions. The cost of attrition is always used – and studies do indicate that the cost of unplanned attrition can be severe to [...]