Understanding The Real Cost Of Losing A Key Staff Member

When someone hands in their notice, although it may be sad and you know you’ll miss them, mostly we think ‘I’ll just advertise the job or hand it over to our usual recruitment agent and we’ll find a replacement.’ This is what most people think is the ‘cost’ of losing a staff member, i.e. the cost of placing ads and/or the fees a recruitment agency charges to do most of the leg work for you.

The costs we fail to factor in:

  • The cost of training the new person
  • The time taken for the various people involved to interview applicants
  • The downturn in productivity while the new person learns the job
  • The downturn in productivity of the person leaving once they decide they want out and perhaps take time off to go for job interviews themselves
  • The mistakes made as the new person learns the ropes
  • The effect on customers in the process
  • The customers who may decide to follow the staff member who is leaving
  • The problem if we can’t find anyone for a considerable amount of time – depending on the skill base we are needing
  • The problem if we take someone who looked good on paper; said all the right things at the interview and we then find out the person oversold themselves or simply doesn’t fit in with the team.

Various estimates have been made about the dollar cost of recruitment. I’d suggest an estimate  anywhere between 50% of their first year’s salary to as much as two and a half times the salary. Think about that for a few minutes!  That statement alone should concentrate the mind of owners and managers before they glibly take on ‘anyone’.

I spent many years working in the manufacturing sector as a personnel manager.  Often the recruitment policy was – if you find a warm body and they can stand upright, employ them. No, no, no. Recruiting people is THE most important thing we do as owners and managers because the cost of recruiting pales into insignificance if we then have to try to remove the person we’ve just hired.

So my tips are these:

  • Recruit for attitude  – skills can be taught a bad attitude is and always will be a bad attitude
  • Involve the people the new person is going to be working with – let them have a say – they may see things you didn’t see or ask things you didn’t askAlways check references; always, always and always.
  • When checking references – ask the question ‘would you re-employ’ and then shut up. See how long the silence is before they answer – the longer the silence the less likely they would re-employ.
  • Find out why the person is leaving! You may learn something incredibly valuable.

If you are new to recruiting and/or recently made a terrible recruitment mistake (don’t worry we ALL make that mistake – hopefully just the once), then check out my special offer:

And I have to leave you with this wonderful ‘thought’ …

‘Train people well enough so they can leave.
Treat them well enough so they don’t want to.’

Richard Branson
Ann Andrews CSP

Author: Lessons in Leadership: 50 ways to avoid falling into the ‘Trump’ trap

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