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The real cost of employee turnover and recruitment

The real cost of employee turnover and recruitment

Posted on 19/12/2017 by Kirsty Craig

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Would you like to hazard a guess at how much employee turnover costs? I’ll warn you, it’s a scary number.  According to ACAS, the average cost, to replace just one member of staff, exceeds £30,000.  Yes, £30,000!

The biggest chunk of this is a loss of productivity during the 28 weeks that it takes, on average, for a new staff member to become fully effective. Add to that the advertising costs, agency fees and the drain on time of the HR and line managers and you can see how the £s ramp up.

To minimise these costs, I would suggest there are two areas to focus on.  Firstly, if you can develop a way of measuring the effectiveness of your recruitment, you can identify if there are areas that are going wrong.  And secondly, if you focus on how you can encourage your staff to stay with you, well, it goes without saying that your staff turnover will reduce.  Get those two things right, and that huge cost could be massively reduced.

So, let’s look at recruitment

Recruitment is a process, and like any process, it is only as robust as the weakest element.  If you start to analyse how you recruit people, you can see where you can improve. And I’ll be honest, many organisations need to improve because 46% of new hires fail within the first 18 months – ouch!

To start with, here are a couple of areas you could review :

The initial screening process – when you start to go through CVs, be prepared.  Have the job description written up and a list of essential skills and experience that you are looking for.  Draw up a second list of ‘great to have’ advantages.  A first quick skim through will let you reject those not meeting the essential list.  A second look through the much smaller pile will let you split into ‘yes’ and ‘maybe’ for first interview. You can then do more in-depth research, using tools such as LinkedIn to view candidates’ profiles, so that you can draw up your interview list.

At the shortlist stage, you can engage profiling tools to help you.  At Kirsty Craig Associates, we offer a highly efficient option called Life Orientations.  It’s an excellent way to help you identify candidate’s behavioural traits in relation to the role you are filling, and a real help if you are down to a small number of candidates with similar backgrounds.

What about when your new recruit starts?

You want to try and bring down that 28 weeks of inefficiency.  So be brutally honest in looking at your induction and training processes.

An efficient induction or onboarding process is the best way to get your new recruit off to a flying start.  It’s a good idea to have a checklist written down of things to cover – and remember, it’s not just about the nuts and bolts of the job, but about making them feel welcome.   You need them to feel they have made the right choice in joining you.

Now, whilst great induction is essential, I’m sure many readers will have experienced the 12-week introduction programme, spending hours and hours with every department.  Frankly, this is a waste of time.  Many people learn best ‘on the job’ and are keen to start making a difference.  If they know the basics – how to use the computer system and so on – and are made to feel totally comfortable about asking their manager and co-workers about anything they are unsure of – a drawn-out process is not necessary and can be counterproductive.

Most importantly – keeping your staff

There are always reasons out of your control that can cause a key team member to leave – they are following their partner to the other end of the country, they want to spend time with their family, etc.  But the good news is that most are within your control. 

Now, here’s some interesting research from Gallup, summarised into one sentence and drawn from decades of data and over 25 million employee interviews.

“The single biggest decision you make in your job--bigger than all the rest--is who you name ‘manager’. When you name the wrong person ‘manager’, nothing fixes that bad decision. Not compensation, not benefits…nothing.”

We can come up with a list of other reasons why people leave – feeling bored, feeling their skills aren’t used, feeling taken for granted.  But when you think about it, all of these issues come back to the effectiveness of the manager. 

So, what I would suggest is that organisations spend a LOT more time on training, development, coaching and mentoring their line managers. 

And of course, you know where to come to get help with that!