UNNECESSARY KEY EMPLOYEE TURNOVER & HIGH COST OF REPLACING THEM
*ON AVERAGE, REPLACING AN EMPLOYEE COULD COST 90%-200% OF ANNUAL SALARY, Society of Human Resource Management (SHRM)
It’s very difficult to pinpoint a precise amount of money it takes to hire a new employee. However, there are some general guidelines to make an educated guess.
As stated in a study by the National Association of Colleges and Employers, hiring an employee in a company with 0-500 people costs an average of $7,645.
Another study by the Society for Human Resource Management states that the average cost to hire an employee is $4,129, with around 42 days to fill a position.
According to Glassdoor, the average company in the United States spends about $4,000
TO HIRE A NEW EMPLOYEE, COULD TAKE UP TO 60 DAYS to fill a position.
If you’re replacing someone instead of filling a new position, stakes get even higher.
*Research by SHRM states that it takes up to 50-60% of an employee’s annual salary to find a direct replacement. Repeated turnover can be quite costly, summing up to a total of 90-200% of an employee’s annual salary.
e.g: $125,000 PER senior level hire (see diagram above)
You can use this spreadsheet to plug in your own numbers to get a sense of what the costs look like for you.
Josh Bersin of Deloitte believes the cost of losing an employee can range from tens of thousands of dollars to 1.5 – 2.0 x the employee’s annual salary. These costs include hiring, onboarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts. Employees, Bersin explains, are appreciating assets that produce more and more value to the organization over time, which helps explain why losing them is so costly.
A paper from the Center for American Progress, citing 11 research papers published over a 15-year period, determined that the average economic cost to a company of turning over a highly skilled job is 213% of the cost of one year’s compensation for that role.
The real cost of losing an employee:
Cost of hiring a new person (advertising, interviewing, screening, hiring)
Cost of on-boarding a new person (training, management time)
Lost productivity (a new person may take 1-2 years to reach the productivity of an existing person)
Lost engagement (other employees who see high turnover disengage and lose productivity)
Customer service and errors (new employees take longer and are often less adept at solving problems). In healthcare this may result in much higher error rates, illness, and other very expensive costs (which are not seen by HR)
Training cost (over 2-3 years you likely invest 10-20% of an employee's salary or more in training, that is gone)
Cultural impact (lost team morale whenever someone leaves others).
Since employers invest a large amount of time and money in searching for, recruiting and training new employees and there is no guarantee that the new employees will succeed in their new position, especially when they're responsible for managing and leading others - WE HAVE designed a number of proven, proprietary and trademarked methods to provide greater assurance for employee GROWTH and success, while at the same time providing greater assurance of return-on-investment for hiring time and costs by the employer and ultimately greater employee retention.
OUR COMBINATION OF: predictive analytics, advisory board learning®, earned value management and coaching IS A SOLUTION TO GREATER COMPANY RETENTION OF KEY EMPLOYEES.
Onsiteclick LP can be engaged as follows:
AS-NEEDED/FLAT-RATE: Before or after new employee candidate starts there position with the employer
RETAINER: On a Retainer-basis, (see Pricing)
THROUGH-LICENSING: Through an existing Search and Recruiting Firm with which it already has a relationship (Licensed Search Firm)
CONTRACTOR: As a Full-Service Search and Development Contractor