Wastage statistics alone, no matter how specific they are, how well presented, and how well researched in terms of external comparisons, still may not be enough to convince top management that retention initiatives could benefit the organisation. To do this, you may have to attach £ signs to your data.
This document shows you how to do this. It shows:
Rather than dissipate resources in attempting to cost wastage throughout the organisation, you should focus on the target areas. There are two types of wastage worth making an effort for.
Jobs which account for a large amount of wastage. Examples include staff nurses in a district general hospital, shop floor operatives in a factory, or secretaries in a large headquarters building. The individual posts may not be particularly costly to fill, but the numbers involved — perhaps 100 or more every year — mean that the overall cost of replacement is high.
Key posts in the organisation — perhaps at a senior management level, or in a specialist area. The cost of finding a replacement for just one of these posts could run into thousands of pounds, or even hundreds of thousands if lost income is taken into account.
We have devised a checklist for costing labour turnover (see below). The checklist includes the following components:
separation costs
temporary replacement costs
recruitment and selection costs
induction and training costs.
Some of these costs are easier to provide than others, but even the more difficult elements are amenable to estimation. The result will provide a minimum cost of replacement for the post in question, and is therefore a particularly useful tool for the People Manager who is arguing for retention initiatives aimed at decreasing voluntary wastage rates by a few percentage points.
The checklist does not take into account the harder to estimate components of wastage, such as
the relative inefficiency of the new employee while he/she is climbing the learning curve
the disruptive effect on stayers of losing colleagues and adjusting to newcomers
loss of income
loss of competitive advantage, particularly if your key employee has gone to a rival company.
The reasons why these costs are not included in the checklist are firstly the difficulty of quantifying them, and secondly the danger that they may not be capable of being costed consistently. However, it may be worth making the attempt, as a one-off exercise, for a handful of selected posts in the organisation which are recognised to be of key importance.
Please click on the attached document for the checklist.
Costing Labour Turnover Checklist 139.00 kB