First, there are separation costs. Staff time, including the departing employee, in conducting the exit interview and preparing COBRA paperwork where required. Consider payout of paid time off (vacation) due to the employee as well as possible unemployment costs.
Don’t forget interim costs until the employee is replaced such as temporary or contract workers as well as overtime for current employees who take up the workload. Morale often suffers if current employees are expected to pick up the slack for an extended period of time.
Recruitment costs really add up! Staff time to prepare advertisements or website postings. Costs of advertising. Employment agencies fees – can be up to 3% of employee’s salary. Executive search firms are much more costly.
Your calculations should also include staff time in:
Screening resumes and conducting telephone interviews
Contacting candidates and scheduling interviews. The more people involved the more time consuming this becomes
Interview costs – don’t forget to calculate the number of people involved in the process times their hourly rate.
Making the final decision – may include a second or even third round of interviews
Conducting pre-employment testing
Background checks and preparation of pre-employment paperwork.
Post employment costs include:
Physicals and drug screening
External seminars/training to bring the employee on board successfully
Time new employee spends getting to know the basics of his/her new job. These costs are no small matter for managerial level employees or other jobs requiring highly skilled or technical employees
Time managers and supervisors spend in training and coaching
Some costs are difficult to calculate. For example, how does one put a dollar figure on what it costs the company when a long-time employee who has great rapport with the company’s best customers leaves the organization? Not so easy, is it?
Here are some tips to avoid turnover:
– Take the time to hire the right person.
– Make sure employees are properly oriented and welcomed into your company.
– Train your supervisors in all areas of employee relations.
– All policies and procedures enforced fairly.
– Employees treated with respect without intimidation or bullying.
– Select supervisors for their leadership and interpersonal skills.
– Salaries and benefits should be competitive.
– Employees should be properly trained and offered opportunities for advancement whenever possible.
You can get more information on employee selection and retention by visiting our website.
Cathy Baniewicz has over 30 years experience in human resources. Her career began at Beatrice Foods Co., where she progressed to Assistant Director of Affirmative Action and Corporate Personnel Manager. Prior to joining EffortlessHR, Cathy was Assistant Director of Human Resources at Golden Eagle Distributors, Inc. (Budweiser). Cathy has her B.A. degree from DePaul University, Chicago, Illinois, and MBA from George Williams College, Aurora, Illinois. Cathy obtained her Professional in Human Resources (PHR) certification in December of 2004.