The Hidden Cost Of Replacing A Member of Staff

Who would wish to pay over £30,000 to recruit a new member of staff?

Surprisingly many companies do just that when the overall cost of recruitment and the disruption caused to the business are taken into account.

A report by a leading Oxford think tank revealed that replacing staff members can seriously dent your bank account for two main reasons:

1.    The cost of reduced efficiency whilst a new employee is trained and settles in.

The report shows that by far the dominant cost to an organisation for replacing a staff member is the lost output during the training and ‘bedding in’ period. Simply put the period of time it takes a new employee to reach their ‘Optimum Productivity’. The report findings suggest that on average the time for this to take place is 28 weeks at a typical cost of around £25,000 per employee. This staggering figure is undoubtedly a major cost to companies with a high staff turnover.

 

2.    The recruitment cost of finding, selecting and absorbing a new worker.

The cost of replacing an employee must include expenditure such as advertising costs and agency fees, as well as the cost of management time in activities such as interviewing prospective candidates. On average businesses will spend around £6000 on these unavoidable costs. Here’s an illustration of some of them.

 

  • Employing temps before the replacement starts: £3,500
  • Management time conducting  interviews: £800
  • Recruitment agency fees: £800 + (Dependent upon percentage of salary fee agreed)
  • Advertising the new role: £500
  • HR cost for processing the recruit: £500

 

Whilst most businesses will be conscious of the logistical cost of recruitment (Item 2 above) it will come as a massive shock to many that absorbing a new employee into your organisation can run to over £25,000. This equates to billions of pounds lost, not just to industry but the health service and other not for profit organisations too. Undoubtedly this very significant cost of absorbing a new worker can be reduced by factors such as a good learning and training programme within the business or by recruiting from the same industry where skills can be transferred but regardless of this there will be some disruption and this will have huge cost implications.

The lesson to be drawn from this report is that organisations wishing to avoid these massive hidden costs of should work hard to motivate, reward and retain their workforce. Of course practically there will always be staff churn within business and knowing what the cost implications can be will help companies to make the right choices when it comes to finding new staff.

One area where meaningful savings can be made is in the recruitment process itself. Using traditional agencies that charge fees based upon a percentage of the  salary of the new employee can add thousands to the overall costs so why not consider taking the fixed fee recruitment advertising route?. Companies such as Equals One will advertise your vacancy across multiple premium online job boards for a fraction of the cost of using a recruitment agent and will fully manage the process too helping you to make significant savings and streamlining the recruitment process into the bargain.

Equals One advertise job vacancies on the 10 Premier UK online Job Boards. So if you want the best chance of your ad being seen by up to 10 million job seekers each day for a full 28 days at a fixed cost of only £250 why not get in touch on 0800 046 3411 or office@equalsone.co.uk