Replacing an employee costs £30,000, report says
On average the cost to employers of replacing a single member of staff is more than £30,000, according to a recent report.
The analysis from Oxford Economics found that by far the greatest expense, more than £25,000, comes from loss of productivity caused by the time it takes - 28 weeks on average - for a new recruit to get up to speed.
The remaining costs arise from the logistics of finding a replacement, it said. This includes agency fees, advertising costs, HR and management time, and the possibility of hiring temps before the new role started.
The analysis was based on figures drawn from five different sectors: retail, legal, accountancy, advertising, and IT and technology. Over a year, the report said the total costs for the sectors combined would amount to £4.13 billion.
Commentators described the figures as 'startling' and 'staggering'. Others thought the estimate was 'far too high'.
Retain or retrain
Whatever the costs, there's no doubt that retaining or retraining staff is often a much more cost-effective solution than replacing.
Studies have found three main strategies for improving retention. One is to ensure that work is 'meaningful' and makes full use of an employee's skills, abilities and potential.
This might involve keeping work interesting and varied, and providing training opportunities so that employees feel they are developing and improving.
Younger employees are the most likely to look for career progression. Organisations that don't offer openings for promotion are most at risk of driving them away.
Good leadership also has powerful appeal for employees. Leaders who commanded high levels of trust in their bosses were much more likely to want to stay put.
Acas resources and services
Acas can help show you How to get the best out of your staff: A step-by-step guide, and has an array of tools to make employing people that bit easier, including Useful templates for letters, forms and checklists and dedicated Help for small firms.
Acas experts can visit your organisation, review existing recruitment procedures, and monitor and analyse your staff turnover. For details, see Recruitment and Retention: how Acas can help.
Visit the Acas Training and Business Solutions area for more information.
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