Many times we talk about the cost of recruitment. Let’s stop and discuss the cost of replacement. It is a much higher number in more ways than one. What does turnover cost? Here are some costs that need to be brought into consideration:
- The person who fills in while the position is vacant
- Lost productivity
- Out-processing (exit interview) of exiting employee
- Management during transition
- Training of new hire
- Departmental lost productivity (continuity)
- Severance (possible)
- Lost knowledge/customer base/etc.
- Cost of recruitment
Here is a great white paper to learn more about the cost of replacement. It even offers a great work sheet you can print out to calculate. Most organizations find that the cost of replacement is at least five times the cost of recruitment; many times up to 20-30 times the cost.
Lesson learned: It is better, easier and cheaper to retain than it is to recruit.
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