The Hidden Cost of Replacing Leavers

3 Minutes

For many employers recruitment fees, advertising and the cost of internal recruiters are the main culprits that contribute to cost when replacing an experienced employee. Whilst these generate obvious spending, less apparent factors that also have a big impact upon go completely unnoticed.  

Research carried out by Oxford Economics reported that it costs employers a shocking £4.13 billion pounds each year to replace executive staff members, with the average figure per head standing at more than £30000. So what are the hidden costs of hiring that employers don’t see?

A vacant position

Usually there is a period of time when a vacancy remains unfilled. This can happen for a number of reasons; employees leaving without notice, the extensive recruiting process and the time taken for new employees to actually start are key contributors of this. Whilst the position remains unfilled, lessened productivity can result in loss of revenue due to missed opportunities and the lack of time given to maintaining existing business. 

Redistributing the roles

The roles and responsibilities of ex-employees are likely to be divided between existing members of staff. Whilst this is a logical way of trying to cover the void that has been left, it does present its own problems. With heightened workloads and added pressure, existing employees are likely to make costly mistakes due to lack of attention and invested time- costing you even more money.

The temping trap

Sourcing temporary workers via recruitment agencies to cover a vacant position is often something hiring managers choose to do. Whilst this increases the over all output of the team, productivity of the temporary worker is unlikely to match your previous employee. Of course there is also the obvious cost of fees paid to the recruitment agency as well as supplying a wage to the temporary worker that you have hired.

The cost of low productivity

Even when your new replacement begins their new role money will still be lost as a result of low productivity. Whilst completing the induction process, adjusting to their new surroundings and getting to grips with their responsibilities, the productivity of a new recruit is significantly reduced. In fact, research shows that it can take up to 5 months before replacement employees reach their full level of productivity depending on their background.

Let’s talk training

It is very unlikely that your new replacement will have the exact skill set required to do their job with maximum efficiency. You will have to invest in your new recruit to ensure they know how to use in-house systems that play a pivotal role within your company. This will take time and money. In addition to this it is likely that money will be spent developing the skill set of your new employee and recruiters can expect to spend between 10-20% of their employee’s salary on training.

The price tag of replacing experienced employees is much bigger than you think. To avoid big company expenditure, hiring managers should consider the savings they could make if they put plans in place to retain current employees, rather than replacing employees on a regular basis.

After being named as ‘one of the Top 100 places for graduates to work 2015-2016’ Pareto know all about the importance of employee retention. Keep your eyes peeled for our top tips on Employee Retention next week at!


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