This is actually a very serious question but one which often gets ignored- how much does it really cost for you to employ a new or replace an existing staff member? Not only that, but how much is it going to cost you if you get it wrong? Making the right decision on who to employ is not an easy task, especially when you have received a plethora of applications, all presenting similar qualifications and experience. However, choosing the wrong candidate who for one reason or another hasn’t fitted in well to the role can be devastating when the reality sets in that you have to do it all again! I run a business coaching group consisting of local businesses from a broad range of industries. Time and time again, one of my group members will have a painful story about losing an employee who had only just started with them not long before. At interview, they had presented well and their resume was impressive. They had high hopes for this employee but unfortunately, for one reason or another, things didn’t quite work out. The costs to one business owner, let’s call him Basil, were enormous. The employee who had resigned was on a $50,000 a year salary (base salary of $45,000 plus cost of super, work cover, annual leave and sick leave). Basil knew it was going to take him six months for the incoming person to truly learn their job completely. During the learning curve, Basil did not expect full productivity. Usually during this time there would have been an average of 75% productivity. If the ideal level is 100% productivity then the cost of introducing the new person into his workforce was the 25% productivity loss on average over the first six months salary of $25,000; i.e. $6,250. The recruitment costs of advertising, staff time involved in short-listing, interviewing, reference checking etc. was also going to cost upwards of $2,500. Not to mention the cost of uniforms, medicals, any training, loss of productivity of other workers supporting the new employee with in-house training or through external courses and any mistakes made during the learning process and their associated costs –possibly another $3,250. So far, Basil was facing $12,000 (this is a very conservative estimate and will vary between industries)- just to recruit and replace his staff member. Double that if he gets it wrong? So if you do the maths, the moral of the story is, if you turnover just four employees a year it equates to $48,000/annum. And this is non recoverable - never to be seen again. Whilst it is impossible to avoid employee turnover altogether and some employee turnover is healthy and desirable unwanted turnover costs your business a lot of money. How much of your staff turnover could be reduced simply by understanding the employee needs, how they would like to be treated/rewarded, what motivates them, their preferred work tasks and environment and interpersonal issues. Behavioural profiling can help you to achieve a motivated workforce through identification of individual motivators. If you, the owner or manager of your small to medium business, are going to effectively manage your operation, you may like to consider profiling your staff. After all, the money saved far outweighs the money invested. Until next time, Mark Bell
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