Article: Rework strategies to avoid recruitment costs

Talent Acquisition

Rework strategies to avoid recruitment costs

According to LBW Consulting the cost of replacing an employee ranges from 29 percent (non-management) to 46 percent (management) of the person's annual salary. Then there are the sunk costs such as induction, training expenses and other administrative people costs incurred on the person. Expenses are also incurred when someone else does the person's job in the interim, leading to a domino effect on employee cost. Given this cost, organizations are accelerating their talent retention strategies, which experts believe would increase the stickiness of employees to their jobs for longer terms. The fact that retention is more cost effective than hiring is now being brought out strongly in research as well. Studies show that the correlation between retention rate and an organization's performance in customer satisfaction, productivity and profitability is more than 35 percent in value terms between a low attrition company and above average retention company.

According to LBW Consulting the cost of replacing an employee ranges from 29 percent (non-management) to 46 percent (management) of the person's annual salary. Then there are the sunk costs such as induction, training expenses and other administrative people costs incurred on the person. Expenses are also incurred when someone else does the person's job in the interim, leading to a domino effect on employee cost. Given this cost, organizations are accelerating their talent retention strategies, which experts believe would increase the stickiness of employees to their jobs for longer terms. The fact that retention is more cost effective than hiring is now being brought out strongly in research as well. Studies show that the correlation between retention rate and an organization's performance in customer satisfaction, productivity and profitability is more than 35 percent in value terms between a low attrition company and above average retention company.

Source:The Economic Times

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Topics: Talent Acquisition

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