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THE PRICE TAG
ON TURNOVER
"Interviewing" is not a priority area of concern for most managers.
It is done intuitively and on the spur of the moment without much preparation.
Since most managers interview only a few times a year, the majority of
hiring is done by people who remain novices at the process.
U.S. Department of Labor statistics indicate that 40% of all new hires
leave within the first six months and 50% of all management-level candidates
fail in their new positions. Some quit because the job does not meet
their expectations; others are terminated because they are unsuitable.
At an average salary of $40,000 year, companies are paying astronomical
sums for errors that could be easily eliminated with some training and
a perceptive, repeatable system.
The information shown below is based on an average salary of $43,500
for a "professional" (someone with specific knowledge and skills or a high
level of responsibility such an an engineer or a manager) who does not
require relocation. The catagories and percentages are based on a
1990 study by The Society For Human Resource Management and published in
the December 1990 issue of Personnel Journal; financial data is based
on 1998 salary figures.
| 1. Cost of inadequacy of the new employee (12
months)
2. Cost of assistance by co-workers closely associated
with the new employee
3. Cost of declining productivity of departing employee
4. Cost of shift of attention from the work to the departing
employee by co-workers
5. Cost of leaving the position vacant or functioning with
stop-gap measures (13 weeks)
6. Cost of processing both the departing employee and
the new employee by Human Resources
7. Cost of recruitment (newspaper ads, agency fees, etc.)
and screening of applicants by Human Resources
8. Cost of operating department time in processing and
orienting the new employee
9. Cost of relocation |
$20,800
14,350
2,600
900
21,750
1,085
2,890
2,930
0 |
TOTAL COST $67,305
RATIO OF COSTS TO AVERAGE SALARY: 1.55
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