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Home | Business | Strategic Planning The 2006 CIPD Recruitment, retention and turnover survey highlights that currently the employee turnover rate for UK companies is 18.3%! These levels varied widely from 13.3% in public sector organizations to in excess of 50% in retailing, hotels and restaurants. They also vary by location. In areas with the lowest levels of unemployment, there were higher levels of turnover as there was a much higher demand for skilled staff. Also, different companies will record turnover in different ways. Is it purely the number of people that hand in their notice? The number made redundant? The number sacked? As far as I am concerned it is a combined total of everyone that has left your company, no matter the reason. Why is it a problem? The UK is suffering from an unprecedented skills shortage. It may take several weeks or even months to find a suitable candidate, and with notice periods and restrictive clauses in contracts, it may take even longer for this candidate to start working for you. In this day and age time is money. For every day you have a vacancy you are losing money. Measuring it The vast majority of companies do not keep strict records of staff turnover. If asked they will either guess or have to sit down and work it out. In order to be able to effectively understand and budget for turnover, it is vital that you record this. There are many ways you can do this, but the method used is less important than actually keeping a record. Two popular ways are total numbers (5 in the last 12 months), but more telling is the % (total number of leavers/total number employed*100). Lets look at both in more detail: 5 in the last 12 months = This tells you the total, and from there you can start to attribute a total cost per staff member lost. Knowing this figure will certainly help you budget for your next financial year. Building up this record over a number of years will help to show that your recruitment methods are working and allow you to forecast better. % = Now this is much more useful. 5 people have left in the last 12 months, we employ a total of 15 people, so we have a turnover rate of 33.3%! Or, 5 people left, we employ 65, so the turnover rate is 7.7%. In the first example you have a major problem, you are losing one third of your company every year! In the second example you have a rate well below average. Having this extra data now means you have a much better insight into your company, and can try to reduce the % year on year. You can keep tabs on how new expansion, teams, divisions, direction etc is actually effecting your workforce. The real costs It is not simple to accurately assess the cost of losing, and then having to replace a staff member, as not all of the costs are purely financial. Costs you should consider include: administration recruitment costs selection costs cost of cover during the period in which there is a vacancy administration of the recruitment and selection process induction training for the new employee. Many of these costs consist of management or administrative time, but direct costs can also be substantial where advertisements, recruitment agencies or assessment centers are used in the recruitment process. Only 8% of respondents to the CIPD survey were able to provide figures relating to the estimated costs of labour turnover. Based on this small sample, the minimum average cost per employee was £8,200. This figure may seem acceptable, but consider the average basic salary in the UK is £23,244 and you can see that this figure is over 35% of the salary, a huge proportion. And to make things even worse, if the person has been with the organization for less than 18 months, this figure rises to as high as 2.5 times the annual salary of the position (Taking into account that you are having to do everything again within such a short space of time). In my next article we will look at some of the reasons that employees leave an organization. And in part three we will look at ways your organization can improve staff retention levels. Article Source: http://www.articlewheel.com
John Tucker is the Managing Director of EP Search Ltd. "We are one of the UK's fastest growing Search Consultants. We pride ourselves on providing a fast efficient service. We focus on what the customer actually wants rather than what is easiest for us". EP Search Ltd provides a full service including headhunting, psychometric assessment and candidate/reference checking. To learn more about us, see our full range of articles and current vacancies visit us at www.epsearch.co.uk
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