More than £30k to replace member of staff, report finds
24 February 2014
The average cost of replacing a member of staff that leaves is more than £30k, according to new research.
Mon, 24 Feb 2014The average cost of replacing a member of staff that leaves is more than £30k, according to new research.
Economics consultancy Oxford Economics found that each member of staff that leaves costs an employer £30,614 to replace.
This figure is made up of two components: logistical costs, including agency fees and advertising, and the cost to the employers in wages paid to the new employee before they reach full productivity.
The authors of the report estimate that it takes an average of 28 weeks for a new member of staff to get up to speed at a cost in wages of £25,182.
According to the study, the full logistical cost of replacing an employee are as follows:
Those working in the legal sector are most expensive to replace at £39,887, followed by accountancy staff £39,230.
Workers in the media and advertising cost their employers £25,787 to replace, taking just 20 weeks to reach optimum productivity.
The cheapest employees to hire are retail workers, each costing their employers an average of £20,114 over 23 weeks.
The study found that it was cheaper for small to medium-sized employers (SMEs) with between one and 250 workers to replace staff as they take only 24 weeks to reach full productivity, compared to 28 for larger firms.
However, the smallest businesses, those with between one and nine workers take an even shorter amount of time to reach optimum productivity at just 12 weeks.
The report calculates that the overall cost to employers of replacing staff in the UK is £4.13bn a year.
Linda Smith, HR director of Unum, the income protection firm that commissioned the study, says: “This report reveals a stark cost implication for businesses dealing with staff turnover. While the logistical cost of replacing an employee will probably come as no surprise to businesses, the financial impact of having replacement workers learn the ropes is probably a cost that businesses have not before considered.
“£30,614 is a startling amount, and I would encourage businesses to place more emphasis on retaining talent and developing good staff to reduce the cost of staff turnover.”
Economics consultancy Oxford Economics found that each member of staff that leaves costs an employer £30,614 to replace.
This figure is made up of two components: logistical costs, including agency fees and advertising, and the cost to the employers in wages paid to the new employee before they reach full productivity.
The authors of the report estimate that it takes an average of 28 weeks for a new member of staff to get up to speed at a cost in wages of £25,182.
According to the study, the full logistical cost of replacing an employee are as follows:
- Hiring temporary workers before the replacement starts: £3,618
- Management time spent interviewing candidates: £767
- Recruitment agency fees: £454
- Advertising the new role: £398
- HR time spent processing replacement: £196
Those working in the legal sector are most expensive to replace at £39,887, followed by accountancy staff £39,230.
Workers in the media and advertising cost their employers £25,787 to replace, taking just 20 weeks to reach optimum productivity.
The cheapest employees to hire are retail workers, each costing their employers an average of £20,114 over 23 weeks.
The study found that it was cheaper for small to medium-sized employers (SMEs) with between one and 250 workers to replace staff as they take only 24 weeks to reach full productivity, compared to 28 for larger firms.
However, the smallest businesses, those with between one and nine workers take an even shorter amount of time to reach optimum productivity at just 12 weeks.
The report calculates that the overall cost to employers of replacing staff in the UK is £4.13bn a year.
Linda Smith, HR director of Unum, the income protection firm that commissioned the study, says: “This report reveals a stark cost implication for businesses dealing with staff turnover. While the logistical cost of replacing an employee will probably come as no surprise to businesses, the financial impact of having replacement workers learn the ropes is probably a cost that businesses have not before considered.
“£30,614 is a startling amount, and I would encourage businesses to place more emphasis on retaining talent and developing good staff to reduce the cost of staff turnover.”
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