Report from Unum and Oxford Economics reveals the “startling” staff turnover costs affecting employers in the post-recession era
Do you think that employee who spends too much time playing Flappy Bird on his phone rather than putting in a hard day’s graft is easily replaceable? Think again.
A report commissioned by income protection firm Unum and carried out by Oxford Economics, The Cost of Brain Drain, has revealed that the cost incurred by SMEs when replacing staff currently sits at an average of £26,595 per employee.
The financial loss has been attributed to two main components: the optimal productivity associated with a new employee finding their feet and settling into a new role and the logistical cost of the employer finding a new member of staff, including advertising costs, recruitment fees and the induction process.
The costs, described as “startling”, are avoidable, according to Peter O’Donnell, CEO of Unum. “The most important step organisations should take to reduce these turnover costs is to do everything possible to retain and develop good staff,” he said. “Raising salaries isn’t always an option, with many companies facing cutbacks and pay freezes in the current climate.”
It wasn’t all doom and gloom for SMEs, however, as the report established that smaller firms are much better at getting workers up to speed than larger ones. It was revealed that employees working for companies with up to nine staff were up to speed within 12 weeks on average, whereas it took employees at firms of over 500 staff around 18 weeks.
O’Donnell added: “This study shows that small companies have an advantage here. Larger businesses should take a look at what SMEs are doing to accelerate the learning curve of new joiners, and see if they can adopt elements of their approach.”