the cost of early leavers

Your recruiting process has worked and you’ve found the perfect candidate. Everyone is delighted: so how do you make sure the enthusiasm continues? It’s an important question: the Australian Human Resources Institute (AHRI) found that turnover among people in the first two years of a job is much higher than among other groups.

High levels of turnover among new recruits means you will barely have recovered your recruitment and training costs before it’s necessary to start the recruitment process all over again. It’s difficult to put a figure on the exact cost of replacing an employee, but Randstad estimates this could be anything from 50% to 150% of an individual’s salary depending on the acquisition cost, seniority, skill level and the impact of loss to both staff and customers. 

A recent AHRI Pulse survey found that seven out of ten respondents reported that their workplace does not actually measure the cost of turnover. While it may seem complicated and time-consuming to calculate the actual cost of employee turnover, it is worth having a conservative figure to refer to when persuading management about possible employee retention strategies. With well over a third of Australians leaving their job within two years, it is clear that spending time and effort on your on boarding processes is good for you, good for your employees and good for the business.

Explanations of high turnover rates include:

  • the job failed to match up to expectations
  • poor selection – the successful candidate did not complete the probationary period successfully
  • the organisation failed to integrate the newcomer successfully — this includes a poor or non-existent induction process and difficulties integrating the newcomer with the existing team
  • failure to connect with the line manager

However, some industries – hospitality, leisure and retail – have naturally higher turnover levels as they often employ younger people e.g. students who aim to move on.

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