More than £30K to replace staff, report finds
The 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:
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.
Circle Director Matthew Leach was not surprised with the findings of the report: "Replacing leavers is indeed a costly exercise, particularly in IT where new employees need to become familiar with their employer's infrastructure, software and systems, not to mention culture", he said. "At Circle, we put our money where our mouth is in this respect. Should a candidate we place not work out, our customers can choose a free replacement as opposed to a rebate. This gives complete assurance that we look to make the right hire first time around, which is the way it should be".