How Are You Spending Your Employment Budget?
Think about the implications of this true story: Low up-front hiring expenses and a huge turnover percentage. Even more interesting is that this HR manager was perfectly willing to spend thousands to find out why employees were leaving and whether or not they were happy in their work. Apparently, no one within this company had taken a very serious look at the costs associated with such huge turnover problems. Although I cannot give you precise pound sterling amounts, I'm willing to bet that the costs associated with that level of turnover are greater than the average nationwide cost-per-hire provided by the EMA.
Think of the training and retraining expense, the disruption in the continuity of the workforce, the expenses of employing people in terms of wages, benefits and other direct labour costs, and the cost of productive time -- the "opportunity cost" -- on the part of supervisors and managers involved in the constant training and retraining of four out of every 10 employees. This may be one of the most graphic examples I've ever seen of being "pennywise and pound-foolish."
Here's a different scenario illustrating how to allocate your employment budget. A few years ago, we were asked to do reference checking on every candidate being considered for employment at a totally new start-up manufacturing facility. Initially, we received more than 6,000 applications for approximately 300 new jobs.
