the cost of replacing staff

The Australian Human Resources Institute white paper Love 'em don't lose 'em: Identifying retention strategies that work validates what HR practitioners and corporate managers alike appreciate. The sheer cost of replacing staff is staggering. The paper is worth a read in full and can be found on AHRI's Centre of Excellence page: click here.

The cost of turnover in Australia has been estimated at $20 billion per year (using Australian Bureau of Statistics data of the average salary of AUD $55,660.80). Conservatively it is estimated that replacing a staff member will amount to 75 per cent of salary. The Australia HR community argues that real replacement costs are more like 150% of salary given lost productivity, recruitment and training. This figure has been supported by a study by Vedior Asia Pacific.

The white paper found that the most significant staff turn over occurs within the first twelve months, indeed, within the first 100 days. What remains to be seen is the impact of the global economic crisis. Are we seeing a temporary shift in turnover trends? Or have the trends changed direction for good?

It is interesting to note that despite unemployment growth, there is an emerging criticism of Y-generation job seeking behaviours. In recent days politicians from the Minister for Employment Participation, Mark Arbib, through to the Prime Minister Kevin Rudd, calling on Y-gens to "not be so fussy". The Minister's press release, which sparked current discussions, can be found here: click here.

What ever we feel about the generalisations associated with the different generations; one thing is clear - the employer proposition is well and truly under the spotlight and will remain there. We may find that all that the global economic crisis may have done, is to shift the proposition away from pure financial attractors. It is time for the intangible benefits to stand up and be counted.