RECRUITMENT AND RETENTION
Labour turnover costs continue to rise
Today's tight labour market has had at least one salutary effect: managers are becoming ever more aware of the cost of their most prized employees walking out the door. All told, the latest labour turnover survey by the Chartered Institute of Personnel and Development estimates that replacing a managerial and professional employee is likely to cost on average £6,000.
The costs are broken down as follows:
leaving — payroll and personnel administration of leaver
replacement — recruitment, interview time, placement fees
transition — training costs, "unproductive" time while learning, induction
indirect — loss in customer service/satisfaction.
Turnover hits record high
The CIPD's seventh annual survey puts the average cost of turnover per employee at £3,933 — an 11% increase on 1999. No fewer than one in four employees left their organisations last year, the highest figure since the survey began in 1995.
Nick Page, who led the research, said: "The escalation in the rate of labour turnover is a big concern for business and is clearly impacting on organisational performance. However, it is encouraging to see employers responding to such activity with one in four planning to introduce work-life balance measures and many more planning to use exit interviews and change pay and benefit structures".
Estimated total cost of labour turnover cost per year (per leaver) 2000
| Occupational group | Cost | Number of respondents | Change in turnover costs 1999/2000 |
| Managers | £6,086 | 347 | 28% |
| Professional | £5,813 | 279 | 12% |
| Assoc. professional, technical and scientific | £4,591 | 254 | 15% |
| Secretarial and administrative | £2,215 | 339 | 16% |
| Sales | £4,179 | 196 | 7% |
| Personal service | £1,589 | 60 | -19% |
| Craft and skilled manual | £1,736 | 179 | 5% |
| Operative and assembly manual | £1,225 | 162 | -9% |
| Routine unskilled manual | £895 | 152 | -21% |
| Other | £1,779 | 66 | -3% |
| All | £3,933 | 628 | 11% |
Note: Respondents were asked to estimate the relevant cost of turnover per leaver by occupational group by selecting from a range of costs. The data was then banded and mid-points established to give an estimated cost of turnover.
Source: Labour Turnover 2001, Chartered Institute of Personnel and Development.
A final word
"If employers are to solve what is becoming a major problem for them, they need to find ways of reducing labour turnover. For example, in the retail and leisure sectors turnover is now over 50% of staff per year. The solution lies in offering better career and reward structures to retain staff — something which many are clearly struggling to achieve." — Nick Page, CIPD adviser, pay and employment conditions.
Want to know more?
Title: Labour Turnover 2001, Chartered Institute of Personnel and Development.
Methodology: The survey questionnaire was sent to 10,000 personnel professionals in the private and public sectors during June and July 2001.
Sample size: A total of 629 organisations with a combined workforce of 863,847 employees responded to this seventh annual survey.
Availability: To download the report in PDF format, free of charge, visit the CIPD web site. Go to "Info source" and click on "Professional knowledge and information" — you will find the study in the "Research" section . . .
www.cipd.co.uk
The CIPD has over 110,000 members and is the UK's leading professional body for those involved in the management and development of people.