Making the business case for exit interviews is relatively easy. Here’s just some of the factors you should consider.
Having vacancies costs money
Rarely does an employee leave without implications. Those implications come in many forms. It could mean you are slower to respond to customers. Or maybe that loss of expertise means everything takes just a bit longer, or isn’t delivered quite as well.
Leavers disrupt relationships too. Clients buy into people as much as they do into brands and businesses. When someone leaves relationships may not break but they will often change. It is almost inevitable the customer will compare whoever comes in with the person who has left. Not always favourably.
Productivity will suffer when you have less people. One less pair of hands to manage the workload also means less capacity. That can stretch delivery times. If the leaver was a fee earner or sales person how might that impact your revenue?
The savings in salary could eaily be offset by paying others overtime to cover the work. Or you might miss a sale that dwarfs the salary saving because you couldn’t get that proposal done quickly enough. Or it could just come down to the phone from that potential client not being answered.
There’s also salary drift to consider. In today’s highly competitive jobs market you may well find that new hire demands more salary than the person who just left…
Hiring staff costs money
Let’s face it, recruitment is expensive – no matter how you go about it.
Agency fees can be a big percentage of salary. In-house recruitment doesn’t come cheap either by the time you add up the costs of employing your recruiters and the costs of attracting candidates.
And then there’s all the management time involved. From potentially reviewing shortlists to preparing for interviews and then conducting them. If you use psychometric tests or run assessment centres they cost money too. And so does the time giving feedback to unsuccessful candidates.
Then there’s the HR costs of makiing an offer. Which can jump up quite quickly if there is any form of negotiation on salary and terms and conditions. Referencing, DBS checks (if you need them), work permits etc etc etc all add to the cost too.
Inducting staff costs money
New starters just don’t turn up and get on with it. It takes time for them to get up to speed. There’s always lots to learn in a new Company even if you’ve done a similar job elsewhere. No two organisations use exactly the same systems and processes. Teaching new starters “how things work around here” distracts managers and colleagues from their day job too.
It takes time to build new relationships and learn who the “go to” people are. No matter how good the hire, it will take time to get up to speed. And that time is costing you productivity.
Getting it wrong costs money
There’s no such thing as a perfect predictor of future job performance. So failed hires are an inevitable risk of replacing leavers. All the time and money that went in to replacing someone could be wasted.
Failed hires often come down to more than competence. People can opt out of organisations as much as organisations decide people aren’t right. It could be they don’t like the culture. Or find their reporting style isn’t a great fit with a new manager. The net result is the same – your back around the hiring loop.
The costs soon mount up
If you model out all the potential costs involved in making one successful hire you’ll quickly realise its a big sum of money. Cost incurred just because someone handed in their notice.
One piece of research provides a useful rule of thumb that you can count the cost of a leaver to be at least the equivalent of six months of salary. So a leaver on £40K might cost you £20K to replace. That’s a hard business case for exit interviews on its own.
Slowing the rate of attrition will save you money
How much would just a one per cent reduction in staff turnover save you? It depends of course on the size of your organisation. What if you could slow attrition by 3, 4, 5 per cent or more?
The secret to reducing attrition is knowing why people are leaving in the first place. The typical resignation letter will say the decision to leave is down to a small number of bland factors like “more money” or “a new opportunity”. Rarely will people tell you the real reasons. Usually that’s because they want to leave with minimum fuss and avoid conflict. Plus they’ll probably be worried about that reference…
Great exit interviews get to the truth
We’ve taken almost 30 years of experience in talking to people about their career choices and developed a model that explains the eight factors that drive the majority of individuals to leave organisations. We are happy to have a free, no commitment discussion with organisations looking for ideas and expertise. Get in touch and we’ll set something up. We can help you develop a business case for exit interviews in your business.