Following is a list of costs you may want to include in your calculation. Some of the items may not apply to your situation; you may not be able to define others. The goal is to realistically define your costs. If you don’t, you’ll never be able to plan a cost-effective solution.
The expenses associated with having to replace an employee may include:
1.The exit interview. Include the time of both the interviewer and interviewee. If a neutral third party conducts an exit interview (a practice that we recommend) consider the additional expense of hiring an impartial contractor.
2.Administrative costs associated with the person leaving; you’ll need to stop payroll and benefits, complete forms, etc.
3. Administrative costs to bring on a new person—adding to payroll, establishing and securing passwords, issuing ID cards, assigning e-mail accounts, etc.
4. The severance or continued benefits to the employee.
5. Costs associated with filling the vacant position temporarily, or the cost due to existing employees filling the void.
6. Employment advertising. Finding the right avenue can be tricky because most “Generation Xers” and “Yers” don’t read traditional paper-based newspapers; companies have to find new sources to attract employees.
7. Hiring costs (including call center management and HR). Include time to review and explain job requirements, review backgrounds, conduct interviews, discuss the assessments with others and select a finalist.
8. Internal posting. Calculate not only the cost of the internal recruiter, but also the time that the applicant is away from his or her job.
9. Drug screens, background checks, and reference checks. Calculate the cost per applicant and how many applicants are involved. Many companies screen the final three or four applicants.
10. Pre-employment testing to assess skills, abilities, aptitude, attitude, values and behavior.
11. Travel and/or relocation.
12. Orientation costs, including the time of the participant, the leader, and the materials.
13. Training costs including the development and delivery costs plus the salary of the new employee and trainer. Don’t forget the cost of the training materials—manuals, equipment, and technology such as computers.
The losses add up. Companies estimate that the loss of one customer service employee ranges from $10,000 to $20,000 on the low side to $50,000 to $75,000 on the high side. The loss is even greater for sales people (probably because it is easier to calculate a hard-dollar revenue loss). The estimated loss of a sales person ranges from $20,000 to more than $100,000 in lost revenue alone for a well-established account manager or broker.
Because contact center employee turnover is high and the costs of turnover continues to escalate, it behooves us to periodically re-evaluate the cost of this loss and make appropriate course corrections. However, don’t try to take your turnover to zero. Remember from a previous blog that not all turnover should be eliminated.
In my next blog, I’ll add to the list by accounting for the negative consequences that occur in the operation when someone leaves. In the meantime, you might want to start gathering your data.
