Thanks to those of you who responded. Here are the responses I received. Thanks! <<Re: [CSMFO Members] Cost of Employee Turnover>> <<Re: [CSMFO Members] Cost of Employee Turnover>> <<RE: [CSMFO Members] Cost of Employee Turnover>> <<RE: [CSMFO Members] Cost of Employee Turnover>> <<RE: [CSMFO Members] Cost of Employee Turnover>> <<RE: [CSMFO Members] Cost of Employee Turnover>> <<Re: [CSMFO Members] Cost of Employee Turnover>>
Great question! Please share. Mary Jo Walker City of Saratoga Bruce Moe wrote: > In this tight labor market, we are all experiencing trouble filling > positions with qualified employees. So much so, that this has become an > issue for our City Council to grapple with in terms of retaining employees. > > As we assemble information for Council review, the question has come up as > to exactly how much, on a percentage basis, employee turnover really cost. > We realize it may vary from classification to classification, but overall, > do any of you have a reliable estimate? > > We would appreciate a quick response since this will come up at Tuesday > night's Council meeting. > > Thanks! > > Bruce Moe > Finance Director > City of Manhattan Beach
Having thought about it for all of the five minutes since reading your message, it seems to me that such costs can be broken into three components, two of which are quantifiable: 1. Foregone productivity. This would be roughly equal to the direct costs associated with the vacancy. While from a strict accounting perspective you have salary savings to offset this cost, the value of work not performed during the vacancy is presumably worth at least as much (and economic theory suggests it's greater than or equal to) as your willingness to pay for it. Of course, this cost is a function of the length of the vacancy. 2. Direct recruitment costs. This is the HR cost of actually advertising, screening, interviewing, background-checking, offering, haggling, and finally cutting an employment deal. Of course, if you perform all but the last task, and thus need to do it over, your costs double. Given that such duties are part of the HR function, it may not be reasonable to include all such costs. However, to the extent that such efforts detract from other HR functions (e.g., safety training), there may be opportunity costs. 3. Organizational stress. Although unquantifiable, at least in dollars, this cost is perhaps the greatest of all. Vacancies create a number of stresses, including potentially increased workloads for those who remain, foregone productivity and momentum on projects being championed by the vacating employee, and uncertainty of potential reorganizations, among others. It also seems that once one person moves on, that action triggers similar soul-searching on the part of remaining employees who start wondering if the grass may be greener elsewhere. Given this, I'm not sure that one can reasonably assign a straight "percentage" cost of employee turnover. But I would be very interested in responses you may get from other folks. Good luck. Karl Mohr, Finance Director City of Davis Finance Department 23 Russell Boulevard Davis, CA 95616 530-757-5607 (phone) 530-750-1772 (fax) [EMAIL PROTECTED] www.city.davis.ca.us >>> Bruce Moe <[EMAIL PROTECTED]> 03/20/00 05:16PM >>> In this tight labor market, we are all experiencing trouble filling positions with qualified employees. So much so, that this has become an issue for our City Council to grapple with in terms of retaining employees. As we assemble information for Council review, the question has come up as to exactly how much, on a percentage basis, employee turnover really cost. We realize it may vary from classification to classification, but overall, do any of you have a reliable estimate? We would appreciate a quick response since this will come up at Tuesday night's Council meeting. Thanks! Bruce Moe Finance Director City of Manhattan Beach
No estimate from us, but I'll sure be interested in your results! Robert Groeber in Visalia -----Original Message----- From: Bruce Moe [mailto:[EMAIL PROTECTED]] Sent: Monday, March 20, 2000 5:16 PM To: '[EMAIL PROTECTED]' Cc: Donna Peter Subject: [CSMFO Members] Cost of Employee Turnover In this tight labor market, we are all experiencing trouble filling positions with qualified employees. So much so, that this has become an issue for our City Council to grapple with in terms of retaining employees. As we assemble information for Council review, the question has come up as to exactly how much, on a percentage basis, employee turnover really cost. We realize it may vary from classification to classification, but overall, do any of you have a reliable estimate? We would appreciate a quick response since this will come up at Tuesday night's Council meeting. Thanks! Bruce Moe Finance Director City of Manhattan Beach
Please share what you learn. I'm very interested. Thanks, Don -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Bruce Moe Sent: Monday, March 20, 2000 5:16 PM To: '[EMAIL PROTECTED]' Cc: Donna Peter Subject: [CSMFO Members] Cost of Employee Turnover In this tight labor market, we are all experiencing trouble filling positions with qualified employees. So much so, that this has become an issue for our City Council to grapple with in terms of retaining employees. As we assemble information for Council review, the question has come up as to exactly how much, on a percentage basis, employee turnover really cost. We realize it may vary from classification to classification, but overall, do any of you have a reliable estimate? We would appreciate a quick response since this will come up at Tuesday night's Council meeting. Thanks! Bruce Moe Finance Director City of Manhattan Beach
Take the total Personnel Department budget less any direct payments for training or risk management. Then ask personnel how much time they spend on employee recruitment vs. their other task (i.e. benefit administration, etc.). Take the net figure and divide by the number of vacant jobs or the number of recruitments Personnel did in a year to get a cost estimate for just filing jobs. Then of course you have to factor in a loss of productivity to train an employee when they are new. How about 2 months of salary. That could give you an total estimate to answer your question. Just a few ideas. Good luck. ---------- From: Bruce Moe[SMTP:[EMAIL PROTECTED]] Sent: Monday, March 20, 2000 5:16 PM To: '[EMAIL PROTECTED]' Cc: Donna Peter Subject: [CSMFO Members] Cost of Employee Turnover In this tight labor market, we are all experiencing trouble filling positions with qualified employees. So much so, that this has become an issue for our City Council to grapple with in terms of retaining employees. As we assemble information for Council review, the question has come up as to exactly how much, on a percentage basis, employee turnover really cost. We realize it may vary from classification to classification, but overall, do any of you have a reliable estimate? We would appreciate a quick response since this will come up at Tuesday night's Council meeting. Thanks! Bruce Moe Finance Director City of Manhattan Beach
Bruce, I know what you mean. We have lost 5 employees in Finance in a little over a year... all went to another department within the organization and 4 were promotions so I feel good for them (knowing we gave them the experience to grow). Although I don't really have an estimate for you, I know that our approach has been that our salaries are to attract employees and our benefits are to keep them once they get here. We offer some benefits not offered by all cities. For example, the city pays for an annual picnic and an annual Christmas Party (that is called the Employee Appreciation Dinner/Dance). We also provide 4% of each employees gross (before overtime) wages towards a 401a plan. We also have an attractive sick leave pay out plan whereby after 5 years an employee is 25% vested in all sick leave on the books, 50% at 10 years and 100% at 15 years. Of course, we have PERS (fully paid), PERSCARE, good leave packages, a Section 125 Plan and Deferred Comp. Makes it pretty unappealing to leave and we have very little turnover citywide. Some of that could also be that our City Council has historically been very supportive of staff. I'll be very interested in the results of your survey. Good luck. Anita Lawrence, Camarillo > -----Original Message----- > From: Bruce Moe [SMTP:[EMAIL PROTECTED]] > Sent: Monday, March 20, 2000 5:16 PM > To: '[EMAIL PROTECTED]' > Cc: Donna Peter > Subject: [CSMFO Members] Cost of Employee Turnover > > In this tight labor market, we are all experiencing trouble filling > positions with qualified employees. So much so, that this has become an > issue for our City Council to grapple with in terms of retaining > employees. > > As we assemble information for Council review, the question has come up as > to exactly how much, on a percentage basis, employee turnover really cost. > We realize it may vary from classification to classification, but overall, > do any of you have a reliable estimate? > > We would appreciate a quick response since this will come up at Tuesday > night's Council meeting. > > Thanks! > > Bruce Moe > Finance Director > City of Manhattan Beach
I know that police officers are our highest cost. You have a lot of O.J.T. even if you can hire them as trained officers. If you get them out of the academy, there is even a higher level of cost. If you have police, you could check with your Chief, as the amount of training could vary significantly from area to area based on size and population. I would venture to estimate that any other employee may have a start-up cost for efficiently of 50% of their probationary period. (IE. 6 month probation, half of that time is non-productive). That may give you a starting point. You also might check with some manpower agencies in your area, they may have some information on productivity. Hope this helps a little. Jo Barrick Administrative Services Director City of Shafter
