Tuesday, October 11, 2005

Cost of recruitment

My favorite formula for cost of attrition is: Cost of recruitment+Cost of knowledge lost bcs ofattrition.

Cost of recruitment: Cost of recruitment instrument(s)/proportional cost ofrecruitment instrument(S). (Proportional) cost of recruiter time, measured byrecruiter salary.
(Proportional) cost of management time, computed bytime spent on selection process * gross salaryapplicable for the time.
(Proportional)Cost of common induction. - company costand recruit's salary cost. Cost of role specific induction. - salary cost of newemployee+salary cost of trainer+ company resourcecosts, if any.
Cost of on the job trng before the employee becomesfully productive. On an average, about 1 month shouldbe enough. i.e., one month's salary.
If the position is a replacement position, this costof recruitment becomes an input into the cost ofattrition, which then becomes: Cost of recruitment+Cost of Knowledge lost +Cost of any unrealised trngs given to the employee. Cost of knowledge lost can be directly computed on thebasis of employee's tenure in the current role.I also like to add a premium for long stayingemployees, bcs they have carried out with them a longstanding knowledge of the company's culture. Of course, all these costs only apply to involuntaryattritions.
People who are asked to leave will get alower figure on the knolwedge lost factor. At the end of this, the figures do appear to be verysubjective, don't they? :-) Puting a number on these figures does bring somestunning results.. but its also equally important toremember that not all the knowledge is in numbers.

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