Where I live (in Idaho), the cost of replacing an employee averages somewhere between $17,000 and $31,000. Employees making over $60,000 per year cost more than $38,000 to replace. The problem for most employers? Many of these costs are hidden and spread out, so they don't glare at you as a single line item in the budget.
When I present these figures during a training session, some people scoff and say it can't be true. All I can say is don't shoot the messenger. These numbers come from the Department of Labor and the Society for Human Resource Management.
What about entry-level workers? Surely it doesn't cost $17,000 to replace them? Usually true, but it still costs more than people think.
A few years back I conducted a workshop for a retail Mall Merchant's Association. In an exercise during the workshop, the merchants discovered that among their own group, $2,000 was the least amount it cost replace an entry-level employee.
Replacing employees is expensive
If you're an employer, how much time does it take for you to earn $2,000? If you make $50,000 per year it's 80 hours. If you earn $100,000 per year, it's about 40 hours. If you earn $200,000 per year, it's 20 hours of precious time.
Therefore, if you could get something done in less than 20 hours that helped you retain just one entry-level employee, you'd be saving money.
That's an amazing claim, but do the math. Then calculate how much time it takes you to earn $17,000. Then calculate for $31,000. Those are realistic costs for replacing just one employee From this, it's pretty obvious we need to do more than find great employees; we need to keep them, too.
To keep them around, we must examine the real reasons employees leave. Most say it's because they're seeking better pay. Wrong answer, try again.
The Harvard Business Review reports that the number one reason people leave is Job Content. It has to do with people feeling bored and directionless in their careers, or because the work they're doing is not what they thought their job would entail.
Thankfully, an easy, inexpensive, and powerful fix is available: Accurate job descriptions.
Already have them? Think you're all set in that department? Think again. Over the last ten years I can count on one hand the number of people who've told me their written job descriptions are accurate.
Take your time; Do it right
Problem: This is one of those "important, but not urgent" items that tends to get shuffled to the bottom of the pile as soon as something more pressing hits the desk. Don't let this happen. A well-written job description is your key to saving hundreds of hours and thousands of dollars.
Benefit #1: Clear, specific job descriptions make it easy to create interview questions that weed out applicants who don't match - and identify ones who do.
Benefit #2: Even the best, most engaged new-hire becomes bored and disengaged if he doesn't think he's contributing to something bigger than himself. Written job descriptions are foundational for helping people see how their work fits into the bigger picture.
Benefit #3: Rarely does a new-hire have every piece of knowledge, skill, and attitude needed for success. By using job descriptions as a check sheet for training, employees learn what they need to do. A collection of well-written job descriptions provide direction for future learning, too.
Benefit #4: Finally, job descriptions are great for structuring performance evaluations. Most company's performance evaluation forms are severely overly-generic. Accordingly, employees aren't sure just what they must do to get a stellar review.
Job descriptions to the rescue. With a clear list of assigned duties and tasks forming the foundation for annual evaluations, employees are regularly reminded of what's expected of them.
All this is well and good, but finding a class on how to write job descriptions can prove difficult. And finding a useful book on the topic is almost as tough.
Resources are available
The Simple Way to Hire, Train and Retain Great Employees
Read Dan's practical guide to formulating accurate, clear-cut job descriptions that help you hire the people you really need.
One highly-rated book is Results-Oriented Job Descriptions by Roger and Sandra Plachy. Published in 1993 by the American Management Association, it's a bit old (and pricey: $64), but it has over 200 actual job descriptions written in a useful format you can adapt to your needs.
You can get The Job Description Handbook by Margie Mader-Clark, or a my own e-book (available on this very site), The Simple Way to Hire, Train and Retain Great Employees.
Both cost much less, and both provide step-by-step instructions for creating accurate and complete job descriptions.
Bottom line, job descriptions are like stealth secret weapons for hiring, training, and retaining great employees. I guarantee whatever effort you put forth will save you hundreds of hours and thousands of dollars.
