Hi team, Could somebody help me in understanding how to calculate the cost of replacement of an employee? What kind of decisions can be made based on the outcome of this calculation? Regards, Shanti
From India, Bangalore
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From India, Bangalore
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Hi Shanti,
This is an interesting question. When it comes to replacing an employee, the important thing is for which position. Normally, when it comes to replacing a senior person, the cost of replacement might be higher compared to someone at a junior level. For example, in one company, the assistant manager resigned in December, and they found the correct replacement only after six months. Here, you can easily imagine that the cost incurred is higher. However, when it comes to replacing someone at a junior level, you may have many candidates applying, and the cost for replacement will be much lower compared to the other scenario.
When it comes to what we can analyze, taking the same example of replacing an assistant manager, you need to understand how important they are for the team, evaluate their performance, and so on. Based on that, you need to first decide if they are worth retaining. If so, you can consider the cost of replacement to retain that employee. If not, the alternative is to go for a replacement without focusing on the cost because the outcome would be beneficial for your company.
I hope you now have some idea about this topic, and please keep posting such questions; it is really good for discussion.
Regards,
Amith R.
From India, Bangalore
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17This is an interesting question. When it comes to replacing an employee, the important thing is for which position. Normally, when it comes to replacing a senior person, the cost of replacement might be higher compared to someone at a junior level. For example, in one company, the assistant manager resigned in December, and they found the correct replacement only after six months. Here, you can easily imagine that the cost incurred is higher. However, when it comes to replacing someone at a junior level, you may have many candidates applying, and the cost for replacement will be much lower compared to the other scenario.
When it comes to what we can analyze, taking the same example of replacing an assistant manager, you need to understand how important they are for the team, evaluate their performance, and so on. Based on that, you need to first decide if they are worth retaining. If so, you can consider the cost of replacement to retain that employee. If not, the alternative is to go for a replacement without focusing on the cost because the outcome would be beneficial for your company.
I hope you now have some idea about this topic, and please keep posting such questions; it is really good for discussion.
Regards,
Amith R.
From India, Bangalore
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Thanks, Amith. :-)
I would like to know if there is some methodology or some best practices that organizations follow to calculate the cost of replacement. How can this be measured/quantified?
Regards, Shanti
From India, Bangalore
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I would like to know if there is some methodology or some best practices that organizations follow to calculate the cost of replacement. How can this be measured/quantified?
Regards, Shanti
From India, Bangalore
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Welcome Shanti 😃
About using a method to calculate the cost of replacement, I don't have the correct idea, but I can tell you that it includes a few parameters that we had discussed in the other topic, and I have pasted the link to that discussion. You might find some points that could be useful for you in developing a method for calculating the cost of replacement.
Link no longer exists - removed
Regards,
Amith R.
From India, Bangalore
Acknowledge(0)Amend(0)
About using a method to calculate the cost of replacement, I don't have the correct idea, but I can tell you that it includes a few parameters that we had discussed in the other topic, and I have pasted the link to that discussion. You might find some points that could be useful for you in developing a method for calculating the cost of replacement.
Link no longer exists - removed
Regards,
Amith R.
From India, Bangalore
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EMPLOYEE TURNOVER.pdf
EMPLOYEE TURNOVER CALCULATOR.xls