the company’s work force.
Trainers and professionals were the most expensive employees to
replace in terms of direct costs, because the company offered relocation
payments of £10,000 when recruiting employees for these two categories
(see Table 5.4.1). Relocation payments were not needed for salespeople
because, although they sometimes switched employers, they rarely moved
to a different area. Relocation payments to secretarial staff were considered
unnecessary, as it was assumed that they could be replaced locally.
Table 5.4.1 Employee turnover – direct costs (£)
Salesperson Trainer Professional SecretarySourcing 4000 3500 3500 600
Interviewing
Mgmt time 2000 2000 2000 2000
Admin time 300 300 300 300
Expenses 100 100 100 100
Relocation – 10 000 10 000 –
Training 6000 2000 1000 1000
Total per emp. 12 400 18 000 17 000 4000
As the data collection progressed, it became apparent that the direct costs
of replacement were only part of the equation. When the opportunity costs
of lost employees were factored in, the picture changed dramatically (see
Table 5.4.2). The costs of losing a professional rose from £17 000 to £27 000,
while the full costs of a lost secretary was judged to be around £6600. The
opportunity costs for both groups were based on estimates of the reduction
in productivity that might reasonably be expected when a new recruit
takes over from an experienced member of a team. The opportunity costs
of losing customer-facing employees were much higher. Moreover, both
groups were likely to defect to rival businesses. Trainers were considered
to be revenue-generating employees, who added directly to customer
value. In practice their work was rarely billable, as most of the time their
services were offered free of charge to customers, by salespeople eager to
clinch a deal. Trainers were in short supply, and very difficult to replace;
their loss reduced the company’s capabilities and its ability to ‘delight the
customer’, which did have a small impact on sales – hence the opportunity
costs of around £45 000 per trainer. That left the sales force as the only
overtly revenue-generating group in the study.
A salesperson took roughly nine months to complete his or her training,
and to become fully familiar with the technology and the customers.
Approximately 30 per cent of the opportunity costs for this group was due
The recruitment and internal market domains 403