Cost of replacing employees

The True Cost of Replacing an Employee

Our CEO, Barry Whelan, featured in the April edition of ShelfLife magazine to discuss the true cost associated with replacing employee’s. Check out what he had to say below:

Encouraging an employee to reconsider their decision to resign from a company, can help save a great deal of time and money further down the line, writes Excel Recruitment’s Barry Whelan.

Ireland is in the midst of the “Great Resignation” with employers witnessing a higher churn in employees then most can recall. We know there is a staff crisis in hospitality, but there is also a looming crisis for labour in the retail, industrial, warehousing, transport, and health sectors. Workers are leaving their jobs in record numbers and new roles, due to demand with the re-opening of society, are being registered at a faster rate than we have ever witnessed in Excel. This is leaving businesses scrambling to replace employees, often at a major cost to the business.

Job postings consistently rising

The trajectory of job postings for the retail sector is on a consistent upward trend, having more than doubled from 1,578 in February 2021 to 4,258 in February 2022 (data courtesy of Indeed). Retail will be the next sector to be faced with a serious and damaging staffing crisis, akin to that currently being suffered in hospitality.

The industry data paints a stark picture – between 2019 and 2021, the number of retail job seekers per retail job vacancy had been increasing year on year. However, since then it has dipped significantly and in February 2022 there were 39 job seekers per job, down from 78 job seekers per job in February 2021. What’s more, the number of employers with active retail job vacancies has now nearly tripled in the 12 months to February 2022 when it stood at 1,360 employers – up from 488 employers in February 2021.

Re-evaluating priorities

Over the course of the pandemic many people were out of work and/or on reduced hours – they had more time on their hands to really look at their careers and their life, and what they want from both. As a result, we’ve seen thousands of workers change careers, upskill in their current industry, and/or just make the decision to strive for a better work-life balance.

That dynamic, combined with the fact that the industry has also missed out on approximately two years of new candidate intakes – due to workers either leaving the sector during Covid because of lockdowns and working restrictions, or indeed leaving the country – has left supply as a major issue, which continues to deteriorate.

The true cost

Depending on the complexity and seniority of a role, the actual or real cost of employee turnover can be estimated to be between 33% to a whopping 200% the employee’s annual salary.

Before allowing an employee to resign without any effort to get them to reconsider, employers should be aware of all the possible costs of replacing an employee.

The more obvious costs such as advertising, the recruitment process, executive and human resource professionals’ time spent interviewing, recruitment agency costs, background or reference checks, rejection of unsuccessful applicants or indeed interim temporary workers hired to plug a hole, all add up to a considerable number of man hours and burn rate interviewing.

But these are not the only costs; you must consider lost productivity, lost sales, lost turnover, lost knowledge, and new hire learning errors along with training time. These are the hidden costs of losing good employees.

Whiplash changes

The talent market has undergone whiplash-like change in the last 18 months, with companies shedding their workforce last spring and then spinning into a hiring frenzy this summer. It’s no surprise that many employees are looking for new opportunities or at least revaluating their career priorities.

Oftentimes, when an employee looks to leave, they should not be retained, as fresh talent can often add unmeasurably to a business. However, management need to understand the total cost of ownership in employee disengagement and attrition before making a decision not to try to retain talent.

‘Stay’ interviews

There are two recent trends that are worth looking at. The first is the ‘stay’ Interview. Here, instead of the usual six-monthly appraisal, companies engage with employees asking them why they continue to work for them and what they need to continue to do so.

Intercom, the Irish-founded tech communications platform with more than 800 employees, is a great example of this, with managers holding special meetings with each of their team members encouraging them to stay.

Boomerang employees

The second trend is boomerang employees: employees who return after leaving a company. A new LinkedIn Workforce Insights survey shows that this keeps rising.

Boomerang recruits amounted to 4.3% of all job switches last year, up from less than 2% in 2010, according to LinkedIn data. Fully trained, culturally compatible employees returning to their employer can’t be a bad thing!

If you would like to check out the full April edition of ShelfLife magazine you can do so by clicking here.

Advice for Employers: How to Conduct an Interview

A new hire is one of the most significant business decisions you can make and a face to face interview is hands down the best way to decide on the right candidate but are you making the most of it? We take you through the best questions to ask a potential employee to gain the most knowledge possible about the person behind the CV.

We at Excel do the leg work in terms of finding exceptional candidates that have the right experience, qualifications and skills match your specifications and we ensure the candidates we present to you are the best of the best but ultimately, the final decision is yours.

By the time you’ve decided to interview someone we, and you, will have screened their CV thoroughly and decided that their experience and qualifications are suitable for the role, but is their personality and style? You know best the type of person that would be the most successful fit in your business.

The best interview questions tell you about the person rather than the CV and gain an insight into the candidate’s personality, strengths, weaknesses, skills and abilities. The most successful questions benefit the candidate and give them opportunity to speak to details that might not fit on a standard CV.

Tell me about yourself.

This question is probably the most obvious on the list, but with good reason. This question is a great way to start your interview and put your candidate at ease, as they will obviously know a lot about themselves. It gives you an opportunity to see their communication skills, confidence and personality from the get go.

From everything you’ve learned about this role, me and the company, tell me how you feel you could contribute to the business?

This question sorts out those that are serious about the role from those just chancing their arm. Those who have really prepared and want to work with you will be delighted to have a chance to show it. Those who don’t really want the job or those who are simply too lazy to Google you will either try and bluff and fail or falter completely.

Describe a time when something went wrong at work and how you dealt with it.

This question is ideal for learning about how your potential hire will handle the pressures of life and conflict in your office. The candidates answer will demonstrate their interpersonal and problem solving skills and help you determine whether they would fit well into the culture of your business.

Why should we hire you?

As we said earlier by the time you meet a candidate for interview, we at Excel have already established that on paper, they are right for the job but this question can help you hugely when deciding if they’re right for your business. Realistically you’re interviewing a number of candidates, all with similar qualifications. This question asks the candidates to define what sets them apart from the rest. An interviewee who does a great job explaining how her unique experience, education, industry credentials, and personal interests will power your business will do the same thing for your company once hired.

How would your boss/ coworkers describe you?

This question essentially ask what are your greatest strengths/weaknesses in a way that can cause interviewees to be more reflective in their answer. A good candidate will know there is no point in spoofing and will use real-life examples or quotes from their boss/ performance reviews that reflect the attributes they’ve already mentioned in the interview.

What kind of manager and colleagues have you had the most and least success with, and why?

This is a great question to ascertain the personality type of the candidate sitting in front of you. By asking this you’ll be able to figure out how they work best, and whether this fits in with how your team works best, or whether they seem to have a lot of conflicts with people or personality types.

Advice for Employers: How to Conduct an Interview

A new hire is one of the most significant business decisions you can make and a face to face interview is hands down the best way to decide on the right candidate but are you making the most of it? We take you through the best questions to ask a potential employee to gain the most knowledge possible about the person behind the CV.

We at Excel do the leg work in terms of finding exceptional candidates that have the right experience, qualifications and skills to match your specifications and we ensure the candidates we present to you are the best of the best but ultimately, the final decision is yours.

By the time you’ve decided to interview someone we, and you, will have screened their CV thoroughly and decided that their experience and qualifications are suitable for the role, but is their personality and style? You know best the type of person that would be the most successful fit in your business.

The best interview questions tell you about the person rather than the CV and gain an insight into the candidate’s personality, strengths, weaknesses, skills and abilities. The most successful questions benefit the candidate and give them opportunity to speak to details that might not fit on a standard CV.

Tell me about yourself.

This question is probably the most obvious on the list, but with good reason. This question is a great way to start your interview and put your candidate at ease, as they will obviously know a lot about themselves. It gives you an opportunity to see their communication skills, confidence and personality from the get go.

From everything you’ve learned about this role, me and the company, tell me how you feel you could contribute to the business?

This question sorts out those that are serious about the role from those just chancing their arm. Those who have really prepared and want to work with you will be delighted to have a chance to show it. Those who don’t really want the job or those who are simply too lazy to Google you will either try and bluff and fail or falter completely.

Describe a time when something went wrong at work and how you dealt with it.

This question is ideal for learning about how your potential hire will handle the pressures of life and conflict in your office. The candidates answer will demonstrate their interpersonal and problem solving skills and help you determine whether they would fit well into the culture of your business.

Why should we hire you?

As we said earlier by the time you meet a candidate for interview, we at Excel have already established that on paper, they are right for the job but this question can help you hugely when deciding if they’re right for your business. Realistically you’re interviewing a number of candidates, all with similar qualifications. This question asks the candidates to define what sets them apart from the rest. An interviewee who does a great job explaining how her unique experience, education, industry credentials, and personal interests will power your business will do the same thing for your company once hired.

How would your boss/ coworkers describe you?

This question essentially ask what are your greatest strengths/weaknesses in a way that can cause interviewees to be more reflective in their answer. A good candidate will know there is no point in spoofing and will use real-life examples or quotes from their boss/ performance reviews that reflect the attributes they’ve already mentioned in the interview.

What kind of manager and colleagues have you had the most and least success with, and why?

This is a great question to ascertain the personality type of the candidate sitting in front of you. By asking this you’ll be able to figure out how they work best, and whether this fits in with how your team works best, or whether they seem to have a lot of conflicts with people or personality types.