ERE Relegating Cost per Hire... figs 1-6_david green_20160328
Transcript of ERE Relegating Cost per Hire... figs 1-6_david green_20160328
Other Topics: Mastering HR Process; Global people management and international expansion; Enhancing employee engagement; Providing shared services and outsourcing HR; Managing diversity and inclusion; Managing change and cultural transformation; Actively using web 2.0 for HR and managing associated risks; Strategic workforce planning; Delivering critical learning programs; Managing corporate social responsibility; Transforming HR into a strategic partner; Health and security management; Managing flexibility and labor costs; Restructuring the organization; Managing work-life balance; Managing an aging workforce
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Delivering on recruiting
Onboarding of new hires and retention
Managing talent
Improving employer branding
Performance management and rewards
Developing leadership
3.5x 2.0x
2.5x 1.9x
2.2x 2.1x
2.4x 1.8x
2.1x 2.0x
2.1x 1.8x
Economic Influence is Discernible in all HR Topics but is Most Pronounced in Six…
Revenue growth
Profit margin
The impact that the most capable
companies achieve over the least
capable companies
Topic in which most capable and least
capable companies were compared
Meet Smart Inc. and Dumb Inc.Smart Inc.
“Optimized” Talent Acquisition functiono Average CPH = $6,465o Average new hire attrition = 10%o Average Time to Fill – 44 days
“Reactive and Tactical” recruiting functiono Average CPH = $3,258o Average new hire attrition = 17%o Average Time to Fill – 55 days
SMART $1Bn Turnover 10,000 employees 1,000 annual hires Avg compensation = $50k
DUMB $1Bn Turnover 10,000 employees 1,000 annual hires Avg compensation = $50k
DUMB
Smart Inc. spends 2x more on hiring than Dumb Inc…
1,000 1,000$6,465 $3,258
$6,465,000 $3,258,000+$3,207,000 -$3,207,000
Cost Per HireNumber of hires per annum
Average Cost Per Hire
Total Annual Cost Per Hire
Difference – Smart Inc. vs Dummy Inc.
SMART DUMB
40% less new hire turnover equates to $4.4M
1,000 1,00010% 17%
$6,250,000 $10,625,000-$4,375,000 +$4,375,000
Cost of First-Year AttritionNumber of hires per annum
First-Year Attrition Rate
Total Annual Cost of Y1 Attrition
Difference – Smart Inc. vs Dummy Inc.
100 170$50,000 $50,000
Number of Y1 leavers
Average Annual Salary
1.25 1.25Cost of attrition – salary multiplier
SMART DUMB
20% faster time to fill equates to $2.5MSMART DUMB
$1Bn $1Bn10,000 10,000
44 days 55 days$20,000,000 $25,000,000
Lost Opportunity – Time to Fill)Total Annual Revenue
Number of employees
Average Time-to-Fill
Lost Gross Opportunity Revenue
NB: Average Time-to-Fill figures taken from Bersin by Deloitte
$100,000 $100,000$455 $455
Average annual revenue per employee
Average revenue per employee day (220 days)
1,000 1,000Number of annual hires
$227 $227$10,000,000 $12,500,000
Average cost per employee day (220 days)
Total salary saved for Open roles
$50,000 $50,000Average annual salary
$10,000,000 $12,500,000-$2,500,000 +$2,500,000
Lost Net Opportunity Revenue
Difference – Smart Inc. vs Dummy Inc.
So, is it smart by name & smart by nature?
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Cost
Quality
Agility
+$3,207,000 -$3,207,000
-$4,375,000 +$4,375,000
-$2,500,000 +$2,500,000
-$3,668,000 +$3,668,000
The ResultsDifference in Cost Per Hire
Difference – First-Year Attrition
Difference – Lost Opportunity/Time to Fill
Total Difference – Smart Inc. vs Dummy Inc.
SMART DUMB
$3.7M