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Talent Loss Analysis – Deep insights for Recruiters
Talent Loss Analysis – Deep insights for Recruiters
Kishor Venkatesh R

Content Developer

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Talent Loss Analysis – Deep insights for Recruiters

16 Feb 2021

Young people entering the workforce these days want to be agile in the way they operate. They want to plug into work continuously, know what is happening, and at the same time, they want to be allowed to manage their work their own way.

Additionally, their purpose goes beyond the financials, and they may not want to have a long career in the same organization. They will want to be a part of an organization if their work is meaningful and their contribution aligns with their purpose.

The Talent Loss Analysis

The Talent Loss Analysis concept gives deep insights into why talent loss is happening and at what levels. The talent loss numbers could always be startling if you are willing and savvy to run them.

The analysis can be done at a role level where talent from one company is moving to another. Below is how a recruiter cheat sheet would look like. This sample is mapped based on a candidate, an ‘Applied Scientist’ who moves from an online retailer company to a social commerce company.


The Cost of Talent Loss

Broadly, there are three ways employees impact the company’s bottom line. 

  • Revenue generators – These people interact directly with customers and bring in revenue. 
  • Revenue enablers – The IT staff and administrators play a supporting role to the revenue generators. 
  • Revenue protectors provide legal, security, and compliance services to the company to safeguard the revenue. 

You can calculate the quantifiable revenue per employee (QRPE) in multiple ways. For revenue generators, take the amount of annual revenue they produce and divide it by the number of business days worked (let’s take 255). If the employee is generating USD 500,000 in sales each year, it results in a USD 1,961 loss daily if they leave. 

For revenue enablers and protectors, divide your entire annual revenue by the team’s total number of employees. If the annual revenue is USD 5 Mn with 25 employees, each employee is worth USD 784 per day. This number provides a ballpark figure helping you understand a single employee’s impact. 

What factors the real cost of talent loss? 

The exact cost varies, but a study has predicted that it costs about 6 to 9 months’ salary on average. The training and recruiting expense for an employee earning USD 60,000 a year is about USD 30,000 to USD 45,000. Deloitte’s Josh Bersin broke down the costs as below: 

  • Hiring costs – This includes the cost of advertising, interviewing, screening, and hiring. The recruiting process alone represents USD 4,000 and takes an average of 52 days for US companies to fill in the position, which amounts to USD 13 Bn a month. 
  • Onboarding cost – This includes training and management time. Companies spend an equivalent of six to nine months of an employee’s salary on training a replacement. 
  • Lost productivity – it may take the employee one or more years to reach an existing person’s productivity, including potential errors made by new employees unfamiliar with the company’s processes, tools, and policies. 
  • Customer service errors – new employees may take longer to solve problems and maybe less adept at it. 
  • Training cost – the cost the company bears in two to three years, which is around 10 to 20% of an employee’s salary or more. 
  • Cultural impact – there is a threat of the employee’s colleagues who may disengage and walk out. The ripple effect can lead to lost productivity worth USD 550 billion a year, according to Gallup. 

Best practices on employee retention and cost reduction 

What can companies do to retain the employee and reduce cost? While competitive pay and benefits package remains an essential part of the employee retention equation, others include: 

  • A comprehensive and well-structured training program for new employees to update them about technical competencies. 
  • Rewards & recognition remain a practical way to create a positive culture. Raises, promotions, and recognitions are still critical to employee engagement. 
  • Invest in professional development and provide employees with regular training, allowing them to advance. 
  • Communicate policies via the employee handbook. Meanwhile, the company must enforce policies strictly and consistently. 
  • Conduct exit interviews to know improvement areas. 
  • Track employee turnover tracked by position, department, and manager. 
  • Use AI and ML-based recruitment and talent management platforms to make quality data-driven hiring decisions and retain top talent. 

Retaining your best employees must be part of your business strategy. Every organization must calculate the cost of losing and replacing key talent. Assessing these costs can sharpen your commitment to keeping your valuable employees. They also must keep an eye on employee growth and consider reskilling. 

Draup for Talent analyzes thousands of jobs and breaks them down to their skill levels to build a valuable career. Learning & Development teams can leverage this data to create comprehensive internal learning curricula. The Reskill Navigator fulfills the function of filling the skills gap and transitioning from one role to another. 

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