Being short-handed is hard enough, but have you ever stopped to add up the costs of replacing an employee?
According to estimates from the Prairie Swine Center in Saskatoon, Saskatchewan, the cost of hiring a new employee can range from $7,347.95 to $70,347.95. (See sidebar for a cost breakout.) Granted, the exact cost will vary with the situation.
One key to keeping replacement costs under control is to have a formal training program in place. This means writing job descriptions, having established training protocols in place, doing exit interviews and developing a plan for recruiting new employees. The downside is that these activities all cost money, but your operation will benefit in the long run.
"If you have a formal training program in place, you can probably head off most problems before they become serious," says Don Tyler, employee management consultant, Clarks Hill, Ind. "This way, you can make sure an employee is in the right job situation."
Another issue to consider is the tenure of your management staff. "If they've been around for awhile, it can help get employees started off right because they have experience in the operation that they can share. That all helps reduce turnover costs," adds Tyler. "An experienced and talented manager will notice right away if someone doesn't fit in and see what kind of remedial works needs to be done to assist or re-assign the worker."
Other factors that can help limit turnover involve the overall attitude of your staff. If your existing employees are willing to help new personnel settle in and feel comfortable it will help reduce turnover.
Of course, the best option to keep the lid on replacement costs is to keep the employees you have now.
How do you do that? "In Canada, pork producers have to at least match or surpass labor standards of other industries," says Mary Petersen, training program coordinator for the Prairie Swine Center. In some cases, employers will add production bonuses, give employees holidays off and pay for overtime. This is a fairly new concept in Canada since farm employers don't fall under labor regulations, she adds.
"A good salary will bring employees in, but what you do as a manager will determine if you retain those employees," contends Petersen. "My biggest advice is to look at how you are managing and treating workers. Get managers to analyze themselves and what they're doing."
Ask yourself or your managers some of these questions.
- Does your staff trust you?
- How do you deal with problems or an employee's concern?
- How do you deal with female, minority or young employees?
- Do you view employees? Be honestùare they simply labor or a part of the overall system?
"In a lot of respects, dealing with production skills is still easier for most producers than dealing with people skills," adds Petersen.
Employee turnover costs you more time and money than keeping the employees you have. It's important to recognize that employees are a powerful asset and it's worth the effort to keep them on board.
Calculate Your Turnover Cost
University of Wisconsin researchers have developed a calculator that you can use to gain a clearer perspective of what employee turnover costs your pork operation. Check out the Web site at http://www.uwex.edu/ces/cced/publicat/turn.html#calc
Adding up Employee Replacement Costs
"Successful people management is vital to the pork industry," says Mary Petersen, training coordinator for the Prairie Swine Center in Saskatoon, Saskatchewan. The costs of employee turnover can add up quickly, and so can the headaches.
To give you an idea of the potential costs of employee turnover, Petersen compiled this outline. Naturally every situation is different, but this offers a perspective of what it can cost to replace an employee. These figures are listed in U.S. dollars, converted from Petersen's estimates in Canadian dollars.
- Newspaper Advertisement
- Regional newspaper ($1.05 per word x 75 words) $78.75
- Local Newspaper $30.00
- Overtime to cover workload two employees at $13.50 per hour regular wage for 3
hours overtime for 4 weeks ($20.25 x 3 hours x 10 days x 4 weeks) $2,430.00
- Outside training (This isn't a factor if you do your own training, however, then
you have to account for costs incurred by training in-house) $3,000.00 - $7,000.00
- overtime or replacement worker
- Letterhead, envelopes, postage $6.45
- Long-distance calls to candidates $8.25
- Mileage for candidates (200 miles x $0.36 per mile) $72.00
- Coffee/sodas during interviews $3.75
- Human resources documentation forms $3.00
Subtotal: $4,632.20 - $7,632.20
These include the cost of time to:
- Write advertisement $33.00
- Send ad to newspaper $33.00
- Pay advertising bill $8.25
- Read resumes $66.00
- Call candidates for an interview $66.00
- Compose interview questions $66.00
- Interview candidates $264.00
- Offer job to successful candidate $16.50
- Write letters to unsuccessful candidates $33.00
- Orientate successful candidate $264.00
- Complete necessary human resource documentation $66.00
- Conduct on-site training for new staff (2 weeks at $22.50 per hour) $1,800.00
- Loss of productivity during learning period $0 - $60,000.00 (cost of an inexperienced employee or loss of experienced employee)
Subtotal: $2,715.75 - $62,715.75