The Cost of a New Hire is $1000-$5000!?

Ryan Holmes, the CEO at HootSuite, recently posted an article over at LinkedIn. Ryan is, of course, an “Influencer” for LinkedIn, because he’s a CEO and because he works for a cool brand like Hootsuite. Who cares if he knows what he’s talking about, he’s from Hootsuite, muthfucka!! He must be influential!


Ryan was actually talking about Google’s “bungee” program (see if you’re influential you talk about Google!) and how millennials only care about being developed. Because if we know anything we know young people are great judges of what they actually want. So, Ryan and Hootsuite are actually coming up with their own copycat program and calling it “stretch”.

This program basically allows Hootsuite employees to try out other roles within Hootsuite one day per week, and if it goes well to eventually into that role full time. The basis of the program being that “great employees will be great employees in any role, given the change”.

But, one other big thing jumped out from the post. Remember this is a CEO of a major company. He based all of this program on cost of turnover and believes his cost of turnover is $5000 per employee leaving! $5000!? Now, if you spent 17 seconds in Talent Acquisition you know there is no way $5000 covers the cost of a top employee, probably not even a crappy employee.

SHRM, and other organizations, continually throw numbers at HR and TA that say they believe the cost of turnover is usually 1 to 1.5 times the salary of the person leaving. Do you see the problem with the HR math we have?

CEO believes that it cost $5000 to replace an IT Developer in your company making $85,000. You believe is costs $85,000-125,000 to replace that person. THIS is a major problem and disconnect!

It would be easy for me to say, “well Ryan just pulled some bad data from some crappy content put together by a TA tech vendor to help shape their own story”, but it’s truly the reality for most executives. This is why I constantly caution TA pros and leaders to stop using the 1-1.5 times metric and start asking your executives what they think it is.

In my experience, what I find is most executives, for a professional position will usually give you a number around $10,000. The biggest miss of executives is they never calculate the revenue and profit a great employee produces versus a bad employee or having that position left open. This is where the SHRM number comes from.

This is problematic because most executives won’t tie revenue numbers to someone who’s not in sales, wrongly, since everyone in your organization has an impact on revenue and profit. So, you can fight this battle, which you’ll mostly lose, or you can just go with what they believe and build your story from there.

$5,000-$10,000 per lost employee aren’t small numbers, it’s still significant dollars to work with as a TA leader, and you’ll get better buy-in from CEOs like Ryan!


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