Costs v value of work (Lab T/O)

Previous students calculated the direct, visible financial costs of losing a mid-management member of staff at 15,000 Euros.

If (as per the ColmarCo example) such managers (annaual salary 30,000)  leave every 6 months then what is the financial consequence….?

Ist Jan Recruitment cost:  15,000

Salary to leaving (6 months):  15,000

June re-recruitment cost:  15,000

Salary to leaving (6 months):  15,000

Dec/Jan re-re-recruitment cost:  15,000

Total cost for the year: 75,000  (45k to recruit and 30k salary).

BUT….

As the members of staff arriving then deciding to leave are hardly going to be motivated, dedicated, productive employees, perhaps the value of their contribution to the company is less than their salary, maybe just 20k per year….

SO….. the company is paying some 75,000 per year to get perhaps only 20k of work done…. a net loss of 55,000 per annum.  And if the situaion isn’t addressed it will be like that every year!!

For ColmarCo with say 500 managers leaving each year, this suggests possibly a total cost of

500 x 55,000 = 27,000,000 Euros +

Remember:  this does NOT include the initially non-quantifyable costs which will become real over time!

Wouldn’t it be better if ColmarCo could develop a system that found the RIGHT people and gave them the right motivation to stay…..??