THE BUSINESS CASE FOR MEASURING ATTACHMENT
The Financial Impact
Thousands of dollars are wasted each year as a result of poor Employee Attachment. The average investment associated with finding, recruiting and up skilling new talent to a minimum performance standard exceeds $100,000 per new employee over their first 3 months of employment. This figure is based on average direct and indirect costs.
New hire direct costs include:
• position review
• advertising
• agency fees
• interviews
• profiling
• testing
• reference checking
• contracts
• administration
• resourcing
• training venue
• training personnel
• salary during non-contribution period
New hire indirect costs include:
• lost productivity
• lost opportunity
• suppressed engagement of team with long term vacancy
Calculating Pay Back & Break Even
The average time it takes for a new employee to “pay back” the organisation’s initial recruitment/training investment is anywhere between 12-18 months, depending on the role, industry and learning curve to reach full competency.
Any attrition prior to a new employee’s “break even” point represents a financial loss for the business. Add this loss to the cost of replacing the employee and very quickly, the initial $100k investment increases dramatically with each new recruitment exercise.
Remember that during probation, new talent are paid a full salary, but are not performing at full capacity. Beyond reducing the cost of repeat loss & replacement, the greater benefit of creating a highly attached employee lies in retaining them at a higher rate of contribution through discretionary effort and performance.
Did You Know?
Over 90% of attrition that occurs within the first 3 months of employment is determined by the employee. That is, the employee is making the decision to leave the organisation, not the organisation letting go of the employee.
Attrition within 90 days of employment usually stems from one of the following reasons:
1. Right person / wrong job = poor job definition
2. Wrong person / right job = poor recruitment practices
3. Right person / right job = poor attachment
4. Circumstances beyond anyone’s control
Remember: Any attrition prior to 18 months equates to a financial loss for the business.
Linking Attachment, Attrition & Performance
High Attachment leads to a lower risk of attrition because the employee has made an assessment that they want to work within the business.
Employees who are highly attached are more likely to put in extra/discretionary effort to achieve high levels of job satisfaction i.e. they are intrinsically driven to achieve. As a result of their increased effort, performance output shifts by a range of up to 40% between low and high levels of Attachment.
Organisations using the Employee Attachment Inventory (EAI) receive a double gain:
1. Firstly, they achieve ROI at a faster rate and retain the employee thereafter at a higher contribution level
2. Secondly, they gain the advantage of higher discretionary effort and increased performance output