Role Reversal

Was discussing with a young family business CEO (mentee), the Cost of Exits in a Co. Whilst he was generally tracking basic Exit data of his Co benchmarked with industry etc, clearly, he had not understood the real implications of the total cost stack-up of Exits.

So we began listing on White-Board, all the heads of direct & indirect expenses triggered by a good performer exiting the system

1.Attraction /Recruitment Cost
2.Gap – Time Wasted cost
3.Selection Cost
4.Pre-employment Costs
5.Pre-employment Training Costs
6.Employment Costs
7.Compensation differentials
8.Orientation/Socialization Costs
9.Initial Training Costs
10.OJT – Learning/Development Costs
11. Cost of Cultural Re-Engagement
12.Cost of Re-Connection with Strategy
13. Performance Optimisation Costs
14. Maintenance Costs
15. Performance Decline Costs
16. Departure / Exit Costs

No business leader would indeed take employee exits lightly & would try to value talent only if he realized the humongous overt & covert ‘total cost build-up’ that impacted, each time a good performer quits the system.

My conservative calculation indicates that such costs are 3 times the CTC of the person who leaves. AJ, my CEO mentee was about to faint !!

Tags: Leadership

Blog Credit – Mr Adil Malia.

mail us