Did you ever stop to think about how much it costs when a knowledge worker leaves your organization? Lots. It’s tragic, but many organizations are just simply missing the mark when it comes to valuing the knowledge of their employees. Yet on it goes. Someone leaves the organization and is replaced; the new employee may takes months to become as productive as his/her predecessor. Or perhaps there’s a dreaded layoff and the individual is not replaced immediately. Is all that knowledge then obliterated?
Let’s try to do a bit of math. A Supply Management professional leaves the organization. A replacement is hired, let’s say at $95,000 per year (about $7,900/month). For the first month the replacement operates at 10% of effectiveness…gathering information, analyzing situations, meeting suppliers and so on. The cost to the organization is 90% of the month’s salary, that is $7,110. Month 2 is likely somewhat better, perhaps 30% effective. Then month three at 50%; month 4 at 75% and month 5 at 85%. At month 6, the new employee finally reaches 100% of the former employee (assuming no performance issues for either of them).
Here’s a graph of how that would look:
The cost is shown below the trend line. The total estimated cost for this model is $19,750,
Does this make sense? Think about it. Aren’t there ways to capture knowledge so that the incoming professional can come up to full productivity more quickly? We’d like your feedback.
Fred Sollish for Supply Knowledge Monday, November 2, 2009