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Avoiding The Brain Drain PDF
Avoiding The Brain Drain PDF
Avoiding The Brain Drain PDF
January 1999
Avoiding the
Brain Drain
What Companies Are Doing
to Lock in Their Talent
Executive Summary
Summary
Executive
the unemployment rate remains nearly a full percentage point below the level of three years ago4.6 percent versus 5.5 percent
And, according to most of the analysts, new
jobs, particularly in the infotech and telecommunications sectors, will continue to be created. The competition for experienced, talented workers is likely to continue, if not intensify, as we enter the new millennium.
That competition has already brought about
a shift in the attitude of many corporations
toward their workforce. In an attempt to win the
loyalty and commitment of their workers,
employers are holding focus groups and "town
meetings," administering "pulse" surveys to get
instant feedback on employee attitudes, and
1.1
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offering a wide variety of special perks to convey the message that they really care about their
people. This new sensitivity to employees' needs
doesn't stem from altruism or a new great awakening of the corporate conscience. Rather, it is
Executive Summary
January 1999
1.1
Industry/Company
Position
Store manager
Kitchen or counter person
$21,931.25
$1,520.50
Information systems
(software for hightech operations)
$32,215.00
$34,397.00
Insurance
$85,556.90
Skilled manufacturing
(machine works)
Journeyman machinist
(salaried)
Journeyman machinist
(hourly)
Automobile manufacturer
Replacement Cost
$102,796.00
$58,732.00
$133,803.24
Statistics for other positions, in other industries, have been published in many places. Here
is a sampling of what our research uncovered:
It costs at least $100,000 to train one
licensed nuclear power plant control room
operator. (Cost Engineering, April 1997)
In the light industrial market, it can cost
$5,000 to replace a typical employee. In
middle management, it can cost $40,000.
(Tulsa World, June 22, 1997)
The cost of replacing one nurse has been
estimated to range from $2,000 to
$10,000. (Moneyclips, May 24, 1997)
The turnover problem costs the [automobile sales] industry as much as $8,000 a
person or about $968 million a year.
(The Detroit News, February 21, 1997)
A major insurance company recently conducted a thorough analysis and found that
its average cost per hire was $35,000,
which resulted in company-wide replacement costs of tens of million dollars a year.
(HRFocus, March 1996)
One database company realized it was costing it $70,000 every time it had to replace
a $48,000 employee. (Seattle Post-Intelligencer,
September 29, 1997)
Executive Summary
January 1999
1.1
Percent of
turnover
(500 x .08=40)
multiplied
by
Average
exempt yearly
salary & benefit
(40 x $82,000= $3,280,000 )
divided by
Average
Number of
Active Customers
equals
Revenue
Per
Customer
Executive Summary
January 1999
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Executive Summary
January 1999
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U.S.
AlliedSignal
165
84
Corning Incorporated
476
229
Hewlett-Packard
42
28
20
14
488
232
Motorola, Inc.
118
64
Steelcase Inc.
885
425
TRW Inc.
642
313
Xerox Corporation
107
61
The tenth Retention Leader, our anonymous worldwide retailer, was within the top
100 in the U.S. and the top 150 globally. The
eleventh, Hallmark Cards, Inc., is privately
held and therefore not eligible for the list.
When we compared our Retention Leaders'
change in market value from 1993 to 1997 to that
of some of their competitors, in all but one case
where Bristol-Myers Squibb outperformed
Johnson & Johnsonthe Retention Leaders'
increase, in dollars, was higher.
A look at both earnings per share and sales per
employee over the past 10 years reveals a similar trend.
Action
67
62
64.5
52
57
38.5
37
% of Respondents
Whose Organization
Has Tried It
Executive Summary
43.5
51
39.5
January 1999
1.1
as at-desk massages, laundry or concierge service, dog grooming, and the like. Thirty-eight
percent of our survey respondents reported
that their companies have tried such frills, yet
over 53 percent said these add-ons have not been
effective in reducing turnover.
Why? Because such actions are peripheral and
don't go to the heart of the matter. Joseph
Hammill, manager of staffing and strategy at
Xerox Business Systems, is convinced of this. He
told Kepner-Tregoe that, "I don't think these
are the fundamental things that turn an employee on. I do think that we have to be sensitive to
Executive Summary
January 1999
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10
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11
7. RETENTION LEADERS
ARE RELENTLESS IN
Conclusion
Executive Summary
January 1999
Office Listings
Headquarters United States
Kepner-Tregoe, Inc.
P.O. Box 704
Princeton, New Jersey 08542
609-921-2806
Fax 609-497-0130
Australia
Kepner-Tregoe Australasia
Level 8
50 Berry Street
North Sydney, NSW 2060
Australia
61-2-9955-5944
Fax 61-2-9955-1625
Canada
Kepner-Tregoe Associates, Ltd.
45 Sheppard Avenue, East
Suite 305
North York, Ontario
M2N 5W9
416-221-5522
Fax 416-221-9376
France
Kepner-Tregoe Srl
91, rue du Faubourg St-Honor
F-75370 Paris, Cedex 08
+33-(0)1.44.71.36.05
Fax +33-(0)1.44.71.35.72
Germany
Kepner-Tregoe Deutschland
An der Alster 17
D 20099 Hamburg
Germany
49-40-28 40 75-0
Fax 49-40-28 40 75-28
Hong Kong
Kepner-Tregoe
4th Floor, Dina House
Ruttonjee Centre
11, Duddell Street, Central
Hong Kong
852-532-8348
Fax 852-845-3485
Ireland
Kepner Tregoe Ireland Ltd
Orania House
97 St. Stephens Green
Dublin 2
Republic of Ireland
+353/1/2834030
Fax +353/1/2836230
Japan
Kepner-Tregoe Japan
Moto-Akasaka Kikutei Bldg.
7-18 Moto-Akasaka 1-chome
Minato-ku, Tokyo, Japan 107
81-3-3401-9521
Fax 81-3-3479-0745
Malaysia
Kepner-Tregoe (M) Sdn. Bhd.
Unit 607, Block D
Phileo Damansara 1
No. 9, Jalan 16/11
Off Jalan Damansara
46350 Petaling Jaya
Malaysia
60-3-460-9128
Fax 60-3-460-9138
Singapore
Kepner-Tregoe,
Southeast Asia, Ltd.
18-06 United Square
101 Thomson Road
Singapore 307591
65-256-6494
Fax 65-256-6500
Switzerland
(Serving Belgium)
Kepner-Tregoe, S.A.
Rue de la Porcelaine 13
B.P. 90
CH-1260 Nyon 1
+41-(0)22-361.21.31
Fax +41-(0)22-362.12.81
Thailand
Kepner-Tregoe
(Thailand) Inc., Ltd.
10th Floor
Thosapol Land Building 2
230 Rajchadaphisaek Road
Huaykwang, Bangkok 10320
Thailand
66-2-274-0646
Fax 66-2-274-0728
United Kingdom
Kepner-Tregoe Ltd.
Bentley House
13-15 Victoria Street
Windsor
Berkshire SL4 1HB
England
44-1753-856716
Fax 44-1753-854929
Affiliates
Brazil
Czech Republic
Denmark
Finland
taly
Korea
Mexico
Netherlands
Philippines
Poland
Spain
Sweden
Venezuela
700-21-P076098B
KL457.a
003458