Very interesting topic of discussion @ the ergo blog. Read Col’s post before reading my response below.
I remember hearing Marcus Blackmore (chairman and founder of Blackmores) speak at a CSR conference I attended last year about his attitude towards ‘soft’ assets and their associated upkeep. His point of view was that each staff member of Blackmores was to be ‘valued’ at 50k…on top of their salary. His figuring here was:
– that to fully and properly replace a member of staff might cost about 1-2k in recruitment costs (more if you use a talent agency, which can charge upto 20% commission on the first year of salary of new hires)
– That when the new person hit deck, they would take time to get fully up to speed with the operation and flow of the business. This time, he conservatively reckoned, could be anywhere up-to 4 months.
– That when an ‘old hand’ leaves, often they have been filling many different roles and functions, which need to be covered at a cost to the organisation. At World Vision recently we have had one of our team, Bev, leave to further grow her own spiritual well-being business (which is booming, by the way). To replace Bev, we have had to distribute her role to no less than 4 different functions around the business.
All up, I actually think his 50K figure sounds quite conservative!!!
Then, in what I now take to be a great example of LAS, he used that assumption to justify the building of a new office and manufacturing space, with a total bill of 50k x the number of staff at Blackmores. (Blackmores, I think, has about 300-500 staff. I’m not sure exactly.)
His feelings were that if Blackmores could create an environment where his staff would want to be, and where they would feel happy and energised working, he could bring down the cost of losing his great people, and the cost associated with capturing the most talented in his industry. For memory, under his assumptions, the great outlay involved in building such an environment was completely rational under the old ideas of the traditional business paradigm – even profitable. And that’s not mention the associated productivity gains generated from such an environment and the savings from being more vertically integrated (office and manufacturing in one place.)
A great topic of discussion, that’s for sure. What are your thoughts?