How expensive is leaving your org? Squiggle Model

By jessica_mccurdy, Ben_West🔸 @ 2023-08-16T18:01 (+40)

Disclaimer: I (Jessica) opted to post this without extra nuance as opposed to not sharing. Hopefully, it can still help spark some discussion and consideration but there are many additional considerations here.

Ben West made this rough Squiggle model you can use to calculate an organization's costs of replacing an employee in months of productivity and rough monetary value.

The model is pretty simple:  total_cost = hiring_manager_time + hiring_support_time + time_without_employee + skill_up_time

I wanted this to be shared because when Ben mentioned some of the extra costs of an employee leaving an org, I was surprised by how high it was. I think others might be underweighting this cost as well which could influence some career decisions[1].

One highlighted point from the model I wasn’t seriously considering:

A new employee will generally take some amount of time to become as efficient as

  the previous employee.

 

  This comes from several sources:

  1.    New people will often simply lack relevant skills/knowledge
  2.    The coworkers of new staff will take a while to understand how to efficiently work with the new person, build up trust with them, understand their strengths and weaknesses, etc.
  3.    New people will also almost certainly lack role-specific knowledge, e.g.       "to send the newsletter you have to use this website and then get approval from this person except in these scenarios you actually get approval from  different person" etc.

Hope this is useful!

  1. ^

     To be clear, I definitely think there are times when people can have a lot more impact elsewhere and there are many biases that act in favor of staying in a job for too long. However, I feel like people in EA hop around particularly fast and sometimes face some social incentives to leave their current positions.

Samuel Dupret @ 2023-08-18T09:03 (+6)

This is a cool tool! 

Maybe it is my french/worker rights bias, but I do feel weird about the framing towards the workers. Shouldn't this be more for bosses to be incentivised to retain their workforce? "If you don't treat your employees well enough and they leave, it will cost you".

Ben_West @ 2023-08-18T17:40 (+10)

Thanks for the comment!

This model is mostly exposing costs that are visible to managers but not visible to employees, so my guess is that it's probably not that informative to managers. But it is probably somewhat helpful (particularly e.g. for new managers) and I agree that your framing is also valid one.

Jamie_Harris @ 2023-08-29T20:36 (+4)

Agree that people might intuitively underweight turnover costs -- I think I was underweighting it before I did some brief research inti the existing soc sci / business literature.

From my post's abstract:

"Google and Google Scholar searches were conducted to identify research on these costs. One key finding was that direct hiring costs are much smaller than the less visible and measurable effects of turnover on an organisation’s productivity; once these costs are accounted for, turnover costs thousands of dollars per lost employee. Given that turnover rates may be around 20% annually in nonprofits, this can amount to substantial costs. There is also evidence from several meta-analyses that higher turnover is correlated with lower organisational performance, though the overall effects of turnover on performance may be very small."

https://www.animaladvocacycareers.org/post/hiring-and-turnover-costs