Dr. Angela Massey's Official Website

The Real Cost of Retraining Your Employees

It is a well known fact that training your employees is an investment that yields the greatest return. However, what if you have to retrain an employee in, say, assertive communication skills or business writing?

If you are faced with the option of retraining an employee or hiring a new employee to do the same job, this chart can help you make a cost-effective decision:

	Hire A New Employee	Retrain An Existing Employee
TIME	Expect for it to take six to 12 months for a new employee to learn: The processes involved in getting the job done How the business operates How to coalesce and become a part of the team If the employee makes $20/hour, and works 40 hours a week, on the low end (six months or 24 weeks) it will cost your company approximately $19,200	Assuming the exisiting employee already: Understands how your business works Has a familiarity with the process involved to get the job done Has established a comfort level with other team members Expect retraining to take up to 90 days or three months. If the employee makes $20/hour, and works 40 hours a week, on the high end (90 days or 12 weeks) it will cost your company approximately $9,600 to retrain an existing employee
COST-EFFECTIVENESS	Hiring new staff will cost more.	Retraining immediately provides your company an impressive cost saving
EMPLOYEE MORALE	Depending on your industry, today's economy may leave many employees fearful of losing their jobs. Whenever you hire someone to do a job that an existing employee could have done, you run the risk of adversely affecting company and employee morale	Employees are motivated to remain loyal, especially in hard times, to companies that focus on helping them keep up with new technology, best practices, and new skill sets

While we can see that retraining, in most instances, is a better option, I recommend HR professionals remain open to either option and choose the one that complements the organization's overall business strategy. Consider retraining if losing the employee means losing critical talent. Consider hiring a new employee if your company's business strategy hinges on setting a different course complete with new talent and new ideas. In either instance, the HR professional will find it challenging to provide managers the support needed to make the right decision.

Dr. Angela D. Massey