The Hidden Costs of Transitions
April 6, 2009
Note: This guest blog from FYI Advisory Council member Mark Maines is the beginning of a series on re-thinking how we approach the hiring process in our ministries. Get ready for heavy thinking!
The Gallup Organization reports the cost of a bad hire as being 3.2 times the individual’s salary.
In his book “Topgrading,” Brad Smart surveyed 54 companies to determine what it costs organizations to replace employees. His findings were even more dramatic. Considering the following expenses
- The cost of hiring (recruitment, interviewing, on-boarding)
- Compensation
- Cost of maintaining the person’s job
- Severance
- Mistakes, Failures, Wasted or misused time
- Cost of disruption
He concluded that for those individuals making less than $100,000, the cost of a bad hire is $840,000. That is over eight times the person’s annual salary.
I think it is safe to conclude that it’s VERY EXPENSIVE to lose any employee.
So let’s assume that the average youth pastor who is working in a church earns $35,000 dollars, and the average length of time that person stays in that position is two years. Using 3.2 times their annual salary as our metric, that means in a 10-year period it will cost the church $560,000 in fixed expenses. This does not even take into consideration the amount of gifts and tithes that disappear when key employees leave the community.
What do these numbers look like if we include “volunteers” into the mix? Just because your volunteers are not on your church’s payroll does not mean that they do not work for the church and that there is no cost when they leave.
When “things don’t work out” in ministry, everyone pays, and everyone pays a premium!
©2009 Fuller Youth Institute