How to lose 80.000 SEK by
changing phone policy
How much
can your company save by enforcing a “business calls only” policy on the phones
employees get? What about moving to a cheaper laptop? Or not having free
coffee, or…
I will argue
that you will lose quite a lot.
The
argument at it’s base it simple – When you make things a little bit worse for
your employees, they are a little more likely to leave. [1] No one will leave a
job because of a new phone policy, or a cancelled x-mas party. But we all have
little counters in our head, counting how much we like our jobs. If the counter
reaches zero, we will leave. So the person that is annoyed with the open landscape
seating, the salary levels and the quality of coffee may just reach zero when
you remove the fruit basket.
One company
I know of allows their developers to choose any computer when they start. This policy
was created in cooperation with HR. Developers are easy to bribe and getting
them to stay longer has a value many times higher than the cost of a Macbook
over a cheap dell.
But the people making the decisions about new
phone policies tend not to look at it that way. So for fun, I did some numbers.
A few
assumptions:
- A
standard recruitment cost is around 20% of a yearly salary
- In
Sweden, a reasonable recruitment time is 5 months (2 months searching and 3 months
severance period)
- A
company expects an employee to add more value to the company than they get in
salary. I’m using the number 5x here. Meaning that for every 100 SEK you are
paid, the company expects you to generate 500 SEK of value.
- It
takes time for a new person to get up to speed. I’m going to assume 12 months
linear improvement from 0 to 100%.
Based on
those assumptions, and picking a randoma salary of 30.000 SEK (Ignoring extra costs) replacing
an employee will take 17 months, and during that period the company will have lost 1.57M SEK.[2]
So, if your
policy makes it 5% more likely that an employee will leave, your expected loss
is 131.000 SEK - per employee. That’s quite a bit of cell phone bills…
But, you
say, your numbers are off! “Crappier coffee will not make it 5% more likely”,
or “A person only generates 312% of value over their salary” or even “You’re
not even doing basic multiplication correctly!”. Perhaps you are right. But
what I’m really after is not to show you an exact number, what I’m after is to
get you to think about the other side of the equation when doing a silly cost
saving. And if you read this far and checked my numbers, at least you have
thought about that. So thank you.
[1] Management
3.0 – Jurgen Appelo
[2] From
starting recruitment to the new employee is fully performant takes, according
to our assumptions, 17 months. During that period we see
