I was out at a factory near Wodonga last week, helping an employer work through a complicated WorkCover claim that was costing him a fortune in time, energy and an increase in insurance premiums.
I asked him if he had made the requirements of the job clear in the job advert.
He said no, he didn’t have time to get into detail because he’d been so busy and under the pump getting staff.
I asked him if he had put the new employees through a medical assessment before they started.
He said no, it was too expensive and would delay getting people on deck in the business.
I asked him if he got the employee to sign a position description.
He said no, he just got him started ASAP, he doesn’t have PDs as he didn’t have time for more admin.
Now you might be thinking, fair enough. Employing people is time consuming and expensive. With the shortage of workers, we’re facing right now, it’s harder than ever to get people.
I hear you; I really do. But I have another perspective for you.
How much will it cost your business to replace even one staff member every few months? In advertising, your time, administration and lost productivity?
It might surprise you to know that the cost of replacing an employee is 4x their wage.
So, if they earn $60,000 a year, it will cost your business on average $240,000 to replace them. It might not all be cash you see – but it is costing your business this amount in new hire time, training which could take 12 months or longer, productivity as well as wages and on costs and don’t forget about the culture impact as it could take a dive.
How much will it increase your WorkCover insurance premium if you get a significant claim?
It can increase up to 30%. If you’re paying $50,000 for WorkCover, a serious claim might mean you’re paying $65,000 next year. $84,500 the year after and $109,850 the following year
A medical assessment costs on average $150. If you need to get something more extensive, it might be up to $1,500at most and that would include scans and/or pathology.
What can you do to mitigate this risk?
An HR Framework with a consultant like us may cost one person’s wage, depending on the size of the business, the gaps you have and how high risk your business is (we do a Business Assessment to identify and tailor what you need; we don’t do unnecessary work, so we don’t give ballpark figures).
If you don’t get onboarding and other HR and OHS documentation right at the start, it can cost your business significantly, upwards of $200,000 in the case scenario.
If you get a solid HR Framework in place, it’s an investment you will not regret. around a quarter of not getting it right!
Which bill would you prefer?
If you want to learn more about what an HR Framework could look like for your business, get in touch for a confidential chat.
