The Cost of High Talent Turnover in the Business Development Department

by Tom "Bald Dog" Varjan

Undoubtedly business development is one of the most crucial parts of your business. You can have the best products and services, but unless you can take it to the market and sell it profitably, you are doomed.

So, here are some measurable costs of losing business development folks...

Remember, these people are directly involved in sales and marketing, so losing them is some of the biggest blows your company can ever suffer. Why? Because these are the people directly involved with making money.

Costs due to people's leaving - This is an instant reduction in sales and the ability to turn the hottest leads into sales.

Cost of recruiting the new people - This includes all the people who focus on recruiting and the career ads in various places.

Cost of training the new people to get up to speed - The better results you want to see from these people, the better training you must provide. For instance, who is training your sales staff? A skilled sales trainer or the local hotshot?

Cost of Lost Productivity - While the new people are learning they can't be productive.

Cost of lost sales - Even after training in the first 2-4 weeks new people run at about 25% productivity. And this is a pretty optimistic estimate.

And of course there are lots of...

Non-measurable Costs

A company that has high turnover can never achieve excellence in the marketplace. It is like a racing car with a leaking fuel tank. Since you constantly have to stop to re-fuel, you are doomed to lose the race.

And certain aspects of high turnover can't even be measured directly because they are not in the books, but rest assured, you are paying for it. These factors are...

• Slowdown on market research and the collection of marketing intelligence
• Reduced effectiveness of value delivery and client fulfilment
• Slower penetration into new markets
• Reduced client satisfaction
• Increased client turnover
• Reduced repeat and referral business
• Company suffers a blow to its image and reputation
• Reduced innovation
• Reduced morale, enthusiasm, passion
• The "Who cares" attitude raising its ugly head
• Muddled communication
• Lost of clients follow defecting sales staff
• Management loses credibility in the eyes of the workforce
• Competition scoops up some of your best people and using them against your company

Let's Look at an Example...

Let's assume the average compensation of the business development folks is $ 60,000 per year. That includes everything.

From research we know that the replacement cost of business development folks is in the range of 250-400% of their annual compensation.

So, when these people decide to leave, they each burn a $ 150,000-240,000 hole on the company's purse.

If you lose 10 of your business development people every year, that loss is costing you in the range of $ 1.5-2.4 million every single year.

Not to mention the "soft loss", like deteriorating corporate image and reputation.

As a business owner or senior executive, can you really justify this loss year after year?

And Here Is the Costs of Training Your Staff

Training is an investment in the most important aspect of your business, you people. And yes, every smart investment has a return (ROI), but the investment must come first. Obviously, you ROI is the reflection of the initial return. And here is the breakdown on the initial training investment if you are seeking a hefty return.

Direct tuition costs - This is the direct cost of the training programme

Cost of resources - This is the cost of materials used during the programme

Cost of facilities - For onsite training you have to provide location and equipment

Cost of transportation and accommodation - If training is provided offsite

Cost of hiring temporary staff - While your staff is being trained, you still need someone to do the work

Administrative costs - This includes insurance, communications and record keeping costs

Cost of recruitment and wages - This applies to new people who have just started working at your company.

So, based on these losses, are you sure you are doing everything to keep your business development folks happy?

Many companies treat sales and marketing folks as dirt. He interesting fact also is that these companies are in deep trouble. Yes, you've guessed it right. Talent attrition eats up all the money they make.

So, what can you do today to keep your attrition level low?

And remember! Don't sell harder. Market smarter. Both you, your employees, your clients and prospects will find it more enjoyable, profitable and attractive.

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