The replacement cost of a senior hire, examined honestly
Build replacement costs from actual records and explicit assumptions. Avoid a universal salary multiplier for senior turnover.
The performance question
The cost of replacing a senior executive can include search fees, interim cover, vacancy work and induction. It may also include lost opportunities, but those estimates are uncertain. An honest model separates paid costs from internal time and hypothetical commercial exposure.
What the evidence supports
HSE identifies high workload as a possible contributor to turnover and staffing shortages. This supports investigating pressure where a role repeatedly becomes vacant. It does not provide a senior replacement cost formula or prove that a particular departure was preventable.[1]
A practical approach
Ask Finance and People to assemble the last completed senior recruitment case. Include invoices, interim expenditure, additional colleague time and the ramp up period using documented assumptions. Keep foregone revenue separate from cash expenditure and explain the basis of any estimate. Deduct costs that would have occurred regardless of the departure.
How to review progress
Present a range with the largest uncertainties visible. Compare later cases against the model and revise assumptions. Do not count salary, lost output and interim cover as three independent losses if they describe the same gap, or present the total as guaranteed savings from wellness support.
Sources and references
- Human factors: Workload Opens in a new tab
Health and Safety Executive
Processing limits, task analysis, workload drift and staffing