Best practice principles and cost saving initiatives
Managing employee medical assessments throughout the life cycle of their employment tenure is an ongoing and evolving process. This discussion paper looks at current practices and an assessment of costs and best practice management principles to help HR practitioners manage the process more efficiently.
Getting boots on the ground faster can improve the bottom line
While the small fixed cost of an independent Order 43 Medical can add to employee start-up costs, long waiting delays could be costing you TEN TIMES MORE.
There are a host of ways companies officially calculate the value of each employee. Even if it’s not one of the primary accounting measures used, there’s no denying that the employee costs and the revenue they generate are major factors in the overall financial health of every organization.
One of the simplest measures is to look at revenue generation. Some organisations work on an average ratio, while others use more complicated indexed valuations by job type and role.
To keep the math simple, we are going to focus on average figures based on revenue.
Company A has 350 employees generating an annual revenue of $400 million
The average employee revenue value
= $1,142,857 per employee
= $21,978 per week
A 3 week delay in replacing existing staff, or appointing additional staff required to maintain production levels is costing the business almost $66,000.
Multiply that by the number of employees per year you need to employ and you see the real costs that minor appointment delays have on a business.
Using the average annual staff turnover rates in the mining sector of 10.1% that business would typically employee 35 new staff per year.
The potential loss in revenue for the business in the example above due to delayed commencement of new staff is:
35 Staff x $66,000 = $2,310,000 per annum.
Putting the above in the context of actual costs to expedite the process of appointment by utilising an independent consultant for Order 43 medicals looks like this.
Independent costs: $395 per employee
Total Employees: 35
Total Costs: $13,825
For a minimal annual cost of $13,825, you generate an increase in projected annual revenue of $2,310,000.