Objectives: The friction cost approach (FCA) is one way to estimate lost productivity, which considers the time taken to replace an employee, known as the friction period. The friction period may be influenced by local labour market conditions, limiting the relevance of international FCA estimates. The objective was to estimate the time and costs of replacing an employee in Australia.
Methods: Staff responsible for recruitment in businesses across Australia were surveyed about the last management and non-management employee hired, workforce composition, friction period time and costs, and team dynamic effects. Primary analyses were conducted on respondents that recruited in the past 12 months. The friction period was decomposed into three periods: recruitment decision, recruitment period, and training period. Descriptive statistics of the friction period time and costs, and team dynamic effects were calculated.
Results: The sample consisted of Australian businesses (N = 274), primarily micro-organisations (2-4 employees, 44%) in urban locations (75%). The time (12.3 weeks; SD 15.1) and costs ($6230; SD $17,502) to replace a manager were higher than those to replace non-managers (10.0 weeks, SD 13.01; $2666, sd $7849). The training period represented the longest time component in replacing an employee (38-40% of the total friction period). There was an increasing impact on other employees' productivity, particularly for absent managers as time off work increased.
Conclusions: The friction period in Australia was similar to international estimates. Interestingly, the friction period mainly consisted of time outside the recruitment period; the decision to recruit and the training period.
Keywords: Economic evaluation; Friction cost approach; Friction period; Productivity loss.