Hiring new employees takes a great deal of patience, analytical wit, time, and money; the latter of which forms the subject of this article.
How much does it really cost to bring on new workers in 2019?
Well, aside from straightforward expenses, there are a few hidden costs that can inflate your budget beyond expectation. We’ll take a look at these factors to help you accurately predict your recruitment spending.
The external hiring team
The luxury of a dedicated HR team is an expense most startups choose to do without, instead opting for an external hiring team when the need arises.
This approach has proved very profitable to small enterprises as it cuts costs for periodical work. Data indicates that heads of small businesses spend 40% of productive hours on non-profitable tasks like hiring.
By offloading this work to others, the organization can ensure all hands are on deck with regards to core business matters.
When outsourcing recruitment to agencies, the cost is a commission based on the salary of the role being filled. For top jobs, this commission can exceed 25% of the role’s annual salary.
Recently, one company confessed to spending a staggering $16,000 each year to get just one placement which goes to show the hefty fees employers can incur for a seemingly straightforward exercise.
Moreover, finding talent is becoming harder so firms will spend more time and money to do so.
This is why we came up with the subscription hiring model at Vested. For just $999, we will identify, and recruit the best candidate for your business.
Our innovative approach returns high quality candidates at a fraction of the cost of firms charging 25% of a role’s yearly salary.
The internal hiring team
Once your business has developed into an enormous entity that can sufficiently hold its own, it becomes a necessity to have your own hiring team.
Having such a dedicated team comes at the cost of adding all of these staff members to the payroll. For instance, you will need at least one HR manager, whose salary can exceed $90,000 depending on their niche.
Hiring additional HR staff to source candidates, conduct screenings, and place/monitor job advertisements will result in additional salary costs.
Setting up an internal hiring team is only feasible if the increased wages remain below what you would have initially spent on a third party recruiter.
Of course, to realize a larger return on investment you can provide additional tasks to the hiring department so that its members contribute to other staffing-related needs like overseeing your benefits program.
The aforementioned scenarios represent the lion’s share of recruiting costs. Moving on though, career events also contribute significantly to the remaining percentage.
Even in the digital age where almost everything is done online, physical gatherings remain an important avenue of employment.
A fact substantiated by a Glassdoor study that indicates three-quarters of all employers attend college fairs which is why new college graduates make up 57% of all new hires.
Every such event attracts participation fees ranging between $125 and $225.
However the final tally is a lot higher as it excludes expenses such as marketing materials, travel, accommodation, and other prerequisite needs.
Background checks are a must have to verify educational qualifications as wells as criminal records. You are looking at costs between $5 and $80 per applicant, which can add up quickly with a large candidate pool.
Other common hiring costs also come in the way of training/onboarding to get the new person up to speed with the organization’s workings; job boards fees, i.e. ads; and salary plus extras such as signing bonuses and benefit packages.
Final verdict: what to expect in a nutshell
According to the findings of the National Association of Colleges and Employers, $7,645 is the average cost for adding a new employee to a company of 500 people or less.
Glassdoor, on the other hand, says that the average U.S. company takes not only 52 days to find a suitable employee but also $4,000 to do so with all factors considered.
Meanwhile, the Society for Human Resource Management puts the preceding figures at 10 days lower and $129 higher.
Hence, the best option would be to hire a recruiter at Vested.
At $999 per month, it’s much more economical than paying 25% of the first year salary of your hire.