Are you trying to figure out your hiring costs?
If yes, it’s safe to assume that you’re a small business owner looking to build a team of employees. Or perhaps you’re a veteran employer whose hiring costs have been spiraling out of control and you need ways to cut back.
Regardless of your current position, there’s no doubt that hiring costs can add up and put a big dent in your bottom line. It’s important that you know how much you’re spending on bringing in new talent and whether you’re spending within your budget.
In this article, we’re sharing insight into the cost of hiring a new employee and tips on how to reduce those costs.
Let’s get into it.
What’s the Cost of Hiring an Employee?
If you’re a first-time employer, it’s understandable if you’re thinking about the wage you’re going to pay the employee. Of course, salary is a direct expense, and it can be substantial depending on the role you’re looking to fill and what the market wage is.
But there are more costs associated with hiring an employee, most of which are indirect. Think of the cost of interviewing and onboarding the employee. You might need to pay to place a job ad on certain platforms, for example.
Onboarding involves a lot of paperwork and training, all of which have a cost.
Also, think about your time. Time is money, they say. You’re going to spend time writing job descriptions, reviewing resumes, and conducting interviews. Although some of these processes can now be automated, you’re still going to invest a lot of your time.
On average, it will cost you about 42 days and slightly over $4,000 to make a new recruit.
How to Lower Your Hiring Costs
If you’re going to spend about $4,000 per employee, building a large team can get pretty expensive. Recruiting 10 workers, for instance, is going to cost you no less than $40,000. Not many small businesses have the money to splurge on hiring.
So, it makes sense that you want to find ways to reduce your recruitment costs. Perhaps you want to fill a position in fewer days and spend less money per hire.
The most effective way to achieve this goal is to outsource the job to a recruiting agency. A professional recruiter already has a pool of job-seekers. All they need is to find someone who matches your needs from their pool and send them to you for an interview. By do this, the hiring time has already been cut by half.
Recruiters also reduce your chances of ending up with a bad hire – and a bad hire will cost your business a ton of money. A recruiter can also serve as a headhunter, especially when you’re eyeing a specific talent.
Building a company with a good employer brand also helps reduce your hiring costs. Job seekers want to work in companies that exhibit certain values, so with a good brand, you won’t have a tough time attracting the best talent.
Stay on Top of Your Hiring Costs
You want to build the best team, but you don’t want to spend a fortune doing so. It’s inevitable that your business will incur hiring costs, but how high or low those costs get depends on your savviness. Use this guide to keep your costs low.
Explore our blog for more helpful advice for business owners.