The cost of hiring an employee can vary substantially because each hire will differ. Experts agree that the cost of bringing a new person onboard will average around $4,000 per person, which can vary up or down depending on your company’s practices and how much the HR people’s salaries are.
Glassdoor is one of the leading platforms for employers, and they have figured that it will cost $4k per new employee, and it will take 24 days to get them fully onboarded and trained. Since every company is different, a formula can be used to determine your exact cost per hire, giving you a more accurate number.
Cost Per Hire = external costs + internal costs / number of employees hired
This equation will give you an exact amount to add to your company’s expense report. Now that you understand the equation let’s dig into where you get the external and internal cost totals.
- External Recruitment Team – Working with an external team for recruiting can save your HR people time. Still, you can bank on paying an average of 20% of the new hire’s salary when all is said and done.
- Internal HR Team – HR employees are a necessary aspect of hiring, and retaining, even if you use outside targets to find employees. This cost can run your company around $50k or more per year per person, depending upon the salary of the HR people.
- Job Postings – This cost can also vary, depending upon where you post jobs. The average amount they will cost you monthly will be around $300.
- Background Checks – Hiring an employee without running a background check is something of the past. It is a mandatory task if you want to hire good people. This can cost an average of $30 per check but can be more if you want more in-depth information.
- Recruiting Software – If you want to save time, and money in the long run, getting recruitment software is the way to go. Recruitment agency software can average a couple hundred or more, depending on how good the software is, but it is an investment that will show a good return.
- Onboarding – Getting a new hire through the onboarding process can take a day, or a week, depending on the job they have been hired for. The average cost of this stage will run $2,500 or more.
- Job Training – The new hire will need to be trained for the job after the onboarding, which will cost an average of $1,500.
- Website – Modern business requires that you have an excellent online presence. The website alone can cost an average of $500 per year, and if you use outside targets to add content, it can be in the thousands for a year of online business.
- Salaries And Benefits – One of the highest costs you will run into is the new employee’s salary and the cost of the benefits that they will opt into throughout the year. This can average $30,000 or more.
- Relocation – If your company helps people from out of the area move to be closer to their new job, you will have to foot some or all of the moving bill. This can easily reach over $1,000 for a basic move, up to $5,00 for more complicated ones from farther away.
Your company may have more expenses that need to be added in, or you may have less. When you add all these numbers, you can see how much they can add up to. The problem with taking these numbers to heart is that your company will undoubtedly have different cost amounts, so only take this list as an average amount.
Do not assume that these numbers will be the exact amounts you need to factor in. The best way is to add up your own costs and use the formula to figure out how much each new hire will cost you. Your budget will reflect a more accurate number for your specific industry and company.