The cost implications of hiring are changing dramatically in recent years. Recent hiring statistics across industries indicate that new technology has massively enhanced candidate recruitment efforts.
With new and improved talent acquisition methods on the table, it's plausible that this will affect the manner candidates go about accepting opportunities.
As an employer, you want to get the right people to fill C-suite, management, administrative, and specialized positions while keeping a close eye at the top considerations that affect the cost of hiring a new employee.
Top Factors that Affect the Cost of Hiring an Employee
In most organizations, having an in-house HR team doesn't cut it.
If you're running a start-up, it's wise to keep a tight operational budget.
When Instagram was purchased for $1 billion by Facebook in 2013, there were only 13 employees. If you dig around Silicon Valley, there's a high chance you'll find that most start-ups function this way.
Nevertheless, when it comes to recruitment, you have to get the hire right, else, it may just cost you lots more to replace the wrong hire.
If your company is in an early stage or your operational costs are already too high, make sure you look into executive search agencies that can help you find the talent you need and a fraction of the cost.
Their rates are typically anywhere from 15-25% of the employee's annual salary and can vary depending on the seniority of the position.
Nowadays, LinkedIn happens to be one of the most popular platforms to seek new employees.
On the platform, recruiters get charged a fixed monthly fee of $119.95. As per their pay-per-click model, the more you spend, the better the odds are that your ad will get seen by the right people.
Another popular option is Monster, a platform that charges recruiters $375 to post their ads. If you have multiple jobs lined up, you can benefit from discounted prices on the platform.
Given the fact that it takes an average of 27 working days to acquire a new hire, it might worth considering having someone else deal with these costs.
Cost of Benefits
The base salary doesn't equal the total compensation.
According to the Bureau of Labor and Statistics, the base salary only accounts for about 70.1% of the net employee compensation. The remainder 29.9 percent is typically just benefits paid out to staff.
As an employer, you need to be mindful of this data point since this usually is a critical contributing factor to employee productivity.
Some of the benefits, like paid time off, health insurance, supplemental pay, FICA, plus retirement and savings plans, can boost morale at the workplace.
While there's been continued acceptance of the gig economy in contemporary times, its notable major setback has always been the lack of employee benefits.
Even though online searches for talent are more prominent nowadays, we can't turn a blind eye to the importance of 1-on-1 human interaction.
In your quest for the right talent, you may find yourself scouring the market for top talent in career fairs and events. These events ideally serve as a great way to introduce yourself to the workforce and get your company's name out there.
According to Glassdoor, the cost per hire for attending these events usually ranges from $125-225, which doesn't include extra charges like accommodation, marketing, and travel.
While candidates may tick all the right boxes in terms of skills and experience, they may have a past work history that could come back later on to bite you.
You need to run your background checks.
A trip to the county court for a criminal court costs typically about $15-20. This basic test looks at records involving felonies and misdemeanors while providing you with intel about the case number and other arrest information.
You could also choose to have a statewide criminal background check that will set you back some $10-20.
Given that there isn't a comprehensive nationwide database that's publicly accessible, the typical background check usually involves peaking at each state's online database. An engagement that costs about $25-45.
To learn more about the importance of background checks read:
The Bottom Line
Investing in talent is essential if you want your company to grow and stay on top.
Having the right kind of talent team up with you doesn't come easy or cheaply, but it's totally worth investing in.
At Peterson Consulting Group, we pride ourselves in sourcing and delivering the very best candidates for heavy civil and commercial construction executive jobs.
With 25 years under our belt, we've developed a broad database and a winning method to source the right talent for you.
Get started by contacting us for insights on how you can make that leap towards hiring success.