Cost of Recruiting a New Employee

Cost of Recruiting a New Employee

Recruiting for a position goes beyond advertising the opening, accepting CV submissions, and scheduling interviews. It involves much more than paying salaries. Hiring new staff comes with a cost especially when you really want to make a good hire and when you are hiring more than one person at a time. Therefore, as an employer or a human resource manager, you need to take into consideration the expenses. This requires having in mind all that you need to do to make sure the recruitment process is stress-free and successful. This article has curated a list of necessary costs to help you calculate and estimate.


Cost of Recruiting a New Employee

  • Outsourcing: For smaller companies that do not have a hiring expert or in-house HR team, they need to bring in the services of a recruitment company. This condition requires that the hired recruitment team handle all the details and stages of the recruitment process from accepting CVs, cover letters, and application forms and going through them, to setting online tests, contacting candidates through phone calls and emails, and scheduling interviews. This is a big job and obviously, the outsourced recruiting company expects to be paid for their services.


  • The Cost of Hiring an HR Manager: Other times, a growing company may decide to bring a human resource manager onboard before recruiting for other roles. Having an in-house HR team saves the company the cost of outsourcing every time they want to recruit. However, it is likely that an employer would like to hire an HR manager with sizable expertise and qualifications hence, there is the issue of the cost of affording a salary that befits their portfolio. After all, the HR team of a company does more than just hiring. The HR department is the personnel department of an organization that also deals with the administration, management, and training of employees. An employer will have to make a decision between outsourcing and hiring an HR manager according to the size and finance of his or her company or organization.


  • Advertisement: No one is going to know that you want to hire until you make it public. You need to put it online, not just on the careers page of your company’s website but also on platforms and sites that job seekers frequently visit like LinkedIn or Jobberman. To use the services of these platforms in spreading the word about your opening, you may be expected to pay a fee according to the duration of your advert, the number of people that click on it, and how visible you want your ad to be compared to that of other companies.

Sometimes, you may need to meet potential candidates in person by organizing or attending recruitment events and career fairs in places like colleges and universities. To pass your message across successfully, it may be required that you print flyers or posters that give information about your company and the job role you are hiring. That is a recruitment expense.


  • Orientation and Training of New Employees: When you recruit a new employee, you do not just show them a desk and a chair and say, “There you go. Start work”. If you do that, there are surely going to be a lot of mistakes. To avoid this, you need to familiarize a new joiner with the workings of your company. This is necessary even if they are experts in the field because every company differs from the other. The onboarding process includes talking to a new hire about the different departments and branches of the company and what they do and also introducing them to the team. In very large companies, you may need to conduct a physical tour of the company grounds. Next, a recruit needs to be put through on his or her roles and responsibilities between a month and three months before full productivity is expected. This means that as an employer, you will spend money to make sure your new employees settle in comfortably even though you are not benefitting from their services yet. Some companies have to provide accommodation for employees who may be coming from another country or a location distant from the training center, which could be the company’s headquarters in some cases. As a considerate employer, you may also be expected to provide transport and feeding allowance for the duration of the onboarding program and a stipulated stipend as a training fee.


  • Salary and Other Perquisites: Obviously, you are expected to pay your employees’ salaries for their services and also offer monetary or other incidental benefits beyond salaries. Some of these benefits may include housing allowance for new employees who just relocated, medical insurance, transport allowance, and other fringe benefits and rights you agreed to offer to your new employee – like sick leaves and paid vacation. Perquisites can also be seemingly small things like free breakfast or lunches and company merch. Depending on what your company or organization does, you may need to provide working tools or devices like a laptop or mobile phone and internet and of course, provide a comfortable workspace. As an employer, the funds for salaries and provision of benefits are largely or solely dependent on the company’s performance and profit and that is subject to change. But payment of salaries is a signed agreement that you have to fulfill no matter the condition of the company’s finance. Realistically, every worker looks forward to payday. Therefore, be careful not to recruit more than is needed. It would make it difficult for you to pay your staff at the right time. That is a working condition nobody is interested in. Recruiting more than is needed also leads to redundancy. The company loses if there are a lot of staff with little to do. It is futile to spend a lot in recruiting new employees only to lay them off.


Final Thoughts

As your staff strength increases in number, so does the cost of keeping your employees happy. You need to do all you can to ensure that new recruits settle in comfortably and fall in love with their roles. If they do not, then your company may become notorious for always recruiting because your staff is always leaving. As you have seen from this article, recruitment is no small feat. Do all you can as an employer to keep your staff happy and satisfied. That way, you will recruit only when necessary. This helps optimize cost. Another tip to cut costs is to examine candidates thoroughly during the recruitment process. Making a bad hire (an unproductive recruit or a job hopper that leaves in a very short time) will increase your expenses. If your company has attained visible growth, it is advisable to get an in-house HR manager. In all, the key to optimizing recruitment costs is thorough planning and working with a budget. We hope this article helps you know what to look out for. We also hope that you get the very best hands-on your team.


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