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The True Cost of Recruitment

When recruiting a new employee to join a team, it is not just the salary the employee will be earning that will be the cost to the Company, there are many other costs associated with employee recruitment.

The cost of replacing employees for smaller businesses can have a huge impact on the business’s cash flow.

Most employers do not realise the true cost of recruiting as they do not consider the indirect and the direct costs that occur when recruiting.

The average cost of recruitment is said to be around £3,000 this is worked out by;

External costs + internal costs / Total number of new hires in an allocated time period

Research done by various sources say that for every salaried employee recruited, the total cost of the recruitment process is between 6-9 months’ salary for the employee, where some suggest it could be as much as double the salary.

Many employers choose to use a recruitment agency to assist with their recruitment, this can also drive the cost up, although it can be a huge saving in time for people internally if they have someone external to manage the recruitment process for them.

What are external costs and how much can these be?

  • Recruitment agency fees
  • Advertising the position on job boards or in various publications
  • Costs of any software used to help with the recruitment process – for example online applications
  • Cost of any temporary employees used in the interim for the position

What are internal Costs

  • Writing the job description and person specification
  • Wages of the recruitment team involved in the process
  • Any additional employees involved in the recruitment process – shortlisting CV’s, conducting interviews, drafting of paperwork and documentation
  • Induction costs
  • New equipment including phone, computer, desk, chair
  • Lost production while new employee is trained by another member of the team
  • Additional payroll costs, salary, pension, NI, benefits, bonuses and holiday payments.

Additional Costs if get the recruitment process wrong

If things do not work out with a new recruit and they exit the business, as well as the internal and external costs listed above the below costs can also occur

  • Increased turnover amongst staff
  • Risk of damage to the employer’s brand

Before an employer recruits, it is vital that you know exactly what the role is that you wish to recruit for, including the skill set and type of employee who would fit the role. A recruitment process should be tailored to the position you are trying to fill to ensure that all candidates are assessed on whether they meet the criteria.

If you need any other help and support, please feel free to contact is on 0330 175 6601 or email us at info@cloverhr.co.uk!

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