When it’s time to hire someone for our company, many of us can be starry-eyed as we envision how that new employee will fit into our workplace.
We often consider how this person will help to alleviate the workload, or maybe we’re anxious to fill a position that was recently vacated, or we’re excited about the prospect of our operations running smoother. Regardless of your motivation for hiring a new employee, we often fail to really think about the costs associated with their hiring. In the HR and sourcing industry, this unit of measurement is referred to as the cost-per-hire.
It can be an interesting exercise to sit down and consider just how much it’s costing your company to hire a new employee. Not surprisingly, most companies severely underestimate their cost-per-hire. But when you consider the time of the HR staff, recruitment or staffing firms, advertising, applicant tracking systems, referral costs, and more, your company’s cost-per-hire can creep up quickly.
In fact, during a study released at the end of last year, the Society for Human Resource Management (SHRM) revealed that the national average cost-per-hire was $4,129. And in cases involving a first-time hire, that number can increase by as much as 20 percent! So before a new employee has even started their first day of work, you may have already invested $5,000 in them.
Another staggering statistic that many organizations don’t often consider is that it takes an average of 42 days to fill a given position. Factoring in lost productivity and the increase in workload to other employees, this amount of time can certainly contribute to the cost-per-hire.
Are dynamic, productive employees worth the investment in time and money? Absolutely! It’s important to look at the cost-per-hire metric, however, to determine if there’s a more effective way to identify and hire employees. Recently, Source2 launched a Cost-Per-Hire Calculator that helps you better assess that figure as it relates specifically to your organization. Before you go to look for your next pool of candidates, take a few minutes to calculate your cost-per-hire, and see if there’s potentially a more efficient way to identify your next great hire. You just might be surprised.
Tom Valerius is a Vice President for Source2 with more than 25 years of experience in human resources in the healthcare industry including 10+ years as SVP of Talent Acquisition. Tom develops talent acquisition strategies and solutions for clients in healthcare, manufacturing and service industries. Schedule a free consultation with him today.