Do you know the true of cost of hiring?
Do you know the real of cost of hiring? (image credit: www.SeniorLiving.Org)

Let’s do the hiring numbers.

Do you agree that the cost of hiring is the most expensive investment in a business and most of the time the results stink? If so, read on.

I have dry cleaners as clients that value their employees as an asset and value the help they get to put the correct person in right job. They value it so much that they come back for repeat business. Take a look at Donny at Sunshine Cleaners explaining his experience.

The Reason: The Numbers (The Cost of Hiring)

An entry-level hire at $10 per hour costs a company approximately $20,000 (plus payroll expenses, insurance, etc.,) per year. If that employee leaves during or after that year, for any reason, flush half that down the drain.

As explained by the U.S. Department of Labor in an article on www.crbdirect.org.uk, it costs one-third of a new hire’s annual salary to replace them. Direct costs include advertising, recruitment fees and overtime. Indirect costs include selection and training and decreased productivity while current employees pick up the slack.

American Management Assoc.: The cost of hiring and training a new employee can vary from 25 percent to 200 percent of annual compensation.

How much money are you flushing down the drain?

Let’s look at the competition. My competition. Here are the numbers associated with the cost of hiring:

A local HR firm: $50 + per hour for each hire. No benchmarks, assessments or automated screening.

Price tag . . . an average of $3,500.

Headhunter: 50 percent of annual salary. Expensive – may or may not screen, benchmark or use assessments.

Price tag . . . $10,000 +

Temp Agencies: Typically 25 percent of salary – no benchmarks, no behavior or attitude assessments.

Price tag . . . $800 -$1000 month

Online Platforms: Inexpensive as a platform for organizing your own hiring program. No automated screening or benchmarks – assessments are extra.

Price tag . . . $250 annual fee.

There is another number: Doing it Yourself

But you are not a $10 per hour employee. You should be a $500 per hour employee. You need to be looking at the big picture. But small businesses typically have owners and managers handling the hiring process.

Let’s calculate your time and your salary if you take the DIY route:

  • Creating job descriptions and advertisements            Hours________ X $___________
  • Screening candidates                                                              Hours________ X $___________
  • Phone calls                                                                                  Hours________ X $___________
  • Interviews                                                                                   Hours________ X $___________
  • Rinse                                                                                             Hours________ X $___________
  • Repeat                                                                                          Hours________ X $___________

Total Cost: $ __________________________

The Results: This is where you count the ones that didn’t work out:  $___________________________

And those are the numbers. Ask yourself this: What is the value of my time and my next employee?

Ready, Set, Go?

I’m doing a Fail Proof Hiring Workshop on Sept. 9th at Sierra Commons in Nevada City: MORE INFO HERE

Can’t make it to the local event?

READY SET GO: Click for info now ( and get your FREE report:“Hire Your Dream Employees: The Four Secrets of Hiring Well”.)

XX, Ruth


Ruth Schwartz

Ruth Schwartz is the author of "The Key to the Golden Handcuffs". She is a high performance business consultant and leadership coach. Connect with Ruth to participate in the conversation. Google+, Facebook, Twitter, YouTube .

    3 replies to "What is the Real Cost of Hiring?"

    • Robert Ridley

      As a job seeker, I would like to know why employers don’t have auditions or tryouts like in the arts and sports. I have applied for dozens if not hundreds of jobs where I wasn’t even interviewed where I felt that if I could at least show what I am capable of, I could increase my chances of getting hired.

      This will also help the employer because you will see the candidate at work before you hire him.

    • ruthschwartz

      Robert,
      I am not against this at all, however, employing people, even for a week is EXPENSIVE. Time, taxes, energy and pay. If you don’t work out it is lost resources. What I preach is that employers test you before they meet you. You show them your desire and behavior before they meet you. It separates the desirables from the rest. The fact: When asked, most job seekers (80%) don’t follow the simple application instructions. Are you? Now for my advice to you. Take a hard look at how you are presenting yourself and keep in mind that employers are thinking about their problems not yours. Address their problem and you stand out. Show them from the first contact what you are made of, what you really offer their company and how you solve a problem for them. That will allow you to stand out from the crowd. I guarantee you that when you do that, you will get the call back. Good luck.

    • […] What is the Real Cost of Hiring? by @Ruth Schwartz What will you pay if you do your own hiring? What will most people charge to hire for you? We know a better way.  […]

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