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”.)