The Five Hidden Costs of Hiring
The cost of hiring is on the rise. Find out where your companies money is going - and how you can allocate it to better serve your business.
How To Get Ahead Of The Competition
For those about to hire a new employee, don't expect to be getting anywhere soon. According to a study done by Glassdoor based on a sample of 344,250 interview reviews, the average time it takes to fill a position from the interview in the US (not taking into account the job posting and time spent reviewing resumes) is close to 23 days. This can go up or down depending on job title. For instance it takes 35 days to hire a software engineer, while it takes 19.9 days to hire a financial software developer.
However, the most alarming thing is that this rate has increased by 13 days in four years. The sudden incline in days spent on hiring appears to be driven by a number of factors, (increase in background checks, internal bureaucracy, number of interview stages, etc). Regardless of the reason, each day spent hiring costs your business more. We've identified the top 5 hiring costs, and how you can use less resources the next time you're recruiting.
5 Unrecognized Hiring Costs
Loss of old hire
When an old employee decides to leave, so to does all the money that you've put into their training, and if you're an agency, potentially some clients. This in itself is detrimental, without including the severance package, farewell parties, administrative costs and lost collateral.
Using benefits to attract top employees is becoming more necessary. It is a modern expectation to make the work environment enjoyable. Ranging from free coffee, to gym memberships and life insurance, benefits can cost an average of roughly 1.25 - 1.4 times the base salary range.
As touched on before, the average time it takes to hire a new employee is between 22 - 31 days. From writing the job description to the hiring stage, and with job postings costing from $50 - $500 per job, per day it's highly possible to spend up to $25,000 on recruitment once including the salary of hiring and administrative staff.
Training and workplace integration
Once hired, integrating the new employee into the workplace has unforeseen costs in administration, software and collateral. Once you combine training with integration a medium sized business is looking at parting with a minimum of $1000 - $5000.
Loss of productivity
To top it all off a report by Harvard Business discovered that during the first month after training, it's estimated new employees are only functioning at 25%. It also discovered that it takes 5 months to get to the point where your employee can achieve full productivity.
How you can make the process more streamlined in your business?
Begin with the end in mind. Clearly define your job description and make sure it actually matches the skills you require. Much time can be lost by HR reviewing resumes not meeting the position objectives. Even worse, much time can be lost by HR talking to people who don't match the needed criteria.
Create deadlines - and stick to them
Clearly set objectives and create a timeline from the very beginning. Who will be working on hiring, what questions will be asked and when all interviews should be conducted.
It's common for people to over sell themselves on their CV. Creating little tests, such as maths problems, writing an article, a series of industry related questions or even valid pre-employment personality assessments can help you weed out the bad from the good before they make it to the interview stage.
OR Go Against the Grain and Gain Flexible, Efficient Hire.
Though not necessarily a standard business move, bringing on a business consultant, or hiring freelance is a good alternative to the hassle of bringing on a full time employee. Many web platforms provide ways to put you in contact with the right professional with little effort on your part.
Economically, consulting is a lean alternative to taking a project from planning to completion.There's none of the aforementioned expenses and management overhead. Consultants are their own manager, so you're literally only paying for those working on the project while saving money on tax contributions and benefits. Additionally consultants are highly specialized accustomed to dealing with multiple businesses, getting the grasp of a company or industry quickly, and therefore require little, if no training - cutting out a quick average of $1,200 a year in training costs.
Strategically, you're receiving an outside view of your business. Untied to your company and beyond office politics, consultants are more likely to tell you the flaws in your company's strategy. Another advantage is the flexibility of contract work . Consultants have other clients, and it's normal to let them go and bring them back at will an easy way to ensure you're never over-staffed. You also know that quality work is the key to their reputation - so they're always going to be performing at an optimal level.
The hiring and training cost of a consultant? Absolutely free - at least through certain online consulting firm platforms. The 2PS.com consulting firm platform goes a step beyond the competition, urging consultants to collaborate and form teams should the project require different skill sets.When you hire 2PS you're getting management for free, enabling a specific project to be finished in record time and at a fraction of the cost of hiring or using a traditional consulting firm.
Don't Follow the Trend
There are small things you can do to quicken the hiring process. Streamlining your hiring process or outsourcing - the choice is yours, just make sure your businesses is evolving to avoid getting left behind.
extension HR Strategy