The Cost of Hiring

Hiring the right employee increases your work output and earns you thousands of times more than the salary you pay with its quality, visionary thinking, positive outlook, and successful handling of challenging tasks. It is an undeniable fact the recruitment process is an important process for all institutions, organizations, and businesses. From deciding on the position to be recruited, creating a job description and a job posting to hiring, what does it cost when a wrong individual joins the organization? In this article, we will find the answer to this question together.

First, let’s talk briefly about the recruitment process, and then let’s go deeper into the subject.

The Recruitment Process

The recruitment process is a set of processes that aim to find the most suitable candidate for a specific position needed by the company. While all these processes vary from company to company, they all contain some classical methods. Some of those classic methods used in the recruitment processes are as follows:

  • Determining the position needed
  • Preparing the job description with expectations and duties for the position
  • Sharing the visual or text containing the job description and expectations from the candidate on career and related platforms
  • Scanning candidate resumes
  • Phone, virtual, and face-to-face meetings
  • Finalizing the process by making an offer to the most suitable candidate
  • Education and orientation

So, what kind of resources are used in this long and demanding process?

Resources Used in the Recruitment Process

In this process, the resources used directly or indirectly appear as factors that increase as they focus on details. The first of these factors is time. In all these processes, a lot of time is spent finding the right candidate, including the direct involvement of the recruiter or human resources specialist, the expected application time to find the right candidate, the coordination and finally, the conduction of interviews.

The second important factor is the financing allocated for the most effective management of the process. Factors such as the amounts paid to career platforms, recruiting with an outside party, and the use of new methods in this process can be cited as examples of the resources the company allocates financially.

The third important factor can be called motivation, harmony, or factors that are invisible in the workplace but keep the workplace psychologically alive. The expectation of people in the positions of officials, experts, or managers involved in the recruitment processes on behalf of new candidates, their efforts to protect or improve the workplace order, and all the benefits expected from compatible candidates can be given as examples of motivational factors.

So how do all these factors affect recruitment? To what extent do the time, financial and motivational costs affect the company or institution?

1. Time-Cost

The time spent on the recruitment process varies according to the size and organizational structure of the company or institution. Having fewer people responsible for recruiting within the organization will increase the time cost, having more employees undertaking this task or outsourcing consultancy will reduce the time cost. The time cost data is as follows:

  • The time small business owners spend on the hiring process is roughly 40% of their working hours.
  • The time taken to fill any position is 42 – 52 days.
  • The time taken for CEO-level hiring is approximately 6 months.
  • The rate of lost time for training is 40%.
  • The time it takes for newly hired individuals to work in full productivity is between 8 and 26 weeks.

2. Financial Cost

Recruitment processes require the transfer of money to many different sources. In this process, the budget allocated to career platforms, the amounts paid to consultancy companies through external recruitment services, the salaries and extras of recruited individuals, expenditures for training and orientation are among the prominent costs. Looking at the statistical data, the financial costs are as follows:

  • The initial and mid-level recruitment cost is ~$2500.
  • Recruitment costs at the director level vary between $2500 and $4100. The financial loss of the company for a wrongly hired manager is stated to be about 3 times the annual wage.
  • Recruitment at the CEO level costs the company between $6000 and $20000. Wrong decisions taken, wrong strategies determined, and opportunities that cannot be evaluated cost the company much greater financial losses in the medium and long term.
  • As a result of a wrong hire, the company has to face a financial loss of between 1% and 2.5% of its total earnings.
  • According to 2018 data, the amount spent on the orientation and training processes of newly recruited individuals is approximately $1500.

Cost of a Recruiter

Recruitment operation is expected from the recruiters in the Human Resources department or the Business Partner. While the cost and performance of a person whose sole job is “recruiting” are more easily measured, the calculation of periodic recruiters is a bit more complicated. The recruitment team, which usually consists of at least two people, is one of the busy units of the company every term.

Job Posting Platforms Cost

Accessing the CV is the first and most important step of the recruitment operation. It is indispensable in cost items. The need to resort to more alternative ways to close the position under time pressure increases the overall cost. Companies with strong financial resources are also adding platforms such as LinkedIn to their research channels.

3. Motivational Cost

As a result of wrong recruitment, the company not only consumes its financial resources but also loses motivation, which is one of the most important factors that can carry the company to its goals. Along with the wrong recruitment, the company encounters negative situations such as the disruption of the order in the team, the negative impact of the peace within the company, and the burdening of the workload that cannot be done or incompletely on other employees. Of course, all these negativities lead to an increase in stress at work and a decrease in performance and motivation. The motivation cost of this situation is as follows:

  • Wrong recruitment, 35% decrease in team motivation
  • Increased team stress by 53%
  • Increased managerial stress by 37%
  • Decreased confidence in making employment decisions by 20%
  • The decrease in the trust of the employees in the company causes damage to the company’s reputation in the long run
  • After all this data, we see how important the recruitment processes are for companies and institutions


Final Thoughts

Hiring a new employee is not a decision to be taken lightly, as it may not easily fit within the company budget. So while the investment may make the company accountant uncomfortable, the potential for a good new hire continues to make the investment worthwhile. Consider this before hiring a full-time employee: is your need only temporary? Will you be able to supplement a 40hour work week after your tech project is complete? If not, maybe filling the role through staff augmentation is the right fit! We provide skilled and vetted software engineers who are ready to hit the ground running on your project. Forget the 40+ days to fill the role! Ready to get started?


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According to SHRM, the average cost per hire for companies is $4,129. Not only is that a significant amount of money, but the average time to fill an open position is 42 days. This way, you don’t have to pay for employee benefits or create space in your office; that alone results in a 20-30% savings.