Running a business requires huge money to make money. You can even make decisions every day on where to invest your hard earned cash for the betterment of your organization. If you have just set out on the journey to hiring new employees, then you may face some hard truth about the hiring process. Hiring is an extremely complex and difficult task and takes lots of skills, patience, time and even money to find the perfect candidate to fill the desired position. If you are replacing the candidate with someone instead of filling a new position, then stake get even higher. Turnover can be much more costly, that sums up to the total 90-200% of an employee’s annual salary.

Unfortunately, this is quite daunting to pinpoint the precise amount of money that it takes to hire new employees. In reports by the National Association of Colleges, it is stated that employers, hiring an employee with 0-500 people cost an average of $7,645. Another study has also reported that the average cost to hire an employee if $4.129 with around 42 days to fill the position. As per the reports of Glassdoor, the average company in the U.S. spends about $4000 to hire the new employees and taking up this to 52 days to fill the position. According to the research by SHRM, it takes up to 50-60% of an employee’s annual salary to find the direct replacement of the candidate.

There are many factors at play and it takes lots of calculation to figure out what does it costs to hire an employee for the specific organization. However, in most of the organization, they have to go through a similar process to hire new talent. But, there is a complete breakdown with the most organization for how much does it cost to hire an employee in 2019. Below are some of the major factors that sum up the cost of hiring an employee in 2019 as;

• External hiring team

For many organizations, having a dedicated HR team simply does not make sense. The startup organization is booming worldwide, and the teams of the half of dozen people can successfully run the business. Most of the small organization owners spend about 40% of their working hours on tasks which do not generate income such as the hiring process.

There are many staffing agencies that work on the model where they are paid for the performance that means they only get paid if they recruit new candidates successfully. The cost of such service is anywhere from 15% to 20% of the employee annual salary. This adds up to over $16000 per year and that’s per single placement.

• Internal HR team

Once your organization gets big enough to warrant its own hiring and recruiting process, it may be the time to get the dedicated HR team or person onboard. If you need to have a bare minimum, then you must have at least one HR manager on your team. The salaries differ across the board, but general estimates are from $91,000 to $120,000 per year with the healthcare on the lower end and the company management on a higher scale.

Currently, it will set you back $1.20 to $1.50 per a single click on your job ad that depends upon the job title, location, and completion. As your budget decreases gradually, your ad gets pushed down on the list of an open position. Another place most job seekers turn to is Monster which is still more traditional payment model of $375 for 60 days and $395 for 90 days for one position.

• Onboarding & Training

When you hire someone new, then they most likely won’t be fully productive on their first day of work. In fact, it can take up a few months for them to get more comfortable in their new job role. As confirmed by researchers, it will take 8 to 26 weeks for an employee to achieve full productivity. After this period, they offer a positive return on investment for your company, i.e. this is the break-even point.

In an ideal world, you would just put a new employee behind their desk and leave them alone to figure out the things. Unfortunately, we are not all that mart and even the best hires that need help and to begin from first. Although, the study is fairly dated that $1200 lost every year on training for a single employee and in 2018 that is around $1500.

• Salary + Extras

When you have set out to hire new employees and offer them a certain amount of money, they know exactly how much they get. The paycheck some in every month with the net amount of money and the employee can rest at ease. However, if you are on the other end of the employing process, things are anything but simple.

Let us take an example, where the basic salary is $50,000 per year, the employer’s cost is anywhere from 1.25 to 1.4 time higher than the basic salary. For the employees to receive $50,000, the employer has to pay from $62,500 to $70,000 per year which is calculated for taxes and benefit, without any extras such as additional seminars and training, etc.

[Also Read: What to choose: In-house recruitment or external agency]

Conclusion

What if we tell you that you could save money on one of the most important parts of hiring new employees – i.e. sourcing? This way you can decrease the cost of hiring people and can have more focus on other activities. No matter how much you pay your HR, 22 work hours add up to a nice lump of money, if you hire more positions.