What is the cost of hiring an employee for small and mid-size business owners.

Your Time Lost to Hire One Person

Hiring costs both time and money. In fact, more than you may realize. Take a look at the time involved for you to hire just one new employee.

Post on Job Boards

Write ad copy and post to one job board: 1 hour and 30 minutes. On average, 250 resumes are received for each corporate job opening. Many job postings will receive more, especially if you post across multiple job boards.

Interview Preparation Work

This includes scheduling interviews and preparing questions for six candidates. Plan on an average time of 1 hour and 15 minutes.

Reviewing Resumes

Recent reports found that recruiters spend only 6 seconds reviewing each resume. That's 25 minutes for the first 250, but if you're more generous, you could spend up to 5 minutes per resume - that's over 20 hours!

Interviewing & Wrapping Up

Activities include initial interview, testing, reference checks, final interviews, contacting other applicants, and making the employment offer which can add up to 7.5 hours.

Prescreening Candidates

It can take up to 2 hours to prescreen eight candidates over the phone.

Total Time to Hire One Employee

This can range from a minimum of 30 hours to over 100 hours per position.

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True cost of poor retention, high turnover and hiring replacements.

The cost of replacing an employee, high turnover ratios and the lack of a retention strategy can come with a huge price tag for employers. We have summarized 13 Case Studies on the cost of employee turnover.Some studies conducted by the Society of Human Resource Managers (SHRM) predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training expenses.

But others predict the cost is even more - that losing a salaried employee can cost as much as 2 times their annual salary, especially for a high-earner or executive level employee.

Turnover seems to vary by wage and role of employee.

For example, a CAP study found average costs to replace an employee are:

16% of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10/hour retail employee would be $3,328.
20% of annual salary for mid-range positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40k manager would be $8,000.
Up to 213% of annual salary for highly educated executive positions. For example, the cost to replace a $100k CEO is $213,000.

What makes it so hard to predict the true cost of employee turnover....

is there are many intangible, and often un-tracked costs associated with employee turnover and what it takes to replace them. So, what is the real cost of losing an employee and hiring a replacement? In a recent article on employee retention, Josh Bersin of Bersin by Deloitte outlined factors a business should consider in calculating the "real" cost of losing an employee. These factors include:

Benchmark your employee retention rate.
Use proven retention strategies, not guesswork.
Don't assume employees are happy, create a high-feedback environment and open door policies.
Implement a health benefits program such as a traditional health plan or defined contribution health benefits
Provide different benefits for different employees focusing on the high-value, top performing leaders or expensive to replace employees
Conduct exit interviews to identify weaknesses from the source.

So, what is the real cost of losing an employee and hiring a replacement?

The cost of hiring a new employee including the advertising, sorting through applicant resumes, vetting, interviewing, screening, and hiring.
Cost of on-boarding a new person including training and management time.
Lost productivity... it may take a new employee 1-2 years to reach the productivity of an existing person.
Lost engagement... other employees who see high turnover tend to disengage and lose productivity.
Customer service and errors, for example new employees take longer and are often less adept at solving problems.
Training cost. For example, over 2-3 years a business likely invests 10-20% of an employee's salary or more in training
Cultural impact... Whenever someone leaves others take time to ask "why?"

Best practices on employee retention - So, what can you do about employee retention? We recently outlined seven tips for employee retention. Some of these employee retention tips include:

Satisfaction Guarantee

Our growth and success are directly attributed to our unwavering dedication to treating both employers and job seekers with the respect and personal attention they deserve. That dedication and focus has translated into a 97% retention ratio that has eliminated the never ending revolving door that our clients had experienced in the past. We guarantee our work and will always focus on quality before quantity. Contact us to learn more about our satisfaction guarantees.

Reduce your cost of hire

Attracting, recruiting, vetting and cultivating relationships with talented candidates is what we do 100% of the the time. We take over every facet of the hiring process for you and bring you best person for the job. This eliminates 99% of the time you would spend hiring on your own.

Locating and attracting top talent is more competitive than ever. Our clients turn to us, in part, for our ability to identify talent quickly and to place the right people in the right positions, at the right time. It’s about driving productivity, controlling costs, and improving the efficiency of hiring, managing, and retaining talent. It’s about delivering bottom line results.

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