Because of the actual cost of hiring employees, companies with tight funds are often reluctant to start hiring, even if they need workers. It is easy to forget that the cost of hiring new employees does not only mean their salary, but the salary itself is considerable. However, once you take into account the costs of recruitment, training, etc., funding will start to increase. In its 2016 Human Capital Benchmark Report, the Human Resources Management Association estimated that the company spends an average of 42 days to fill job vacancies. The cost of just finding the right person to hire can be huge. Bill Bliss, president and business consultant of Bliss & Associates Inc.2, said that there are various potential high costs in the recruitment process, including job advertisements, the time cost of internal recruiters, and the time cost of recruiter assistants. Review the resume and perform other recruitment-related tasks, the person’s time cost.
Training cost Recruitment is only the first step in this process. Once the right candidates are in place, companies need to provide adequate training so that new employees can do the job and start producing for the company. It turns out that training is one of the most expensive investments a company can make. According to a recent study by Training Magazine, in 2019 the company spent an average of US$1,286 per year on training for each employee. In the same year, employees spent an average of 42.1 hours on training. And these are not necessarily just new employees. They not only need the same on-the-job training and continuing education as existing employees, but also additional time, induction training and initial job training.
The cost of wages and benefits The obvious cost of new employees—salary—is accompanied by its own package of side projects. Benefits range from minors (such as free coffee in the employee lounge) to majors (such as life insurance, disability insurance, medical and dental plans, tuition reimbursement)…the list goes on. According to Sergej Dergatsjev, a columnist for Boston Business Magazine and a senior lecturer at the Management school, the total salary plus benefits are usually “in the range of 1.25 to 1.4 times the base salary.” Therefore, for an employee with an annual salary of US$50,000, the salary plus benefits package may be equivalent to US$62,500 to US$70,000