The hiring process is expensive. On average, it takes companies 30 days to fill a role and costs them $7,500 in lost productivity, but this expense doesn’t end once the position is filled. They now need to invest resources into training their new employees so they can be productive as soon as possible. If you’re having trouble retaining staff, it could cost your company thousands of dollars on top of those initial costs.
How much does it cost to hire?
You might have heard that hiring a new employee costs about 30% of a position’s salary. That’s the average, as it varies widely among industries and regions.
The average cost of hiring an employee includes:
- The cost of advertising and searching for candidates, including printing resumes and posting on job boards
- The cost of interviewing potential candidates, including phone calls or emails to schedule interviews and travel expenses for both parties involved in the interview process
- The cost of performing background checks on candidates (this is especially important where state law requires it)
The average cost of onboarding new employees is roughly $1,600, according to research from CEB Catalyst. This figure accounts for training materials and other documentation related to onboarding and integration activities, such as welcoming lunches or company tours.
In addition to these direct costs, there are indirect costs associated with hiring and onboarding new employees. For example, if you’re already short-staffed and have to pay overtime to cover the vacancy created by a recent loss, or a new hire getting up to speed, that will cost money. When you factor in expenses related to turnover from poor hiring decisions or unproductive workers, it becomes clear that making good hires is key to reducing overall operational costs. One way to reduce these costs is to implement behavioral assessments that streamline the hiring process and provide valuable insights into candidates. A tool like the Omnia Behavioral Assessment can drastically cut hiring time and cost.
Engagement, retention, and turnover
Engagement and retention are closely linked. Engagement measures how well employees are engaged with their work and organization, while turnover is the rate at which employees leave your organization. Turnover can be caused by many factors: low pay, poor management, lack of opportunity for growth or recognition, and so on. However, it’s important to note that engagement is often the driving force behind these other issues.
In fact, according to research from Gallup (a global research-based consulting firm), engagement predicts turnover with 95 percent accuracy. If you have highly engaged employees who feel like they’re recognized for their contributions—and rewarded appropriately—you’ll have far fewer people leaving your company than if those same workers weren’t engaged at all or felt undervalued because they didn’t know what was expected from them in terms of results, behaviors, and actions.
The loss of institutional knowledge
One of the most expensive aspects of losing employees is lost institutional knowledge. When you lose someone who has been there for a long time and knows how to do their job well, it takes a long time to train their replacement. They’ll have to learn all the processes and procedures from scratch—which can mean months or even years before they’re up to speed.
That’s not just a problem for you; it’s also a problem for your customers. In an industry where speed and accuracy are essential, like healthcare or manufacturing, losing someone who knows the ropes can be devastating.
To summarize: Low retention means lost time, money, and productivity.
The cost of hiring is not just the cost of filling vacancies. It’s also the cost of training and development. Employees who miss out on growth and progress opportunities are also the cost of lost productivity. And it’s also the cost of lost knowledge that comes from replacing your best employees—all this adds up to a lot more than just money!
The scientifically validated Omnia Behavioral Assessment is your go-to resource if you’d like to reduce hiring costs and increase retention.
