The cost of hiring great people

Hiring great people is essential to grow your business and set you apart from the competition, but it comes with significant costs that many businesses underestimate. The true cost of recruiting goes far beyond salary, encompassing several hidden costs that affect both profitability and productivity.

Adding up the costs

Firstly, the direct cost of recruitment can be substantial. According to a study by Oxford Economics and Unum, average recruitment fees for a role over £25K range from £5,433 per hire, with additional agency fees often taking 10-20% of the base salary. Then, there’s the cost of advertising vacancies on platforms like Reed and Monster, which can add hundreds to your bill.

Once you’ve found the right candidate, the onboarding process begins. During this time, productivity often dips as the new hire gets up to speed. For someone earning more than £25,000, the combined cost of recruitment and lost productivity during the onboarding period can exceed £30,000 per employee. In some cases, it can take up to 28 weeks before a new hire is fully integrated, representing a significant drag on efficiency.

Get it right first time

In addition to these financial outlays, there are also the less tangible costs of a poor hire. A person who isn’t the right fit for your company can negatively affect team morale, decrease overall productivity, and, in the worst case, lead to higher turnover as other employees become disengaged. With the new laws that are being brought in with Labour’s Employment Rights Bill that strengthen workers’ rights from day one and make it harder to dismiss someone, it is more important than ever to prevent against hiring the wrong person.

Keeping great people

It’s important to remember that the cost of hiring doesn’t end when someone accepts the job. As you can see from the figures above, having invested these sums in recruiting a good new hire, you want to retain them for as long as you can. Retaining top talent requires investment in career development, flexible benefits, and looking after all individuals. Providing a clear growth path and supportive work environment is crucial to avoiding the costly cycle of turnover.

By investing in a robust hiring strategy, you can avoid the pitfalls of high recruitment costs and focus on building a team that drives long-term success. Careful planning, speed, and strategic onboarding can ensure that the cost of hiring great people delivers the value your business needs.