The hiring process is one of the most important parts of growing and scaling your business, especially if you are hiring remotely.
Even though many businesses may know (or think they know) how to hire A-players, they are often not aware of how much the hiring process really costs.
It may seem that, in the process of hiring, they are paying only for posting the job ad and then the salary of the person they hire and that there’s no other costs – but sadly that’s not the case.
Digging into the details of every hiring stage, the costs can turn out to be significant!
Hiring costs are going way beyond just the job ad price, despite what companies might be tricked to believe. Moreover, it takes a lot of hiring experience to pinpoint the best candidates and get it right every time.
The overall hiring process can be a significant cost if you have no experience and time to invest in the process. Thankfully we’ve taken steps to help control these costs with you.
The True Cost of Hiring a New Employee
The costs vary from company to company, based on:
- What the company needs,
- Positions and seniority,
- Hiring policies
There are multiple core processes a company goes through when hiring and we’ll cover the most common below
1. Advertising costs
Which channels and platforms are you using, or are going to use, to find quality job seekers?
Investing in advertising is one of the first but also one of the most important steps in the hiring process.
The first step is to post the job ad on one of the online job boards.
Costs for posting an ad for one job vary on different platforms:
- We Work Remotely -$299 for 1 job posting for 30 days
- Outsourcely -$59 per month
- JobRack – $199 for a single job post and you have the option buy 3 job posts for $399
- Onlinejobs.ph – $69 per month
By pushing the online job posting through any of these channels, you can already narrow down the applicants you’re going to receive. Choose the right platform to get the skills and quality you want to hire.
2. Time costs
Ever feel like you are always short on time?
Time is the scarcest resource which also drags other resources with them.
That said, hours spent on a certain task also have a toll on energy, creativity and productivity levels.
So, what tasks are the most time-consuming when it comes to hiring a new employee?
No matter if it is the business owner or a top manager dealing with the process, these are just a few of the tasks that will need doing:
- Preparing the post – to attract the best candidates, it’s important to have a well-crafted job post that will elegantly present all the ins and outs of the position and present the company culture and opportunities in the best way.
- Sorting applicants – depending on the position, the ads can generate an unimaginable influx of CVs; you’ll need to go through each and every one of them in order not to miss a gem,
- General communication and verification – before inviting job seekers to an interview, companies often do pre-screening to narrow down the choice of candidates to just those that they are going to interview.
- Interviews – The average length of a video interview call is 45 minutes + a minimum of 15 minutes preparation time. Interview ten people and including preparation time you’re looking at 10+ hours just for this stage alone.
These four steps can require massive hours that drain the weeks of busy managers and CEOs.
How to determine the cost of this phase?
What value do you place on your time?
$25? $100? $250?
Whatever number you’re thinking of it’s almost certainly too low. Double it and you’re probably getting to a more reasonable estimation of the value of your time.
Simply fill in the spaces below, and get a rough estimate of the dollars poured into hours spent:
___ $ per hour x ____ hours = _____
So if you realized so far that the cost of hiring is pretty high, you might want to consider other options that could save you money.
We have a great solution for businesses that want to save money by using experts to work with you as your very own hiring team.
Our Done For You service is the perfect option because our team of expert recruiters understand your needs, find the very best candidates, then they’ll test and interview them to present you the very best options to choose from.
This is great for businesses who have limited time and want to get the best results in the shortest possible time.
3. Testing costs
You want to optimize the time you spend on interviewing candidates so you should only interview those that actually have the right skills.
This is where testing comes in.
Well-crafted tests can come to the rescue to avoid meaningless interviews. Initial tests can provide the company with result-driven assessment in the first round saving you time, money and frustration.
However, as you probably know yourself, creating a good and meaningful test is not an easy task. It has to be relevant to the role and something that can be completed in an hour or less.
So you have to factor in the cost of coming up with these tests.
The formula we had above repeats itself, as it means a time investment again:
___ $ per hour x ____ hours = _____ $
Where you’re recruiting for a technical role then you may be able to use online testing services. Among the most popular testing suites for developer roles are:
- Athena Assessment – 500$ per month
- Interview Mocha – 500$ per month
- DevSkiller – pricing starts from $3,000 annual fee
4. Opportunity cost
The cost that all businesses pay when taking too long to hire is the opportunity cost.
The longer a company waits for the right employee to come through their door and start tackling the tasks, the longer their projects and business stay still.
Inexperienced hires or extremely busy managers not sticking to the time schedules can take longer to get through the entire process.
Let’s assume that for example, the whole hiring process is projected to take 1 month.
However, due to busy schedules or getting tangled into the process, it takes longer (let’s say: 3 months).
Comparing the projection with the actual time needed gives us a 2-month period where nothing happened to make progress on the goals you have for the new hire.
The result is a loss of not starting to act upon the project that could have started 2 months earlier.
Pro tip: Don’t try to cut short and move the process forward to soon. You can make a big mistake of hiring too early, which can also be detrimental to your business. It’s a balance of being focused on the right things at the right time.
How Much Do Bad Hires Cost?
Assessing risk is important to be aware of if a company want their business to move further.
Making the wrong choice when hiring a new person on the team can turn into a significant loss for the business.
First, there are the costs mentioned above (advertising, time spent, testing and opportunity costs).
Then, the salary the employee received while working for you.
And to top it all – the training you’ve had to invest in onboarding the employee plus the time to then find a new hire all over again!
For a small company, an investment like this (potentially a third or more of the employee’s yearly salary) gone wrong can be a real kick for the business to handle.
So what can we do instead?
Now we don’t want to suggest that hiring isn’t worth these costs. Getting the right person for your business is one of the most important decisions you’ll make and it has the potential to truly transform your business again and again. You just need to find the right balance and make some sensible decisions.F
Decision 1 – Advertise your job on the right platform. If you want quality, technical hires then don’t advertise your job on platforms focused on virtual assistants. Head to the quality sources of great remote workers with the skills you need.
Decision 2 – Which parts of the hiring process should you do yourself and which should you consider outsourcing some or all of them?
Looking to Save on Hiring Costs?
If you’ve done the calculations based on the formulas above, you’ve probably already reached a cost of $1000-$5000 to hire your next employee. If not, you can use our hiring calculator which tells you your cost to hire in just a few questions.
All this being said, it’s completely understandable why companies struggle with the whole hiring process for months. Knowing the effect of hiring too early or too late can have for your business is a huge challenge.
But, in the perfect world, everyone should do what they are best at.
Connecting over 1,000 companies with an enormous database of Eastern European job seekers, JobRack helps to make your hiring process streamlined and efficient.
Outsourcing the hiring process will allow any company to focus on the core activities for their business – and get the best-matched candidates delivered in their inbox.
So whether it’s advertising your own role on JobRack and getting top quality candidates applying or whether you choose to use our expert team to handle the process for you – we can help.
If you have enough time to invest in the hiring process you can post your job advert with a good description and we will help you find the best talent by sending a notification to thousands of job seekers who match what you are hiring for.
Unlike other platforms, we do not have hidden fees nor extra expenses. You get your job ad posted live with full support throughout the process for no extra fees. Your job advert will be active for 60 days starting from publishing date and within that time we are 100% confident that you can find the best talent out there.
You can interview your applicants however you want on our platform and you can do it for free.
On the other hand, if you are short with your time and you need to focus on some other things in your business you can let us do all the work for you!
As we said before, our Done For You service is an amazing option to find great candidates, filter them, test them, interview them and deliver them to you ready for the final decision.
You will have full visibility throughout our hiring process and our team will send you updates, suggestions, and advice about hiring all along the way. We will complete everything for you and find you exactly the person you need!
Click below for more details to check it out or should you have any questions do not hesitate to get in touch.