To help you get a complete picture of your recruitment costs, Thorens Solutions offers a free calculation grid.
On average, three postings are required to fill a position. This can be several hundred dollars in postings and several weeks to go through many irrelevant resumes to hope to find some interesting candidates!
In addition to posting costs and operational costs (your salary and the hours you grant to recruitment), there are other costs that must be taken into account when calculating the overall cost of your recruitment processes:
- Fees for additional services (criminal check, medical tests, psychometric tests)
- The cost of a vacancy
- The cost of a bad hire
Costs of a vacancy
You may think that a vacancy does not cost you anything, but it’s quite the opposite. Yes, you save on salary and benefits, but a vacancy can cost you between 1 and 3 times the salary of the missing employee!
An employee brings the company between one and three times his salary annually. This means that if this employee is not employed for several weeks or months because of stagnant recruitment, your company loses money.
Take the example of a sales representative, one of the most strategic positions in your organization, because it represents the source of your sales and your income. If your representative normally earns about $ 80,000 (including his commissions) and you’ve been looking for him for 6 weeks, you’ve missed out on potential earnings of $ 21,818.10!
Let’s do the math
Every day without a sales representative, you save $ 363.63 in salary, but you miss $1090.90 in potential income. This represents a net loss of $727.27 per day and $21,818.10 for a period of 6 weeks (30 business days) without a sales representative.
As time progresses, you will tend to compromise on the evaluation of applications received to fill your position more quickly. In doing so, you expose yourself to selection errors, which also have a significant cost.
Cost of a bad hire
Have you ever hired a candidate saying “he’s not perfect, but he should do the trick”?
You are not the only one! But beware, this exposes you to more bad hires that can prove costly!
According to the National Business Research Institute (NBRI), 66% of companies say they made a bad hire in 2012. Of this number, 43% of the bad hires were attributed to the need to fill the position quickly and:
- 37% noticed that the morale of other employees was affected
- 18% observed a negative impact on relations with their clients
- 10% reported a decline in sales
According to the NBRI, a bad hire can cost an average of 1.5 to 2 times the employee’s annual salary. In the worst case, it can go up to 5 times his salary.
If we retake the example of our sales representative, the National Business Research Institute estimates the cost error of $150 000$! These costs include:
- Loss of productivity
- Training costs
- Human resources costs
- Interview costs
- Job postings costs
Would you like to compare your recruitment costs to those of hiring a headhunter? Contact us.
