According to data from the Society of Human Resources Professionals (SHRM), the average cost per hire in the U.S. is just over $4,000. This can include costs associated with buying job board postings, paying a recruiter, building a career site and screening candidates using background and reference checks, among other expenses.
While the costs above can be accounted for as line items in your recruitment budget, many employers overlook the hidden costs of hiring, which also add up quickly each time you have an open role. Below, I've highlighted a few of these hidden costs, along with tips to reduce them and, as a result, drive profitability.
1. Resources and time spent on candidates who aren't a fit.
Hiring and HR managers often spend a significant amount of time manually reviewing every single applicant who comes through. But in many cases, time is wasted on candidates who ultimately won't be a fit for open roles or the company as a whole.
If unqualified candidates get past the initial screening process, they might also be asked in for interviews, wasting additional time and resources that could otherwise be spent on tasks to help drive profitability for the business.
One way for your team to avoid spending time on candidates who aren't qualified for your open roles is to tap into prescreen surveys or another automated step before applications even reach the hiring manager. Using prescreen surveys, your team can automatically send follow-up emails to each applicant thanking them for their interest and providing a link to the survey.
Prescreen surveys are essentially a series of true/false questions and only take candidates a few minutes to complete. Candidates who don't score well on the survey are automatically eliminated from the hiring process. This way, your team will only spend time reviewing applicants who meet the basic qualifications for your open roles.
2. Lost productivity when you have open roles.
For each day your team has an open role, productivity and profitability is lost. For example, each day you have an open sales role, the fewer sales your team will close. And each day one of your departments is short a team member, other employees will be left picking up the slack, which will cause overall productivity to take a hit.
To reduce the costs associated with open roles, your team needs to follow an efficient hiring process. One way to do so is by streamlining candidate communication through text messaging. While candidates might overlook an email or miss a phone call, you can reach them sooner via text, moving forward with hiring steps quickly.
3. Time spent getting new employees up to speed.
New hires are rarely 100 percent productive the day they walk in the door. Between onboarding and training, it takes each new hire some time to get fully up to speed. And while this is happening, your team will continue to fall short from a productivity standpoint.
To get new employees contributing to your team quickly, one step your team can take is kicking off onboarding before each new employee's first day. No new employee wants to spend hours or his or her first day filling in paperwork in the HR office.
Digital onboarding enables new employees to kick off their day-to-day work right away, rather than focusing on required paperwork. And can save your HR team from manually repeating many of the same onboarding tasks each time a new employee is hired.
Onboarding tasks that can be completed before the first day include: filling out direct deposit information for payroll, completing tax forms, filling out benefits paperwork and signing the employee handbook.
When employees dive into your employee handbook before their start date, they can learn more about your company culture and core values, making them even more motivated to start contributing to your team.
A tight labor market presents unique challenges to employers looking to staff up with top talent. And in some cases, it can lead to a prolonged hiring process. By understanding the hidden hiring costs outlined above and taking proactive steps to make your hiring more efficient, you can get a leg up on the competition and ensure you have the best team in place.