Miscalculating hiring costs can be a detrimental mistake to the budget of your company. In order to remain financially solvent, it is imperative to keep tabs on the actual costs involved in hiring new employees. This will help you decide when, how and how many employees your business can afford to hire as it grows. With some organization, you should be able to get a rough estimate of general costs of hiring.
Determine recruitment costs. Recruitment costs involve things such as placing classified ads, preparing marketing videos, business cards, salaries of employees involved in recruiting, job fair fees, supply fees and more. Write down all expenses incurred with recruiting. Do not leave out any expense, no matter how small you might feel that it is.
Calculate selection costs. Selection costs generally involve costs of background checks, salaries for employees conducting interviews, applicant testing and materials, reference checks, educational checks and so on. Your company needs to write down the exact cost of everything involved in selecting employees for hiring.
Write down all costs involved in orientation and training. Your business will need to pay for the salaries of new employees, the cost of training courses, materials, teachers, office space, reviews and other vital expenses. None of these items should be overlooked. It is generally better for the budget to overestimate cost than to underestimate it.
Consider the cost of turnover and burnout due to varying factors. Old employees may burn out and new employees may find that the new job is not a great fit for them after all. Think about these costs along with what you can do to minimize them.
Add the total dollar amounts from all categories together to arrive that the total cost for hiring new employees. Compare this number to your business' budget in order to determine how much hiring your company can afford to do. A growing business always does better when it plans realistically and responsibly in the hiring process.
Anne Kinsey is an entrepreneur and business pioneer, who has ranked in the top 1% of the direct sales industry, growing a large team and earning the title of Senior Team Manager during her time with Jamberry. She is the nonprofit founder and executive director of Love Powered Life, as well as a Certified Trauma Recovery Coach, certified HRV biofeedback practitioner and freelance writer who has written for publications like Working Mother, the San Francisco Chronicle, the Houston Chronicle and Our Everyday Life. Anne works from her home office in rural North Carolina, where she resides with her husband and three children.