9 Costly Recruiting Expenses That Quickly Add Up Before You Know It

2 min read
Apr 6, 2016

9 Costly Recruiting Expenses That Quickly Add Up Before You Know It by TINYpulseThere are many reasons why 78% of business leaders consider employee engagement and retention top concerns. Here’s one of them: It costs a lot of money to hire new employees.

According to researchers from the UC Berkeley Institute for Research on Labor and Employment, businesses can spend up to $7,000 to hire a skilled employee. Does that number seem a little high to you? Let’s break it down:


1. Salary and benefits for recruiters

Yes, you’ll ultimately have to stomach the salary and benefits expenses that pertain to your new hire. But before you get to that point, you’ll have to pay your recruiters to source candidates.


2. Signing bonuses

Not every organization offers signing bonuses. But to make their offers that much more attractive than their competitors’ offers, many do.


3. Job listing fees

When you use a site like Craigslist or LinkedIn to advertise new openings at your organization, you have to pay a fee. Generally speaking, these fees are determined based on geographic location. According to a Glassdoor blog post, LinkedIn charges up to $495 for a 30-day job posting, while you might only have to pay $25 to get a job up on Craigslist.


4. Third-party recruiter fees

Hiring a candidate who’s been passed to you via a third-party recruiting firm might save your organization a whole lot of time. But it probably won’t reduce your costs. According to Quora, recruiters can charge anywhere from 20% to 33% of a new hire’s salary.


5. Employee referral bonuses

If you’ve got an opening, why not ask your staff whether they know candidates who would be the perfect fit? It’s like networking with your employees. To encourage employees to participate in such a program, many organizations offer referral bonuses (e.g., $2,000 if the new hire lasts more than 90 days) — which factor into onboarding expenses.


6. Travel expenses

Companies often offer to buy prospective candidates plane tickets, so they can fly across the country for an interview. They’ll put them up in hotels and maybe buy meals too. More local candidates might arrive via train or cab — and businesses usually cover those expenses as well.


7. Relocation expenses

To attract top talent, many organizations offer to pay a new hire’s relocation expenses. Depending on where the person is moving from, these costs can add up quickly.


8. New equipment

Does your new employee need a laptop, a mobile device, or a printer? It’s time to take out the company credit card.


9. Training costs

Great! You’ve finally hired a new employee. Now you’re going to have to train that person, which generally involves pulling an employee off their regular duties.

Here’s a little bit of silver lining: The first employee you hire will cost the most money, according to the Centre for Economics and Business Research. But thanks to economies of scale, the more people you hire, the less they’ll cost incrementally. In any event, because of the high costs associated with hiring new employees, organizations that wish to grow should do everything within their power to strengthen their employee retention strategies.



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