When your business is experiencing growth, hiring employees is a necessity and retaining them becomes critical; something roadblocked by the current labor shortage. Multiple factors affect your ability to hire in 2023, all mostly resulting in your HR department racking their brains to find suitable talent. Many businesses are facing recruiting challenges today even when adapting constantly to favor the modern worker’s demands. The significant question is, how much is the cost of hiring employees in 2023? Here’s a little insight into the often-overlooked details associated with new hires:
Average Cost Per Hire
For a group of new hires, the total amount spent divided over the number of hires will give you the average cost per recruit. This small metric becomes important when internal and external costs have to be reduced while hiring a great number of candidates. Below are a few statistics to consider:
The average cost per hire range is between $3000 – $5000 depending on company size and industry – workable
The average monetary impact for hiring a single employee is $4,425, which goes up to $14,936 for executive positions – SHRM
It may take 94 days to fill out skilled positions
Companies spend 46.7 hours on training an employee adding up $986 in expenditure
It takes 6 months for a company to break even on the investment made on an employee
It takes 12 weeks for a new hire to become productive at work
Factors Affecting Recruitment
The number, location, and size of your businesses typically impact your hiring practices and the cost associated with them. Added on top are benefits that hit a 16-year high, as of 2022. Aside from the basics, other overhead costs become a major concern which includes factors that affect your overall expense, such as:
All these are secondary to the fact that you cannot find the right worker in today’s labor crisis. A reported talent shortage is making it even harder for recruiters to find the relevant skilled personnel for any company to invest in.
83% of recruiters have had a difficult time in finding suitable candidates in the past 12 months –SHRM
By 2030, the talent shortage will have caused $8.5 Trillion in losses in the U.S. alone – PwC
The worst part is that your finally selected applicant may not be a good fit and the role may terminate after a few months. This means you have to replace that employee again at your expense and might have to go through the process multiple times till you find someone appropriate.
Cost of Replacing an Employee
Whatever the reason that your employees leave, turnover costs and new-hiring procedures will amount to a lot of expense for your company. Replacing an employee becomes a greater problem when you start overburdening your internal resources, causing them to burn out.
Since turnover rates are a record high and are expected to grow in 2022, recruitment costs are only going to jump higher with talent becoming even more scarce.
According to SHRM, the cost of replacing an employee falls within 6 to 9 months’ worth of salary for their particular post. The overall cost may come to around one–half to two times their annual salary – Gallup.
You may then wonder how to hire an employee and consider a recruiting agency to fill the gap. Since they have multi-faceted pricing depending on the type of roles and time spent, their fees would cost you over and above your hiring budget. Especially when there are percentage fees involved like an annual salary or retainer-based (for ongoing services). Another important question is: How effective are job boards?
Investing in job boards is sure to tank your money; as the applicant pool is the same, recruiting firms have no more luck than an internal HR department. If job boards are a waste of time too, the dilemma then is how to look for suitable talent that is willing to work according to your demands?
Best Way to Hire in 2023
To effectively hire in 2023 and retain your employees, you need to reduce recruitment costs, hire a dedicated team, and ensure the lowest turnover and attrition. A win-win solution like that isn’t possible unless the answer is outsourcing, or more precisely co-sourcing.
The difference between the two; the first being an external vendor applying low-cost offshore resources to fill your hiring gap, while the second doing the same, but with the added advantage of sharing risk and reward. A co-sourcing firm also provides consultative subject matter expertise to push your business forward, acting like an advisory partner, invested in your success.
Premier BPO is such an offshore company that lifts and shifts your operations to the right strategic locations, best suited to fill the roles you need. Particularly when companies can’t hire in this labor shortage, we provide staffing from a talent pool of seasoned professionals from across the globe. We also overstaff at our expense to make sure you never feel the effects of any attrition. To get a sample of our offshore cost savings, visit our interactive ROI calculator. You can also put in your numbers to get a customized estimate.