Company Accountants are very good at assessing the cost to hire someone. Cost per hire can be determined by the simple addition of recruitment fee (where applicable), advertising costs, Management’s time interviewing, administration’s time onboarding, etc.
What this approach fails to take account of is the cost of NOT filling the role.
Consider what happens when there’s a lengthy vacancy. Leaving a position open can lead to lost productivity and greater stress for your existing employees. Existing staff experience increases in their workload as responsibilities are transferred. This can result in resentment which could spill over to affect customer satisfaction, lower profits and less creativity. These costs cannot be ignored but are difficult to define and calculate.
A simpler approach:
- Calculate the annual revenue generated per employee (divide annual company revenue by the number of revenue-generating employees).
- Calculate the daily revenue per employee (Divide the above number by the working days per year (roughly 210 days after sick days, public holidays, etc)).
- Now multiply this amount by the number of days the role has been unfilled to find the cost of NOT filling the role.
Make sure that once a potential candidate is identified that you move efficiently to interview and offer otherwise you magnify the number of days the role has been unfilled! You also risk losing that candidate to a competitor or a counteroffer. Time kills all deals.
Compare the cost of NOT filling the role with the amount you spend to hire a new employee.
It makes a lot of sense to contact the B Series to discuss your vacancy with experienced, specialist recruitment consultants. We know how to reduce the cost of NOT filling the role.