6 Hidden Recruitment Costs


“Zappos CEO Tony Hsieh once estimated bad hires had cost the company "well over $100 million.” - The True Cost Of A Bad Hire -- It's More Than You Think by Falon Fatemi


In the same article, Falon Fatemi writes that the cost of loss when hiring bad employees can vary, but seeing the amount Zappos has lost in talent acquisition would seem staggering for any professional recruiter to comprehend. Moreover, she asserts that the U.S. Department of Labor reports that at least 30% of an employee's earnings equates to the cost of a bad hire. Ultimately, you’ll want to learn more about some of the cost of talent acquisition. 

In Recruitment University’s Cost Analysis course, it covers many of the costs associated with the recruiting process. Here are some of the examples:

1.      Human Resources Personnel Hourly Rate - for interviews, sorting resumes, phone screens, organizing information, sharing with direct manager, coordination of interviews, etc. 

2.      Direct Managers' Hourly Rate - same as above (for interviews, sorting resumes, phone screens, organizing information, sharing with direct manager, coordination of interviews, etc.) but add in additional time for company tours, onboarding conversations, introduction to the team after hire...

3.      Other Interviewers’ Hourly Rate - interview times, feedback from interviews, coordinations, 

4.      Cost of the Employment Advertisement - most sites can start as low as $200 and go up to $1500.  Plus add in the cost of physically creating the ad.

5.      Cost of a Referral Bonus - companies with existing great talent usually offer great referral bonuses to attract like-minded future employees.  This is usually $1000.

6.      Agency Fee (If Used Agency) - contingent fees are usually 20-25%; retained fees vary.

To avoid the pitfall of Zappo’s experience, you’ll want to pay attention to the breakdown of some of the recruitment cost, and its data. You’ll see from the list mentioned above – the first charges are hourly salaries of hiring personnel involved in the decision-making process.

You’ll notice the amount of work that goes on behind the scenes of recruiting. The number of people involved can range from as little as one person to over 20 people. Be advised that having a few team members participating would cut down on the cost while streamlining the process into finding your perfect candidate. 

Now, keep in mind, these values would be of use when analyzing and comparing the data of good hires. 

In upcoming blogs we will provide worksheets but for now, any questions on cost can probably be answered by clicking here.    


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