•It should be noted that the costs of time and lost productivity in hiring a wrong employee can easily reach 150% of the employee’s annual compensation figure.
•Some of the main factors you and organizations need to consider when calculating the cost of recruitment are :
Departing Employee
- Temporary cover for vacant post and lower productivity
- Administration costs for departing employee – payroll, pensions, etc.
- Lost skills and investment in training
- Loss od goodwill from customers
- Possible downturn in morale of remaining employees
Recruitment and selection
- Manager’s time spent analysing the vacancy and specifying the job
- Time spent in briefing/working with external agencies
- Direct costs of working with external agencies
- Direct advertising costs
- Administration costs – sending out job information, letters, arranging selection events, etc.
- Manager’s time – shortlisting, interviewing, selection, taking up references
- Training costs – ensuring everyone has the necessary skills to recruit
New employee
- Induction and job skills training
- Manager/employee’s time spent in orienting new person
- Administration costs of new employee – payroll, pensions, etc
- Cost of the new employee being less than 100 per cent productive for weeks/months
- Disruption to the department as the new person gets up to speed
- Cost of any new equipment such as company car, mobile phone, laptop, etc.
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