Hiring new employees is an important part of expanding your business. New people bring new skills and perspectives to your company. The idea of a new hire can be so compelling that you might be tempted to rush the process. However, it is critical for the health of your business and the well-being of your existing employees that you understand all the costs associated with a new hire.
In order to get someone to interview for a new job, he or she must be aware that the job is available. For your business, this means that there will be some kind of recruiting cost. If you are hiring for an entry-level position or looking for a local hire for a less-skilled position, your costs may only be a few hundred dollars to post the job locally. However, if you are looking for someone with a higher level of education or unusual skill set, you may have to hire a headhunting service. These are services that track and help recruit candidates for certain job positions.
Head hunting services can be pretty expensive. According to Money Crashers, it is typical for this service to charge a percentage of the new employee’s salary, usually around 20 percent. An employee starting at $50,000 could require a headhunting fee of $10,000 or more.
New employees will not do you much good if they do not have adequate training. Training costs vary from position to position. You should assume that there will be a couple of weeks where the new employee is being paid to learn rather than produce. In addition, the person guiding the new employee will be less productive, focused on getting the new person up to speed. If the training is more extensive, requiring you to bring in temporary training staff, the costs will grow.
Each employee you hire is a big responsibility for your business. Not only is there the cost of a salary, but there are also the costs of various benefits, like health insurance. In order to hire qualified candidates and keep them, you have to treat them fairly. According to The Hire Talent, lowballing a candidate on salary does nothing for you or your business and can make it difficult to retain them should they accept. At the very least, you need to learn the average starting salary for someone coming into a position in your organization. Even if you cannot match it, you should try to come within one or two percentage points.
Hiring a new employee before you are ready can put your business in financial jeopardy. It can also damage the morale of all your employees. However, it may also be a worthy move for the company. Before you start the hiring process, be sure you calculate all the expenses of a new hire.
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