Possible Solutions for High Employee Cost

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Wage Analysis as a Possible Solution for High Employee Costs

Most business leaders try to ensure that their employees are getting a fair wage for their services. When employees fail to meet expectations placed on them, yet annual raises continue to occur, an entry-level or mid-level position may become incredibly lucrative – especially when the employee is paid too much from the start. Although this is an avoidable drain on the business' cash reserves, is it a problem that could be fixed with a wage analysis? The answer is yes!

Paying employees more money than they are owed often harms the employees around them and the organization as a whole. Not only can this limit their development as an employee, but it can also spread resources thin company-wide. Becoming a market leader both regionally and nationally by paying increased wages is often considered a smart strategy. Although, it is crucial to ensure that overpayment is not leading to high employee costs. Fortunately, initiating a wage analysis is one of the easiest ways to account for this common problem and ensure a business protects its bottom line.


How Does Wage Analysis Improve Employee Costs?

Performing a wage analysis on the organization's vital positions can help determine a fair wage for all employees based on the type of work they are performing. This process can also help create a "pay cap" that can only be surpassed once the employee moves into a new position through recognized work or skills. If a team member is not performing their duties, they should not be entitled to a wage increase. But how does a wage analysis directly impact employee costs and ensure that a business is not inadvertently setting itself up to lose cash flow on high employee costs?

A wage analysis can provide valuable insight into the correct pay scale to provide employees based on both local and national data. Not only does this help business leaders determine a fair starting salary and benefits, but it can also create room for salary increases based on performance or provide guidelines for potential bonus opportunities that may be available. At the same time, this helps ensure that new employees are not being overpaid and draining the capital or financial resources that could be used to expand the workforce or improve services for external clients and internal shareholders.

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Providing employees with a higher wage than competitors may seem like a smart business decision to attract the top talent. The only caveat to this approach is that the right checks and balances need to be in place to ensure high employee costs do not negatively impact the organization as a whole. A wage analysis is the best way to do this. However, continual research will need to be completed at least bi-annually to keep up with the changing market. Through options like performance based staffing, organizations can rest easy knowing that the employees they have are receiving the best wages possible without the potential for a financial drain to occur.

Exploring Targeted Recruitment & Retention Programs as a Possible Solution for High Employee Cost

In many cases, targeted recruitment begins with a company knowing who they need to reach and the best ways to get a job listing in front of them. While this approach provides many benefits for businesses looking for specific skill-sets, it may also help control high-employee costs. Any time recruitment and retention efforts are leveraged, companies can be sure they are finding the right talent at the right price.

The ultimate challenge in recruiting is ensuring that the best candidates are being sourced at the lowest possible cost. While a quality hire often will take precedence, employers will often have to accept higher costs associated with the skills required for a position. With the right balance, companies can spend their recruiting budget efficiently without compromising on the quality they can receive from candidates. Having a solid targeted recruitment and retention program in place can help control high employee costs throughout the employee life cycle.


How Can Targeted Recruitment and Retention Programs Decrease Employee Costs?

A company needs to establish a process to track the effectiveness of its recruitment sources. Some important metrics to consider include the source of the hire, the cost of the hire and the type of candidate recruited. With this information, companies should determine patterns and learn which targeted recruitment sources are controlling high-employee costs. With this information, the company can invest more into those sources to continue finding top talent at the most affordable prices possible.

Many different factors go into a targeted recruitment and retention program. Companies may need to outline several additional expenses associated with this process to ensure they are getting the actual cost associated with hiring new talent. This can include the cost of working with a recruiter to find new talent, the salaries of other team members involved in the process, advertising costs and much more. When added up, the average associated costs could range from between $3,500 to $5,000 when everything is accounted for.

One of the easiest ways to decrease high employee costs associated with recruitment is to ensure that you have an excellent retention program in place. This can reduce the overall need to seek new employees and help save time and money while still ensuring that top talent is available internally year-round. Simply put, companies cannot afford to neglect their retention programs to ensure that their most valuable employees remain productive as long as possible.


Attracting and retaining top talent is a wise business decision for any industry. The only problem with this approach is that most employers do not have a system to ensure that they are investing in targeted recruiting and retention programs that make a positive impact. Certified Source can help simplify the process of eliminating high employee cost through performance based staffing services. With this strategy in mind, employees can rest easy knowing they are not only attracting the best talent possible but ensuring they have the incentivization to stay long term.

Exploring Pre-Screening as a Possible Solution for High Employee Costs

While wages are often seen as the only cash drain that an organization may have, two overlooked factors that heavily contribute to high employee costs are onboarding and turnover. While it is unlikely that these costs will ever be remedied completely, there are many great ways that organizations can utilize pre-screening. This can help ensure they are hiring candidates that are a long-term fit and possess the skills and education necessary to complete vital job functions. Decreasing high employee costs is often easily achieved through a comprehensive pre-screening model that includes aptitude tests, personality tests, cognitive ability tests and integrity tests.

According to the U.S. Bureau of Statistics, the average turnover rate nationwide is around 12% to 15% annually. When put into perspective, employee turnover can cost anywhere from tens of thousands of dollars to about 1.5 to 2 times their annual salary. This makes pre-screening to find suitable candidates one of the most effective ways to eliminate high employee costs while still ensuring that the top talent is placed in crucial positions at all times. While this is a staple among performance based staffing professionals, employers still need to understand the unique benefits that pre-screening provides to eliminate high-employee costs.

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How Can Pre-Screening Decrease High-Employee Costs?

There has been a known talent shortage worldwide that affects nearly any industry, from manufacturing to accounting. According to a recent survey from Nearshore Americas, almost 69% of employers struggle to fill their vacant positions, a stark contrast from the 14% that found it difficult in 2010. Unfortunately, this leads many employers to settle on sub-par candidates as a band-aid solution to increase productivity and ensure corporate headcounts are being met. Typically this occurs at the expense of an employer as they pay steep onboarding and turnover costs.

With pre-screening, employers can make more informed decisions about the candidates they are pursuing. Not only will they have an accurate reflection of past job experience and the length of time the employee remained with the company, but they can also gather information about their skills and determine how they will fit into organizational needs. Suppose a hiring manager winds up hiring the wrong candidate. In that case, it could significantly cost the organization by further hindering productivity and limiting the growth that the organization can achieve. This makes ensuring candidates are only given an offer following extensive pre-screening.

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Ensuring a candidate-friendly experience is critical for success with pre-screening to eliminate high-employee costs. Unfortunately, that means that pre-screening needs to be more robust than it was in the past. As technology-driven generations rely more on social media and mobile platforms, employers should also factor these characteristics into their pre-screening strategy. Using gamification strategies to attract talent in these audiences may be a great starting point while also challenging their skills or abilities as potential employees. Certified Source has developed innovative pre-screening methods to ensure our performance based staffing clients find the right candidate and limit the potential for high employee costs.

Exploring Pre-Employment Evaluations as a Possible Solution for High Employee Cost

High employee costs can quickly take their toll on an organization if they aren't taking the steps necessary to secure top talent and improve their hiring and onboarding processes. One of the most popular ways to reduce the risk of high employee cost is by implementing pre-employment evaluations to ensure the right candidate is sourced at the appropriate pay grade. With a pre-employment evaluation, a hiring manager can help ensure that a candidate has the skills and education needed to succeed long-term with the company while also helping to fulfill organizational needs.

Exact hiring costs can often depend on various factors, and, unfortunately, there is no one-size-fits-all approach. On average, the costs of a new hire will be around one-half to two times their annual salary. This means that every bad hire can result in extremely high costs in a short period. With a pre-employment evaluation, finding the needle in the haystack becomes much more accessible, and the cost savings often become evident quickly. Even better, the entry-level barriers are extremely easy to overcome for most businesses that put forth the effort. But what ways can pre-employment evaluations help reduce high employee costs while also ensuring the best fit possible?

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How Can Pre-Employment Evaluations Decrease High Employee Cost?

While pre-employment evaluations can save an organization from making the wrong hire, they will require upfront costs for testing. However, as previously noted, the cost of a bad hire could be as much as two times the projected salary for the employee. This can quickly add up if even just a few bad hires are occurring annually. With a pre-employment evaluation, organizations can use accurate data on an employee to determine whether they will be a great long-term fit or if they should continue searching for other candidates. Although, there is often more to the equation than just these factors.

Another potential turnover factor that could contribute to high employee cost is legal ramifications if the employee resigns or leaves feeling like they were the subject of what they perceived as wrongs at the employer's hands. More often than not, these legal claims can cost a minimum of tens of thousands of dollars to settle. If the organization tries to fight a frivolous legal claim, it can still drain cash reserves that would otherwise be available to hire a more suitable candidate. Having a pre-employment evaluation to ensure the right fit from the beginning can help mitigate this risk.

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Pre-employment evaluations may seem daunting for many hiring managers; however, working with a team of experienced staffing professionals can help ensure an efficient and accurate candidate selection process. Certified Source has refined the staffing experience for both employer clients and job seekers through innovative new performance based staffing techniques. This approach helps decrease potential turnover before it occurs and ensures that the organization receives the right candidate based on the qualifications, experience level, and other factors that are most important for verifying the right fit for a job.

Exploring Site Orientation as a Possible Solution for High Employee Cost

When thinking of ways to save money on high employee costs, onboarding is rarely a strategy that comes up. While this is likely because onboarding costs money that could be used on other business facets, an excellent site orientation program is critical for ensuring that new employees can start making a return for the company invested in their skills and time. For this reason, organizations need to ensure that new hires leave site orientation equipped to perform their job while also instilling a greater knowledge of functions and policies to help ensure their employee cost meets their position or performance levels.

With ongoing labor crunches affecting businesses nationwide, eliminating high employee costs is critical to ensure enough budget is leftover for other crucial positions that may be vacant within the organization. Even better, a well-thought-out site orientation program can help ensure that new employees stay for more extended periods, all while boosting productivity at a much lower price point. Although, businesses must also realize that this is an essential element in any employee lifecycle and should be an extension of a much larger recruitment and retention process for the best results.

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How Can Site Orientation Decrease High Employee Costs?

One of the primary goals of a site orientation should be to develop realistic job expectations while also cultivating positive attitudes and increasing the likelihood of job satisfaction. The sooner employees understand their job duties and what is expected of them as an employee with an organization, the faster they can start being a productive member of the much larger team. Each new employee should have an extensive look into the position they were hired for before. As you might imagine, this helps ensure unnecessary or potentially damaging mistakes do not occur.

It is important to understand that a thoughtful site orientation program can save the organization thousands of dollars in the long run. This is a distinct difference that can be seen when a company is wasting money on ineffective training that could be easily avoided. Often, one of the biggest reasons that employees will leave an organization is that they do not feel like they are a welcomed addition to the team or feel like they do not fit into the overarching company culture. Unfortunately, this turnover is often another factor contributing to high employee costs that could otherwise be avoided with a better site orientation program in place.

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While the basis of eliminating high employee costs may depend on the recruitment process and the guaranteed rate that a candidate is offered, that does not negate the ongoing support against high employee costs that may be occurring if a well-planned site orientation program is not in place. At Certified Source, we provide performance based staffing solutions that simplify site orientation for organizations while also ensuring that high employee costs are eliminated at each step. That means only the most suitable candidates are being hired at the appropriate price point to support the overall staffing goals of the organization.

Function-Specific Training as a Possible Solution for High Employee Costs

Function-specific training is a frequently overlooked facet of onboarding, leading promising new employees to become unproductive team members. Often simply because they aren’t aware of what they should be doing. Deciding to provide enhanced training to employees can seem like a monumental challenge. Not only do employers want to ensure they are getting the best price possible, but they also want to make sure that their employees are also getting knowledge and experience at the same time.

According to a 2018 Training Industry Report, a standard average-sized company spent around $1,096 per employee on training. While this number may seem high at first glance, this considers every facet of the training, from time investments to the salary of training managers. Unfortunately, this often scares off many employers that are looking for ways to improve training while simultaneously reducing high employee costs. But what is the true benefit of function-specific training when attempting to reduce high employee costs, and how might it turn a fresh employee into a valuable asset that helps achieve organizational goals?

Function-Specific High Employee Costs

How Does Function-Specific Training Reduce High Employee Costs?

It isn’t uncommon for modern businesses to take their time to find an appropriate training strategy that aligns with their goals and budget. The biggest problem that this causes in the interim is that employees can quickly become bored or underappreciated, leading them to seek employment opportunities elsewhere. For many businesses, this means that the financial investments they’ve made on the employee to this point will be lost as turnover costs continue to skyrocket.

The actual benefits of function-specific training are often seen more clearly with new employees within a business. According to a report from Gallup, roughly 87% of millennial workers stress that professional development is one of the most important aspects of a job. Since these employees are the key to building the future workforce, it often puts employers in a very advantageous position. Not only can many of these new employees be obtained at a fraction of the cost of their seasoned colleagues, but they can also be molded into ideal employees through an excellent training program.

Function-Specific High Employee Costs
Function-Specific High Employee Costs

Function-specific training is also an ongoing dedication to employees that have been with the company for an extended period. This is particularly beneficial if a business has a graduated pay model that rewards years of service. By providing the appropriate training to expand the knowledge and skills of an employee, they are more likely to meet the cost or pay draw that they are entitled to within the company. In addition to this, these tenured employees can also help further train new employees to advance productivity and bridge further any skills gaps.

Perhaps the best way to ensure training is as effective as possible and high employee costs are kept to a minimum is partnering with an experienced staffing provider. Certified Source offers our clients performance based staffing options designed to meet their unique goals and price points; however, our team can also ensure that employees receive the function-specific training they need to thrive within a business.