Certified Source Blog
The Costs of Onboarding a New Employee
Although many businesses may equate the cost of hiring a new employee to the salary and benefits that they offer them, there is likely more to the equation than meets the eye. Between interviews, background checks, and all of the included paperwork, the average cost per hire could cost almost $4,000; however, this number can vary depending on the job level and the hiring practices that are currently in place. In this article, we will look at some of the hidden costs of onboarding a new employee that may be overlooked in the hiring process.
Most businesses will hire a Human Resources employee that is responsible for benefits, tax forms, payroll, and monitoring employee adherence to the handbook. However, these employees will generally also be responsible for vetting and onboarding new employees. What most businesses may not realize is that, depending on how many new employees they are onboarding annually, this cost may become very high. For instance, if an HR professional makes around $20/hour. 20 new employees are hired each year and each new employee requires 10 hours of work to process, you are looking at nearly $4000 alone there just to onboard new employees.
One of the easiest ways to minimize this cost it to digitize all onboarding paperwork to eliminate the need to transcribe this information and expedite the review process. One other consideration is to have new employees complete all required paperwork before arriving on their first day, so it is immediately in the hands of the HR team for processing while the new employee begins training. Don’t waste salary time completing paperwork with new employees when it isn’t necessary. This will help to cut the costs of onboarding all new employees.
Early Turnover Costs
While it may not seem common, many businesses find that, once they spend the time and money onboarding a new employee, they lose them within a few weeks. Often this is because the job description wasn’t clear, they were sold a position that doesn’t meet their expectations or they were offered a position with another organization. While this may not seem like a big deal, all of the resources you had diverted to that employee are now lost as well as any initial costs that were accrued to train and onboard them. If this happens multiple times a year, the costs could be exorbitant for a business with limited capital.
For this reason, having a great hiring vetting strategy in place is critical to ensure that the employee will see long term placement with the business and easily assimilate into the company culture. One thing that often helps with this is having a structured orientation process that sets clear expectations for new employees. This will help weed out possible sources of early turnover quickly before too much capital is invested in them. When paired with the tips for reducing administrative costs, you could easily limit the financial impact.
At Certified Source, we go above and beyond to make sure our clients are protected and experience service excellence. All of our staff members are Certified Staffing Professionals credentialed by the American Staffing Association. For more information, view all current job positions available.