The real costs of recruiting a team member
It may sound simple, but hiring the right people for your company is harder than it sounds.
In addition to finding people with the right skills for the job, you have to ascertain that they’ll also be a good fit for the organisation and reflect your brand values. Once you’ve found the right people for the job, they have to follow an induction and training process before they can be fully up to speed. Of course, all of this has a cost, and according to a report by Oxford Economics, it won’t come cheap. On average it takes employees up to 28 weeks to reach their maximum potential, something which costs around £25,000 per person. Add on logistical costs and you’re looking at a business outlay of around £30,000 for every new employee.
These costs are high- but they can get even higher if you’re experiencing a high turnover of staff. A study by Bureau of Labor Statistics shows the average length of time a person spends at a company is now 4.6 years– a far cry from the ‘job for life’ expectations we used to have. For some companies, the turnover rate is much higher, with many employees leaving after just one year in post. When you calculate the time, effort and expenditure of employing a new member of staff, it quickly adds up. But what are the real costs? And how can you manage these to ensure better retention of staff in the long-term?
Right from the outset, employers have a duty to ensure that new recruits are fully equipped to hit the ground running. They’ll need to be onboard with all the company processes and procedures, as well as gaining insight into the brand’s culture and direction. A good induction programme is an essential part of a new employee’s journey and can help set the stage for future working practices. One study shows that positive experiences during onboarding can increase productivity by up to 20%, demonstrating the benefits of investing in your programme.
While the induction process will incur some costs, it does go a long way to improving retention and staff engagement in the long-run.
Investing in your training programmes is a positive move as it demonstrates commitment to your new staff. But training and development can be a huge cost to the business, so it’s important to get it right. Interactive learning has been proven time and time again to be the more efficient technique for knowledge and development, so make sure you’re utilising it. Whether it’s through interactive games, treasure hunts or team building activities, you can find something within your budget that will suit your brand. Technology allows for greater flexibility, so it’s worth investigating this when you plan your training strategy.
When you hire good people, you’ll want to reward them fairly for their efforts. Staff benefits and national insurance taxes are always going to be a necessary business cost, but it’s one investment that will pay off. A study by Principal Financial shows that companies offering an attractive benefits package have significantly lower turnover rates. While size of profit margin of your company may dictate the amount you can pump into your scheme, there’s nothing to stop you personalising it to deliver what people want. If you’re at the very early stages of setting up your business, you could increase retention by offering new recruits a stake in the company.