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The Cost of Hiring

The Cost of Hiring 

Hiring a new employee is a necessary part of business.  Perhaps a position opening is due to growth, overall company vision, or turnover.  Whatever the reason is, there are both hard and soft costs associated with hiring a new employee. 

SHRM estimates that the average costs of a new hire is $4,700.  An organization can plan for this cost, but there is more to the hiring than simply paying this dollar amount. 

What are the kinds of costs? 

Costs that can be accounted for in advance, or hard costs, encompass job board postings, recruiting fees, salary, hiring bonuses, relocation costs, equipment, software, and other tangible and predictable costs.   

Costs that are less tangible, or soft costs, can be significantly more, and harder to account for.   

“When all of these professionals are meeting with potential candidates, screening applications, scheduling a few rounds of interviews and making final decisions, it takes away time from accomplishing organizational goals/outcomes, which then certainly ties to ROI [return on investment],” said Ankit Shah, supervisor of talent development at Columbus State Community College in Ohio.” (Navarra, Katie, The Real Costs of Recruitment, 2022) 


Depending on what a company uses, the costs of job posting, software licensing fees, pre-employment screening, background checks, employment verifications, and recruitment can be typically accounted for in terms of flat dollar amounts. 

For example, the cost of a background check may cost between $20-$100 per hire, depending on what screens are being run (such as searching multiple states or driving history), and can be a line directly associated with the cost of hire. 

Another cost that can be predicted is adding a new employee onto the current Workers’ Compensation plan.  Costs vary based on the age of the business, experience modifications, loss history, safety records and procedures history.  The workers’ compensation rate is multiplied by an employee’s gross earnings.  In this blog, “Workers’ comp rates are expressed as a dollar amount per every $100 dollars you spend on payroll per class code. 

So, if your rate is $10 per every $100 for your restaurant employees – with a total annual payroll of $300,000 – your workers’ comp costs for the year would be approximately $30,000” 

Cyber liability costs have become very important to business, and that can add thousands to tens of thousands of dollars annually depending on the size of your company.  If there is a breach, however, deductible costs can be $10,000 per year. 

There are also a number of hours that can be accounted for and applied a monetary value to.  For writing a job description and placing the advertisement, there can be a cost of 3-5 hours for an HR team member to complete.  If you are utilizing a boosted source for posting the job, such as Indeed or ZipRecruiter, there are fees in addition to the time spent. 

Even though these costs have some predictability, they can compound significantly to impact a business’ bottom line.   

Soft Costs 

Complicating the ability to make cost predictions, there are several ripples to hiring a new employee that can’t be accounted for.  The emotional toll of hiring, the impact on productivity, the alterations made by adding a new person to a team, and the cost of lost candidates can significantly impact the overall cost. 

An example of the impact of productivity can be described as the disruption of the flow of how things get done in an organization.  Training a new employee can have a lot of variables as well.  Hours of training are hours where work is altered from the typical flow, impacting the overall productivity. 


Time is always in high demand.  To receive a return on investment as quickly as possible, there are steps in efficiency that an organization can take to reduce time spent on the tedious but necessary steps that come with employee hiring.  Using an all-in-one solution like Employer Solutions Staffing Group can greatly reduce the bottom-line costs, freeing up an organization to focus on the value that they provide both internally and externally. 



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