How Much Does it Cost to Hire a New Employee?

Do you know how much it costs to train your new employees? If you’re anything like countless other organizations, you don’t have a firm grasp on this cost.

What factors into the cost of training new employees?

If you start with the cost to recruit new employees and add in the administrative hours spent on the hiring process, you’ll have a starting point for determining how much you spend per new employee. The harder part to factor in is how much actual training each new employee will need—this will be based on how skilled that person is at the time of hire.

Say, for example, that you promote an existing employee to a management role. If that person has never held a management role before, he or she is likely to need some training, perhaps extensive training on the transition from co-worker to manager. On the other hand, if someone held a similar position at another company, maybe new employee orientation and a brief overview of the job is all that’s required.

Don’t forget…

While the cost associated with recruiting and hiring new employees might be obvious, there are some less obvious costs that should also be considered. Things like instruction materials, equipment and supplies used, and the time spent on training (make sure to consider the time the new employee spends training as well as the time a manager spends facilitating the training). If employees are required to travel off-site for training or conferences, travel time, as well as food and entertainment costs must also be added.

Putting it all together

Now combine the obvious costs with the costs you had to really think about and add that total to the person’s annual salary and you’ll arrive at the total cost of hiring a new employee.

Are you surprised by the number you arrived at? Read more about reducing your employee turnover by retaining your employees for the long-term.