It’s no secret that hiring new talent is a huge undertaking for any company, both in time and resources. On average, it costs a company around $4,000 to hire a new employee, but what about the “hidden cost of hiring?” We’re using our over six decades of industry knowledge to break down the hidden cost of hiring to help you recruit better.
Onboarding materials and administrative processes are a huge hidden cost of hiring employers may not always think about. Onboarding requires a lot of paperwork, including benefits paperwork, tax forms, background checks, employee handbooks, non-competes, etc. While these may seem like minimal costs and may not break the bank, it’s still affecting your hiring budget. Depending on your onboarding process, there are also costs in getting your new employee set up with specific tools, programs, or equipment, and some companies provide “welcome kits” for their new hires. These are all costs that are essential to keeping and retaining your new hire but can quickly add up when you consider them as part of the hiring cost.
Employers really should consider how much the administrative processes cost when it comes to actually processing the onboarding paperwork. One way you can try to minimize costs is to digitize your onboarding paperwork completely. There are plenty of options for HR software programs to fit most budgets that can help streamline the paperwork process and make it digital. The benefit of digital paperwork is that your new hires can “self-service” themself on their own time after the job offer has been made and before their start date. According to Aberdeen, “best-in-class” companies are 53% more likely to begin the onboarding process before day one. This “self-service” means there is less time your administrative and HR team have to spend going through the onboarding paperwork process and can spend more time helping the new hire get acquainted with the position and organization.
New Hire Turnover
According to a study done by SHRM, nearly 1 out of 4 new hires will quit their job within the first six months, and nearly 25% of new employee turnover happens in the first 180 days after hire. It takes an average of 42 days or almost four weeks to recruit and hire a new employee. Protect your investment by preventing new hire turnover. If this happens, not only can it be frustrating from a productivity standpoint, but also from a financial one. If you hire and lose multiple, or even one new employee a year, the financial kick-back can be devastating to your bottom line.
To help mitigate new hire turnover, all the research points to having a structured onboarding process. This goes back to digitizing the paperwork and creating as much “self-service” for the new hires do complete before their start date as possible. A case study by Corning Glass Works, for example, found that employees who attended a structured orientation program were 69% more likely to stay with the company for three years. The sooner your new hires can learn the job and integrate into the team and company culture, the better for retaining your new hires. Employers should remember that proper onboarding sets clear expectations for your new hires and equips them for success.
Slowed Productivity of New Hires
Another hidden cost of hiring is the slowed productivity of new hires. A new employee needs time to be trained and has to learn the duties associated with their role. During this time of learning and training, their productivity will be slowed, and other employees will have to take time away from their respective roles to train the new hire. Employers should expect new hires to get less tangible work completed since they are taking time to learn their responsibilities, figuring out communication flows, and forming relationships with their new co-workers. For example, a new business development representative might have to spend more time studying an existing account before reaching out to them. Some research suggests it takes as long as eight months for a new employee to become fully productive in their role.
Strong Employee Onboarding is Crucial
Again, we want to point back to how crucial the onboarding process is to the success of retaining your new hires. During the onboarding process, simply covering the basic paperwork is not enough. Employers should include check-ins, mentoring, and training programs as part of their onboarding process to ensure their new hire is succeeding and has the means to succeed.
The next time it’s time for your company to recruit and hire a new employee, think beyond the general recruitment costs that come along with it. Employers need to remember that there are hidden costs associated with onboarding and retaining your new employees. While it may seem like your company is spending more money upfront, it will be far less than having to start the process over if your new hire doesn’t stay.
About EG Workforce Solutions
We’ve been in this business for decades and have developed a deep network of professional connections. Whether they’re companies looking for talent, job seekers looking for work, or an up-and-coming store in need of some temporary help, we know the right people to bridge the gap between the hiring and the hired.
But what’s more, we get to know people. From employers hiring to candidates looking, we take the time to listen and learn. We hear your likes, talents, and needs. We gain an understanding, and with it, we’re able to facilitate lasting relationships between businesses and people. Contact us today to see our consultative approach to hiring solutions.Back to Blog Page