Hidden cost of recruiting more than £26,000 per hire

    The hidden expense of recruitment is costing businesses over £26,000 per hire.

    “It’s not the cost of advertising or paying a recruitment fee to get someone in the business, it’s all of the things that we are not tracking that start to really hit the bottom line,” Teresa Mitrovic, Professional Performance Consultant, TM&Co said at last week’s HR Game Changer Conference. “But we don’t see it because it’s not a cost that we have to start paying immediately,”

    “It costs, on average, £32,000 to recruit a new team member, and 82% of that cost is hidden cost,” she said at the event held by myHRcareers.

    Mitrovic stated that businesses that have sustainable engagement have 44% higher retention rates and are 30% more profitable and 50% more productive.

    She blamed a lack of employee engagement for making businesses less sustainable, encouraging companies to “think in terms of sustainability of employees’ careers”.

    “We’ve got younger generations coming into the market as well, that are less resilient than hardened corporate professionals,” she added. “Meaning we need to protect the knowledge that businesses have.”

    Image courtesy of Flickr user KarenVBryan

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    Comments (7)

    • Hollie
      Mon, 15 Sep 2014 12:00pm BST
      What exactly is the source of these findings? Figures are apparently 'based on research released earlier this year in the UK' - in what report/research paper did these figures appear?
    • Vincent Belliveau, C
      Vincent Belliveau, C
      Mon, 15 Sep 2014 9:34am BST
      If the cost of recruiting externally is now as high as £26,000, organisations would do well to remember that some of their best hires may be right under their noses. According to pan-EMEA research undertaken in conjunction with analysts including eLearnity, only half (54%) of organisations recruit from the internal talent pool, despite over three quarters (77%) believing that internal recruitment is critical. If HR professionals are to avoid incurring high recruitment costs, they should make sure that they have a healthy balance of looking outwards and inwards for their new recruits.
    • Teresa Mitrovic
      Teresa Mitrovic
      Fri, 12 Sep 2014 4:42pm BST
      Hi All

      It's great to see this article getting some debate. To add context, it reflects a single aspect of a 30 min talk on engagement I gave in London last week.

      The figures (based on research released earlier this year in the UK) are an average, with costs varying by pay grade and industry. The general theme across pay grade and industry was for every £2 you could 'see' there was £8 you might not track. While this isn't news to a lot of people, the fact that the room stirred (and that I often get startled responses from HR) indicates not all businesses are tracking the full impact of leavers yet.

      Paul's right in listing all of those overlooked areas where costs arise - the productivity lag is also experienced by team and line manager through time spent interviewing and on-boarding new hires.

      I agree with Andrew too that (ideally) businesses should have a handle on the visible AND hidden costs of recruitment (I'd add absenteeism and - in a perfect world - presenteeism to that list too). The reality is that not all businesses do. Yet.

      The unfortunate thing is that there are businesses out there measuring all sorts of good stuff - like engagement - while overlooking a mountain of untapped information about absence and leavers that has the potential to reshape both their cultures and their performance. On the upside, as long as they refrain from measurement, those of you who are tracking it have the upper hand.

      The bottom line is that when the focus is on delivering more value with less resources, there are many other - sometimes less obvious and smarter - ways to deliver exceptional results, effectively and sustainably.

      At the end of the day, what matters isn't what I say about engagement, or costs to hire, or maxing performance, or anything else. It's about what you - and others like you - are doing, wherever you are now to shape your business for the better.

      If you're up to sharing, I'd love to hear it!

      Thanks for contributing to the conversation,
    • MG
      Thu, 11 Sep 2014 3:22pm BST
      I find it suprising that there isn't more detail on what that 26000 breaks down into.

      And i followed a social media share link to come here !

      Are people realy sharing this
    • Paul Farrer
      Paul Farrer
      Thu, 11 Sep 2014 2:10pm BST
      Hi Andrew, long time no speak.
      Couple of things:
      1. The conference was in NZ which may explain the very low figure quoted
      2. In my experience employers haven't got the foggiest idea what the true cost of replacing a leaver is.
      FD's seem to think the cost is recruitment fees, recruitment advertising and cost of internal recruiters. These are costs although as always the language is wrong because it is an investment in recruiting talent and should depreciate in line with average tenure
      The invisible costs (but trackable) are:
      Decline in performance of leaver
      Opportunity Cost while position lies vacant (if no cost no need to hire)
      Time taken to develop joiner to acceptable productivity
      Opportunity cost of management time in recruitment, training & development.

      In my experience the highest cost is the opportunity cost while position lies vacant. Of course this doesn't appear on the FD's spread sheet in a place they look for it. It is a top line item (the value of the role to the business) that hits the bottom line.

      Look forward to listening anyone wanting to debate this

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