Cost of recruiting a new employee in the U.S.

29 of August, 2022

It takes money to make money. In order to recruit the best talents for your company, you need to invest time and money in the recruitment process. But what is the real cost of recruiting new employees? Many expenses must be taken into account to determine how expensive recruiting really is.

What are the costs of recruiting new employees?

A recruitment process comprises many direct and indirect costs that you need to be aware of in order to correctly estimate its cost. Doing an HR audit is a good way of reviewing all the aspects of your HR department and see what costs could be optimized. Here are the main costs induced by recruiting that you need to have in mind:

Recruiter remuneration

If you have an internal recruitment department, then this cost is one of your main ones. It consists of the salaries perceived by your internal recruiting staff. To make sure you’re not spending too much than you have to on internal recruiters, you should measure your HR staff to employee ratio and see if it is within your industry’s average.

Outsourcing costs

Some businesses are too small to justify investing in an internal recruitment department. If you don’t possess your own recruiting team, you have to hire the services of a recruiting agency.

Employee referral bonuses

If you offer bonuses to employees who refer qualified candidates to the hiring team, then you should include them in your recruiting costs.

Digital recruitment marketing

This encompasses the expenses produced by digital advertising on social media, online job portal fees, as well as the costs related to the design and maintenance of the careers page on the company’s website.

Career events

Participating in job fairs or university recruiting events comprises certain costs, namely: booth fees, the printing of material, signage, etc.

Evaluations and background checks

The recruitment process also involves assessing the candidates’ skills, hiring third parties to conduct background checks, and in some cases hiring a clinic to perform drug screenings. All theses expenses are part of the cost of recruiting new employees.

Training and onboarding

Every new hire needs to adjust to the company’s way of operating and requires training to acquire the necessary skills. Other employees will then have to dedicate some of their time to training the new employee. Training can be expensive – you could have to spend 38% of an annual salary on a new hire’s training.

Don’t forget about internal staff time costs

Recruiting doesn’t cost only money, but also time. Several of your company’s roles spend time and energy on recruitment processes. If your staff comprises internal recruiters, then 100% of their working time goes towards recruiting efforts. If you outsource recruiting, then part of your HR team must manage the relationship with the agency. Other roles that you must consider are those of managers who are involved in the recruitment process for their team, and the communication team that takes care of recruiting campaigns on social media and on the company’s website. The time spent training the new hire (both the new employee’s time and their mentor’s) must also be taken into account.

So, how expensive is recruiting?

Various studies have come up with different numbers. The Society for Human Resource Management has found that the average cost to recruit an employee in the US is $4,129. However, the National Association of Colleges and Employers states that the cost of a new hire actually amounts to $7,645 on average.