You begin the process of hiring a new employee with the idea that they’ll improve your company, hopefully by bringing an unmatched level of experience and expertise. But before you go too far down the hiring path, make sure you can answer this one very important question:
How much does it actually cost to hire an employee?
It’s one thing to understand the benefits of a new hire, but another thing entirely to have a firm grasp of the cost. If you don’t know the short- and long-term impact on your finances, you could end up regretting your decision.
The associated costs of hiring an employee
The exact cost of hiring an employee varies from company to company based on factors such as the position, industry, and process. Even so, several costs generally come to the forefront:
- Advertising the job opening: How will candidates know that you’re hiring? In addition to the careers section of your website, advertising the opening on job boards helps you reach a broader audience. With global hiring on the rise, you need to drive as many eyes as possible to your job opening.
- Background screening: Background screening and reference checks go a long way in helping you hire the right person for the job. It’s an additional cost, but it’s one that you should never skip. Doing so increases the risk of hiring the wrong person.
- Training: According to Indeed, the average training cost per employee is more than $1,200. It might be a good idea to account for this before you ever advertise a job opening, and also consider that it costs more to train certain types of employees.
- Salary: This is the biggest ongoing cost of hiring a new employee. Set a salary range upfront and budget accordingly.
- Benefits: Right behind salary is the benefits package you provide employees. This can include but is not limited to health insurance, life insurance, disability insurance, paid time off, and retirement account contributions.
Along with the above, don’t forget that time is money. It can take hundreds of hours to find and hire the right employee, which is time that can’t be used to complete other tasks.
Using an employee cost calculator
The best way to understand the cost of hiring an employee is to use an employee cost calculator. Not only does this give you a basic idea of the total cost of a new hire, you can also adjust the numbers on the fly to determine what does and doesn’t fit into your budget.
There are three important questions to answer before using an employee cost calculator:
- What country does the candidate reside in?
- Where does the candidate live within that country (e.g. state, province, etc.)?
- What will be the employee’s gross annual salary?
Once you answer these questions, you can then turn your attention to the cost of finding, interviewing, and hiring a candidate. The more times you go through the hiring process, the more you’ll realize what to do, what to avoid, and how to trim costs.
An employee cost calculator helps you better understand the upfront and ongoing costs of hiring a worker. This knowledge helps you decide if you should proceed with the hire, hold off for the time being, or adjust your offer terms and conditions. Check out our hiring cost calculators for locations around the world.
So, how much does it cost to hire an employee?
Unfortunately, there’s no simple answer to this question. It may cost one company $1,500 in upfront expenses to hire a sales development representative while another blows past this number on background screening costs alone.
Since there’s no right or wrong answer, you need to settle on a system that suits your company. The simplest and most effective solution is implementing a global employment platform that can assist with all the finer details.
Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
With the help of Oyster, you can hire candidates anywhere in the world without making any compromises. If you’re ready to take action, sign up for an account to learn how Oyster can help save you money on the many costs associated with hiring and managing employees.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
