🛡 Direct and Indirect Costs of Hiring New Employees
#Freelance
🔺 The simple definition of hiring costs are any budget that goes towards onboarding new workers to your business. Cost-per-hire is a commonly used metric in HR and Recruitment, but different companies include different line items in their calculation.
Direct Costs of Hiring New Employees:
🔺 Advertising and Recruitment: These are the most obvious costs of making a new hire. Posting the position on job boards, working with recruitment agencies, or using marketing efforts to help find the right people all costs money, and these can stack up fast.
🔺 Hiring Process Expenses: In this category, think about background checks, compliance screenings, technical assessments or the cost of interviewing potential candidates and freeing up interview panels to make that happen.
🔺 Administrative Costs: Especially if you're hiring globally, there are additional direct costs to ensure the employee can legally work for your business, whether that's obtaining work visas and permits, or complying with local legal requirements in the hire's own home location.
Indirect Costs of Hiring New Employees:
🔺 Time Costs: By some estimates, finding and onboarding a new hire can take 42 days. During this time, the HR department and hiring managers are spending their time writing updated job descriptions, reviewing resumes and cover letters, sitting in on interviews, and having private evaluations.
🔺 Productivity Loss: Even once a new hire is chosen, the productivity loss keeps on rolling. When your existing team has to train and manage a new employee, their attention is split, and they have to move a lot slower.
🔺 Training and Onboarding Costs: When a new hire starts work, there’s so much more than handing them their badge! Think about setting up payroll, enrolling them in the benefits program, or updating records.
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