Hiring a new employee is always fraught with a certain degree of uncertainty.
Think about the kinds of questions you ask yourself when you make a new hire.
- How do I know the person can actually do the job?
- Will the new employee live up to our expectations?
- Is there something I missed during the interview process?
- Is the information the new employee provided fact or embellishment?
In addition to the uncertainty, there is also the nagging question “How much should I be spending when I hire new employees?”
According to a recent SHRM survey, the average cost to hire a new employee is $4,129. Others use percentages to estimate hiring and replacement costs. For instance, the Work Institute suggests an estimate of 33% of an employee’s annual salary – resulting in a cost of $15,000 to replace an employee with a salary of $45,000.
Respected business writer Annie Mueller, in an article that appeared on the business investment website, Investopedia, also provides interesting insights about the cost of hiring employees. How much you spend, as the article implies, is not as important as the effectiveness of how you are spending your hiring dollar.
We believe the answer is quality of spending, not cost of spending. The best employment tests, for instance, typically pay for themselves in turnover cost savings alone. And that’s not including the additional returns resulting from increased employee performance and productivity.
Spending your employment dollars wisely will pay off big dividends and put to rest those nagging uncertainties that often plague the hiring process.
And spending dollars wisely is a key reason clients have trusted Employment Technologies for more than 20 years in helping them hire people who perform better, stay longer, and contribute more to the bottom line.