How to Determine the Cost of an Entry-Level Hire

When deciding whether or not to take on a new entry-level employee, it is important to look at how much the hiring process will cost you, beyond simply looking at entry-level salaries.

In 2012, the NACE Recruiting Benchmarks Survey found that the average cost per recent graduate hire for U.S. companies was $5,134, though large companies (over 20,000 employees) averaged $2,885.68. These figures were determined by adding up all of the internal and external costs required and then dividing by how many hires are made in a given time period, according to the cost-per-hire standard set by the American National Standards Institute and the Society of Human Resources Management.

cost infographic

External costs are money spent outside the company on recruiting efforts during the time period in question. These can include everything from advertising and job fair costs to travel expenses incurred in the search for the perfect candidate. Anything spent within the company in order to recruit potential hires are internal costs. These are things like salary and benefits for your recruiting staff.

Of course, this method has some definite problems. For one, you cannot compare your cost per hire to other companies’ simply because different companies use different methods and incorporate different costs into the figuring. Another downfall is that if most of your internal and external costs are fixed and you have a fall in recruiting, your cost-per-hire will be extremely high.

Dr. John Sullivan encourages employers not to use their time calculating the cost of hiring and instead put more effort into measuring the quality of potential candidates. He points out that finding the best and brightest is often expensive, and cheap recruiting can lead to poor experiences, both for candidates and managers.

Don’t just focus on the costs. See the value.

Check out our free template guide for determining the cost of a hire by clicking the download guide button below!

Image provided by JMR_Photography via Compfight cc
Infographic created by Liz LeCrone

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