Recruitment Costs Per New Hire

[CAC]

I am a HR Manager working in a manufacturing company in the SE suburbs of Melbourne with 250 employees nationally.

I am measuring the cost of recruitment per new hire and am trying to establish an industry benchmark. Specifically, I have taken the total cost of recruitment YTD which include agency fees, advertising, etc. only and divided this figure by the total new hires YTD. Costs incurred beyond this point such as induction, training, the productivity curve, etc. are excluded. Are you able to help me in determining this benchmark?

[Lisa-Jane]

Hi CAC,

It is hard to estimate without knowing your processes.
For example if I looked at the cost of inducting a new employee for my current organisation I would include the following:
7.5 hours wages for the presenter and on average 6 attendees at the monthly Orientation session.
Each new employee has on average two buddy shifts when they commence employment (wages for two people doing the same job for two days).
Mandatory training not included in Orientation such as food safety (one hour minimum).

Therefore to Induct one new employee for us, we are looking at paying the equivalent of seven days of wages. It could be more expensive if the training is conducted by trainers external to the organisation. The above is just a rough calculation.

Regards,

Lisa.

[CAC]

Lisa, thank you for your prompt reply however I must not have been clear.

At the moment I am only concerned with how much it costs to get an employee IN the door. Therefore, what I really would like to know is what is the spend on the advertising, cost of recruitment agencies, medical, etc. up to but only including the employee's commencement date expressed as a cost per hire.

For example, I have taken these costs and divided them by the total new hores for the year.

My next challenge will be to determine costs AFTER an employee comes on board.

Chris

[Moz]

Chris,

Recruitment agency costs usually vary depending on the salary level of the position. For a $50k hire the fee might be $7500, whereas $60k hire would be $9000 (assuming a 15% fee), although if pushed they would probably fix a fee per placement for all placements within a salary band or range.

Likewise advertising costs can vary dramatically depending upon where you advertise - i.e $150 for a Seek ad vs $6000 for a display ad in a major newspaper.

You could possibly get an idea what similar companies were paying external recruiters in percentage terms and come up with an average percentage fee which could then be applied to salary bands.

Another thing to consider is that some companies outsource all their recruitment, some do it all themselves and other use a mix of the two.