How to Calculate the Cost of Recruitment for your Business

How to Calculate the Cost of Recruitment for your Business

Recruiting is one of the most important activities that any small business engages in. Without the ability to recruit the right people, it is almost certain that an organisation will not be around long, since the people who are driving it will not be capable of meeting their necessary goals. On the other hand, the right people can take your business to heights that you never thought possible.

This is why recruiting is so important, and why so many businesses invest a tremendous amount of resources in making sure that they recruit the right people. The cost of recruitment for your small business may be different than the cost of recruitment for other companies, but it is important that you know what kinds of costs that you have to incur in order to find a top-notch candidate for your job opening

Departmental Resources

Before you can even begin looking for a new person to fill a job opening, there are resources that you must commit to the recruitment process. Namely, you will need to meet with your human resources department and decide on exactly what kind of job responsibilities and traits the new employee will require. Everyone who is involved with this process will have a slightly different view of the matter, but eventually a single job description has to be agreed upon and finalised so that the process can move on.

After that, you have to post the job descriptions in the right places, making sure that they select areas where their opening will get the most response. This selection process alone can be difficult. Thanks to the Internet, there are more ways than ever for you to meet prospective candidates for your job openings, which can be a good or a bad thing depending on how many applicants you anticipate having to filter through.

The Time to Hire

Even after a job description has been decided upon and the position has been advertised in the right places, someone still has to be responsible for keeping up with the posting, responding to applicants, going through resumes that are received, screening, and so on. The reason that this time is actually a significant cost of recruitment for your small business is because it must be exclusively devoted to hiring. When you are going through resumes or closely analysing a candidate’s history, it is hard to focus on anything else. This is why many companies have large, dedicated departments to make sure that their company hires the right people. The longer your hiring process goes on, the higher this specific cost of recruitment for your small business becomes.


Indirect Recruitment Costs

Two other recruitment costs that might not be easily quantifiable but are still important are the cost of keeping the position open, and the cost of missing out on the right person by making a mistake in your recruitment process.

The cost of keeping a position open can sometimes be quantified, depending on the nature of the position. For example, if an average sales rep in your company or industry brings in a certain amount of money each year, you can probably get a ballpark figure of how much your company is losing from keeping the position open by subtracting any salary and training costs from this annual sales rep’s revenue contribution. It is harder to determine the costs of keeping positions like project managers and accountants open, but it is safe to say that they fulfill an important function at any small business.

The other more theoretical cost of recruitment for your small business is the cost of missing out on the right person. Imagine if you might have been able to hire a superstar sales rep who would have brought in much more money than anyone at your company currently; however, since you weren’t present on the right recruitment avenue, you missed out. This is one cost of recruitment that can be incalculable, yet extremely damaging for a business over the long haul.

The cost of recruitment for your small business may not be something enjoyable to spend money on, but it is still important if you want to find the right employee for the job. By gaining a deeper understanding of the particular types of costs that your small business is likely to experience during the hiring process, you can give yourself a better chance at successfully executing an efficient job search that culminates in the perfect new hire coming to work at your company.

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