Assembled Workforce Hiring/Search Costs: Double-checking Management’s Numbers

There are multiple variables that impact the cost to replace professional employees.  One of the first to examine is the cost of hiring through a recruiter.  Recruiter fees will typically range from 25% to 33% of the employee’s salary.  An employer may tell you that he’s been able to hire for only 15% to 20% in recruiter fees.  And, maybe he has.  But, the difference in rates reflects the same difference in quality that it does in the appraisal field.

To be fair, a second variable is whether the employer will even need to use a recruiter to hire.  On the whole, only about 5% to 10% of all positions are filled through a recruiter.  Which takes us to the next variable: How difficult is it to find and hire a replacement for this employee?

Answers to this question will vary according to who is answering it and the industry and location in which the company operates.  Once the employer has offered his assessment about the degree of difficulty, ask how recently he actually had to fill such a position.  Ask how long the position stayed vacant during the hiring process.  It shouldn’t be surprising that the higher the position in the hierarchy, the more highly skilled or the more distinctive the job functions, the greater the likelihood that a recruiter will be involved.

You can double-check your clients’ perspective in other ways:

Go to the website of the National Association of Personnel Services NAPS) and click on the Directory link.  There you will be able to search by specialty area and find a recruiter who can contribute perspective to your appraisal process.

Using a website called Simply Hired, you can enter the employer’s job title and see the online ads for others who are trying to hire the same person.  This will give you a better picture of the demand for this job and whether your client’s recruiting costs may end up being more than he thought.

Even if the employer insists that he can successfully hire by using help-wanted ads in newspapers, it’s helpful to be skeptical.  You might want to inquire, for example, as to how many responses he has to wade through in order to find the candidate worth interviewing.  That represents a cost on top of the cost of the ad, itself.

The costs associated with interviewing and testing candidates are easily overlooked because they are typically part of someone’s larger responsibilities.  By the time the employer invests an hour or so of interviewing time of three or four highly-paid employees, the costs can add up.  Remember that these costs accumulate for every candidate, not just the one that is successfully hired.

The more sources you have for information to double-check your client’s numbers, the more reliable your analysis will be.