The Average Cost to Hire and Onboard an Employee


iring, onboarding, training… New employees don’t come cheap to businesses!

With workers reshuffling at unprecedented levels, chances are your business has seen some departures that you’re looking to replace.

If so, you may be wondering how much this is going to cost, and how you might be able to reduce the cost of these transitions.

Keep reading to find the average cost to hire, onboard and train new employees, and the most effective ways to reduce these costs.

Download FREE: The Ultimate Guide to Onboarding

How much does it cost to hire and onboard a new employee?

How much does it cost to hire a new employee?

According to Glassdoor, the cost to hire a new employee is approximately $4000, and takes 24 days. The cost of hiring includes all the required activities and purchases up until the employee’s first day.

A variety of costs play into the cost of hiring a new employee, including:

  • The cost of placing advertisements on job sites or board
  • Administrative costs to filter candidates, conduct interviews, and prepare and process necessary hiring paperwork.
  • The cost of new hardware (laptop, computer and/or mobile), stationary, workspace and/or other equipment.
  • The cost of new software accounts and logins.

Your business may also have additional hiring costs such as background checks, uniforms, pre-hire assessments or personality quizzes.

How to reduce the cost of hiring a new employee

Did you know that as many as 1 in 5 new employees will leave in their first 45 days? The reasons for this can be varied, but it can easily double or triple your costs if you need to repeat the hiring process.

Fortunately, there are a wide range of methods for reducing the cost of hiring an employee.

Work proactively

To start, there are several proactive steps you can implement. Start by maintaining positive relationships with your employees. Happy employees are less likely to leave, and more likely to give advance notice if they do depart. This can give you more time to pursue less expensive hiring methods.

Avoid expensive job listings.

Posting a job advertisement can cost hundreds or thousands of dollars, depending on the location, features and number of times you need to post it.

To avoid paying this cost, you can use no-cost channels that you own to advertise your position. Tap into your company’s social media pages with posts announcing your vacant position, and encourage your employees to share your post. 

It’s also a good idea to maintain an active careers page on your website to catch job seekers who may be actively seeking to work at your company.

You may also like to start an internal referral system, whereby rewards are given to employees who are able to refer a candidate who is successfully hired.

Discover how to reduce the cost of hiring and onboarding a new employee

Be clear about your role

Slapping together a quick job description without stopping to clearly and thoughtfully define exactly who you want to hire can slow your hiring process down immensely.

An unclear or inaccurate job description will inevitably attract the wrong candidates, wasting the time of your recruitment staff by forcing them to wade through irrelevant resumes.

The hiring process can also be slowed down if the team members involved in selecting the candidate (including final-say managers) are unclear or disagree on the qualities they want in a candidate.

Be decisive

With a clear role description in mind, the final step for reducing the time (and thereby cost) of hiring is to be very decisive about candidates. Don’t waste time on candidates that don’t fit your role, or that you’re umming-and-ahhing over. 

Move quickly on good candidates, as they may be snapped up by other companies if you drag your feet. Cut out any unnecessary or overburdensome interviews or application projects. This may require combining interviews to include several managers instead of requiring a candidate to attend multiple one-on-one meetings.

Lastly, present valuable offers. Attempting to low-ball your salary offers as a beginning to salary negotiations may result in the candidate feeling as if you do not value them, and accepting a better offer from another company.

Reduce the cost of onboarding by investing in online onboarding training for new employees.

How much does it cost to onboard a new employee?

Onboarding is the process of introducing a new employee to your company culture, and training them to reach full productivity.

The process of onboarding begins on an employee’s first day. For some companies, they may even begin before then in an attempt to get their new employee up to speed even sooner!

Studies often place the cost of onboarding somewhere between 50% and 90% of that person’s salary for one year. While this may seem extreme, it takes into account that onboarding can take 6, 9 or 12 months, depending on the role.

Why does onboarding take so long? In their first 30 days, an employee works at just 25% of their full potential productivity. This number steadily creeps up over time depending on the complexity of their work and role.

How to reduce the cost of onboarding new employees

While there may be a few incidental costs to onboarding a new employee (such as free lunch on their first day, or a welcome gift package), the vast majority of the cost of onboarding a new employee comes from two sources:

  • Reduced productivity until the new employee is up to speed
  • Time spent by managers and colleagues to train the new employee.

In both these cases, reducing the time to onboard will also reduce the cost of onboarding. With a few tactics, you can easily reduce the time to onboard.

Use a first-day onboarding checklist

Using a clear, repeatable checklist to organise basic onboarding and orientation tasks is important for streamlining the onboarding process. HowToo has a free onboarding checklist that you can use to onboarding both remote, and in-office employees.

Free onboarding checklist! The Ultimate Guide to Onboarding. Download now.

Create onboarding courses

Did you know that using digital eLearning courses to train employees is three times faster than relying on face-to-face sessions?

Instead of sitting your new employees down to experience the same presentation over and over about your company history, or basic questions, why not convert your presentation to an interactive online course?

Online courses can be completed on computers, tablets or mobiles and therefore can easily be sent to new employees working remotely. Unlike presentations, they can be reexperienced as many times as needed. Digital courses can also give your new employee some much-needed social down time between overwhelming meet-and-greets.

Want to save time and money on your onboarding? Create an onboarding course in minutes with HowToo’s free Onboarding course template, free on every HowToo plan.

Create an onboarding program

A study of over 1000 new employees by BambooHR revealed the top three things workers want from their onboarding period:

  1. Organised, relevant, and well-timed content
  2. A thorough onboarding process that lasts more than 1 week
  3. A mentor or buddy

While organising a program that lasts more than 1 week sounds like extending the period, rather than shortening it, it’s important to think about how this might relate to the first point.

Chances are, you’ve experienced an “onboarding” in which a huge amount of information was dumped on you in your first week, and then you were left to your own devices. Too many businesses are guilty of this!

The result is that new employees are overwhelmed by all the information, and quickly forget much of what was dumped on them. This then increases the time it takes for a new employee to reach full productivity, costing the business potential revenue.

Instead, businesses should carefully think about the information that new hires need to know in their role, and devise a program to build up this knowledge over an achievable amount of time.

A good way to structure your onboarding program is with the 70-20-10 model, in which 70% of your program is on-the-job or experience-based learning, 20% is mentor/buddy-led learning, and 10% is from set training courses.

Hiring and onboarding new employees doesn’t need to be expensive

There are many ways to reduce the average cost to hire and onboard a new employee. A great place to start is by converting and automating repetitive training with online training courses.

Explore HowToo’s free Starter account today and claim your free onboarding course template.

Company training made easy with HowToo. Get Started free.
Feb 28, 2022

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