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How much do companies spend recruiting new hires? (Please give a range from companies like Goldman Sachs to small startups). As many data points as possible would be great. Thank you!
Hello!
Thank you for your question about the recruiting costs, spend by large companies and small startups on new hires. The short version is that $4000 is the average cost of recruiting a new hire to a startup, $12500 per year is a conservative estimate of new hires' recruiting costs for larger companies. The new hires recruiting costs’ breakdown by types of jobs is as follows: Managerial and professional employees recruiting costs are near $7000, low-skill, manual laborers recruiting costs are around $2000, Professional/Trade - $5582, Manufacturing - $5159, Publishing - $4438, Arts and Recreation - $1394, Waste Management - $1320, Services-accommodation - $1062. Below you will find a deep dive of our findings, together with an explanation of what constitutes our approach to your request.
METHODOLOGY
First, we searched for industry reports, studies, articles on trusted media sites, information on corporate websites. After we researched in detail those sources, we can conclude that the cost of recruiting a new hire depends more on the type of job and the industry in question as opposed to the size of the company doing the hiring. That is the reason why we include in our analysis an average recruiting costs across all industries, as well as a breakdown by company size and by type of job. Note that we made a conservative estimation of the recruiting cost (for the year), spend by larger companies.
AVERAGE RECRUITING COSTS FOR NEW HIRES ACROSS ALL INDUSTRIES
According to the Society for Human Resource Management's report, the average cost-per-hire is $4129 and the average time, needed for filling a given position is 42 days. The Cost-per-hire indicator (CPH) is calculated as a sum of the external and internal costs, divided by the number of hires.
U.C. Berkeley Institute for Research on Labor found that the average cost to hire an employee is $4000, beyond salary and wages.
According to Bersin by Deloitte, the average cost-per-hire is almost $4000. Depending on job level and hiring practices, that cost will vary.
Depending on the industry, the average cost-per-hire in the U.S. is between $3000 and $5600, according to this article.
This article states that "The average sunk-cost of a new hire is somewhere between $4325 (Deloitte 2015) and $41 111 (£31 808 Oxford Economics 2014). For a position with a salary of $51 676 (£40 000, Quarsh) the number goes up to $89 510 (£69 285, Quarsh)".
NEW HIRES RECRUITING COSTS BY COMPANY SIZE
1. Startup companies - $4000 is the average cost of recruiting a new hire. This is the cost of recruiting, hiring and training a new employee in a startup company.
2. Larger companies - $12500
For larger companies, a recruiter makes $25 an hour, and the company hires 50 new employees per year, and it takes 10 hours of administrative time to process their documents. That adds up to $12 500 per year — a conservative estimate for larger companies.
NEW HIRES RECRUITING COSTS BY TYPE OF JOB
In general, costs are driven by the job type and industry. These days, the tech industry seems to have the most expensive recruiting costs.
The U.C. Berkeley Institute for Research on Labor and Employment found the recruiting costs of hiring professional and low-skill employees:
- Managerial and professional employees recruiting cost - near $7000.
- Low-skill, manual laborers recruiting costs - around $2000.
According to this article, a study from 2011-2012 came up with this recruiting costs' split by job title:
- Professional/Trade - $5582
- Manufacturing - $5159
- Publishing - $4438
- Arts and recreation - $1394
- Waste Management - $1320
- Services-accommodation - $1062
A more recent source averaged the cost of recruiting a new hire to $3500 per employee in direct and indirect recruiting costs. We estimated the average number across all recruiting costs splits by job title, derived from the 2011-2012 study. The average is $3159 across all job types, which confirms that the current cost-per-hire of $3500 is in line with the older figures.
CONCLUSION
To wrap it up, $4000 is the average cost of recruiting a new hire to a startup, $12 500 per year is a conservative estimate of new hires' recruiting costs for larger companies. The new hires recruiting costs’ breakdown by types of jobs is as follows: Managerial and professional employees recruiting costs are near $7,000, low-skill, manual laborers recruiting costs are around $2000, Professional/Trade - $5582, Manufacturing - $5159, Publishing - $4438, Arts and Recreation - $1394, Waste Management - $1320, Services-accommodation - $1062.
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