Cost of Hiring a New Employee

What is the cost of hiring a new Employee?

Learn about hiring a new employee with Chris Patt

Case breakdown: Jurrasic World

The scene that you just saw shows you how a new hire is feeding the dinosaurs. While doing so, he falls off the bridge straight into the dinosaur’s den. Owen (played by Chris Patt) rescues the new hire and later asks him whether he is aware of why there was a job opening for this post. In this blog, Learning Perspectives will explore the cost of hiring a new employee.

What is the cost of hiring a new Employee?

One of the wrong notions that are encountered many times around the cost of hiring a new employee is that only salary cost is associated with an employee. Contrary to this popular belief, the salary of an employee is only a part of what the company or an organization spends on an employee.

Cost of training and recruiting needs to be factored into this process. If we are to segregate these costs, it would look something like the ones mentioned below:

Cost of Recruitment

  • Consultant costs
  • Job Portal costs
  • Internet expenses
  • Advertisement expenses
  • Relocation allowances
Cost per hire

Cost per hire is an important metric for recruiters. It includes the internal and external recruitment costs which are divided by the total number of hires in that time frame. Calculating this cost is an important strategic tool for the company.

Hiring costs can be by category too. This can include:

Ultimate Lead Gen

Cost of Training

According to an economic times report, organizations in India spend close to Rs 7,000- Rs. 33,000 per employee annually. Smaller organizations spend Rs. 16,350 per employee, compared with Rs 52,879 per employee in large organizations. The average spend per employee at the senior level (Rs 86,277) is three times that of entry-level employees (Rs 28,759). Training now is being given in a blended format, which is proving to be a better option.

Cost of Salary and Benefits

Benefit and salary are the most obvious option in the hiring cost. There are many benefits given to an employee in an organization. This ranges from medical insurance to special allowances. Government employees enjoy a wide variety of benefits, hence a government job in India is considered coveted by many people.

Covid-19 has also impacted the hiring landscape in terms of roles, qualifications, and skills in demand. For many organizations, the cost related to hiring a new employee is reduced while for others this cost spiked. During this time, many companies started hiring on a contract and temporary basis. Covid-19 dissolved boundaries as careers weren’t local anymore, they became global.

Hiring a new employee isn’t an easy decision for any company, especially when the company is just starting. In large companies, employees are hired with a strategy. As these skilled employees are recruited and trained, they become an investment for the company in the long run.

Understand the Cost of Hiring a New Employee with a Video


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