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JDA Professional Services, Inc.
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Cost of Hiring Worksheet




Instructions: Fill in the blanks that correspond to your situation, and move to the bottom of the table to view the results.

I. Client's Direct Recruiting Costs

a.  Classified Advertising -
(In Houston 1/98, small display ads run close to $700)

b. Screen Resumes -
( = hours spent x hourly value of employee*)

c.  Phone Time Costs -
( = hours spent x hourly value of employee* performing screening, qualifying, and appointment setting)

d.  Interviewing Costs -
( = hours spent x hourly value of employee* performing interviews)

e.  Pre-hire Cost Cycle -

f.  Additional Cycle Costs -
(Should the chosen candidate decline your offer or no appropriate candidate is found, you must start over. List the average number of pre-hire cycles, eg. 2 cycles.)

g.  Other Costs -

  • testing.

  • sending "Thank Yous".

  • sending rejection letters.

II. Personal Costs

 

a. Aggravation Cost -
(taking candidate calls, interruptions, losing focus on company goals, etc.)

b. Personal Time Cost -
(estimate the cost of the hiring authority's hourly value*)

c. Opportunity Cost -
(what opportunity to make money was lost because you were dealing with hiring activities)

III. Turnover Costs:

a. Add total Pre-hire Cycle Costs (I.e.) and Personal Costs
(this is added because there is a 35% to 50% likelihood of having turnover when taking a candidate from the pool of unemployed)

b. Morale Costs -
(estimate the effect of turnover on remaining employees)

IV. Training Costs

a. Direct Costs -
(classes a new employee must take at company expense)

b. Indirect Costs -
(estimate cost of having an inexperienced person in the job versus an experienced one)

c. Indirect Costs -
(of productive time lost by on-the-job trainer orienting new employee)

Total Employer Hiring Costs:
Add Total Direct Recruiting Costs, Total Personal Costs, Total Turnover Costs and Total Training Costs.


*Hourly Value of Employee - Remember to use a figure that represents what an employee's time is worth to your company. Using their pay rate will not accurately reflect this figure.  To calculate what an employee is worth to your company, multiply their salary by a figure between 3 - 5--use your best judgment--then divide that by 2,080 to derive their hourly value to your company.

Back to Cost of Hiring/Turnover Article


6464 Savoy Drive, Suite 777 Houston, Texas 77036

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