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How Much Does It Really Cost to Hire An Employee In Today’s World?

The cost to hire an employee is often more than you would expect. On top of the new employee’s salary, you have to factor in the costs of recruiting, training, and so much more. Many organizations are surprised by the amount they have to invest to find a candidate who can make a positive impact on their organization.

At LG Resources, we think it’s important for organizations to know what to expect throughout the hiring process and beyond. In this article, we will discuss all the factors that go into the cost of hiring, plus a couple of ways you can lower those costs.





Recruiting high-quality candidates usually takes money. As a start, you need to advertise the job opening and pay for someone to spend time recruiting.

Either a hired recruiter, staffing agency, or staff member will need to review resumes, conduct interviews, do background checks and drug screenings, and conduct any other needed pre-employment assessments. The hiring process will vary depending on the job you need to fill, but these costs can quickly add up for even a lower-wage employee.

Meanwhile, your company will not be as productive as it could be while you are still missing a team member. The longer the recruiting and hiring process takes, the more money your company loses to reduced productivity.


The hiring process doesn’t end after a candidate accepts your job offer. It will take time and money to integrate the new employee into the organization through onboarding, formal training, and informal training.

Depending on the job, you may need to supply the new hire with their own set of equipment. For example, a computer worker will likely need a desk, ergonomic chair, and computer. Some jobs may require added software, a company phone, or more specialized equipment. Many workers need more equipment than in the past due to pandemic safety issues.

Even candidates with decades of experience in your field will likely need some training in the company’s processes and workflows. Your company may use different software or take a very different approach to management than a candidate’s previous employers. There’s no way around it — companies must invest in preparing new employees to do their work.

Small companies spent more than $1,500 on training each new employee in 2019, and it's likely gotten more expensive due to the significant inflation since then. It can take months for a company to break even on investing in a new hire, depending on the role.


The most obvious cost associated with hiring a new employee is their salary. But compensation doesn’t end with base pay: employers also often cover a combination of benefits such as health insurance, life insurance, disability insurance, tuition reimbursement, or even just free coffee in the break room. Add in taxes, and you are likely spending much more than you think.

Joe Hadzima, a senior lecturer at MIT’s Sloan School of Management, estimates that salary plus benefits typically cost 1.25 to 1.4 times the base salary. An employee making a $40,000 annual salary might actually cost $50,000 to $56,000 per year.




It’s estimated that it costs over $7,500 total and takes over two months to hire an average new employee. That’s even when you stick to inexpensive hiring resources, such as only using Indeed as a platform.

It’s no surprise that many employers are looking for ways to cut costs while hiring. While there are no simple shortcuts to finding a great new employee for every open position, we can recommend a few tips that may help you save in the long run.


You may be able to reduce your hiring costs in the long run by reducing the number of people you have to hire in the first place. While there’s no way to ensure that all your employees will stay on board — even the best companies lose employees to retirement, family needs, and other major life events — there are usually ways to reduce turnover.

To keep your current employees loyal, you will need to offer more than just competitive pay and benefits. Employees also want to be engaged at work. While a real discussion of employee engagement is beyond the scope of this article, here are a few ideas you can implement with minimal research:

  • Have managers regularly give and receive feedback.
  • Encourage employees to have and work on personal projects.
  • Find ways to remind employees about your company mission.
  • Support skills development and learning.
  • Recognize achievements, including successful projects, process improvements, and promotions.
  • Remember to celebrate birthdays, retirements, and other major events.
  • Make time for nonworking events, such as virtual or in-person happy hours or game sessions.


Recruiters often save companies a lot of time and money by finding better candidates faster. They charge a fee for their services, but their clients often come out ahead financially in the end. Companies that attempt to hire on their own usually cannot reach as large of a talent pool and take longer to hire, which ultimately costs them just as much or more than if they had worked with a recruiter.

When you use a recruiting firm, you effectively supercharge the hiring process. Your HR team or hiring manager likely has plenty of other things to do beyond searching for the perfect candidate, while a professional recruiter or headhunter will devote their full focus to hiring. After all, recruiters only make money when one of their candidates gets hired.

At LG Resources, we use comprehensive screening processes to find the best candidates for each open position you have. Our candidates often exceed clients’ expectations and noticeably boost productivity.

Ready to get started with LG’s recruiting services? Contact us today for more information or request an employee today.


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