16 Oct The Real Costs of Turnover and Hiring
Let’s face it: The reason many businesses don’t use a staffing firm for recruiting and hiring is that they think the costs are too high. It is also likely that they are not familiar with all of their options in terms of money spent working with a staffing agency.
However, when viewed from the actual turnover cost/benefits perspective, working with a staffing agency may be more affordable than you think.
Turnover costs are what it actually costs the company to replace an employee. One study from the Society of Human Resources Management predicts that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $80,000 – $115,000 a year, that’s anywhere from $40,000 to $76,000 in recruiting and training expenses.
Another study from the Center for American Progress (CAP) predicts the cost is even more—that losing a salaried employee can cost as much as twice their annual salary, especially for a high-earner or executive-level employee. For example, the cost to replace a $200,000 CEO is $413,000.
Let’s look at the actual costs to hire a new employee:
Advertising, screening, interviewing, background checks, hiring, and onboarding.
it may take a new employee one to two years to reach the productivity of an existing person, not to mention the production lost from the empty job.
other employees who see high turnover tend to disengage and lose productivity. They may have to help pick up the slack and often can’t get their own jobs finished, so overtime is required.
Customer service and errors
new employees take longer, make learning mistakes and are often less adept at solving problems.
over two to three years, a business likely invests 10 to 20 percent of an employee’s salary or more in training.
whenever someone leaves, others feel a negative impact and take time to ask why.
The Benefits of Using a Staffing Firm
The main purpose of the staffing agency is to take over the processes that the company would normally do in hiring a workforce– the ones that cost you time, resources and give you headaches– like advertising, screening, verifying previous employment, background checks, and onboarding. Staffing firms are hiring specialists who are in tune with laws and regulations, employment trends and will understand your market.
Other major benefits include:
- Access to expertise – by using experienced professional hiring specialists, who know about recruitment best practices and the laws and regulations surrounding hiring procedures, you can stop the guesswork and know you are doing things in the right way.
- Access to their network – a reputable staffing agency is well-networked. Being well-networked, we typically know who has a good reputation in a given market. If we don’t, we oftentimes know people who are familiar with a given candidate and can give us the true story. Understandably, candidates list references who will say good things about them. It’s important to see what unlisted references have to say. We regularly see companies hire for a position on their own and hire someone whom we know has a bad reputation.
- Reduced risk of hiring the wrong candidates – When you put in the time, effort, and money to recruit and hire on your own, you risk hiring the wrong person and having to do it all over again at additional costs. When you use temp-to-hire services, you get to test out your new employees before making the commitment to hire them full time.
- Efficiency – using an expert will produce better candidates in less time. Most entrepreneurs have so many other things to do, they often put hiring on the back burner and take longer to fill a position. Staffing firms are more motivated because it is how they make their living. They also have a host of candidates looking for jobs that might contain your perfect hire.
- Access to bigger talent pools and top talent – Staffing firms know exactly where to find active and passive candidates in your industry. They have large networks and advertise widely on-line, on job sites, their own website and use social media.
- Pre-selected, quality candidates – candidates are pre-screened for your job’s requirements and have been vetted for educational achievements, background, and criminality. You just make the final decision.
- More hiring options that can also save money – Besides hiring permanent, full-time staff for the long term, staffing firms give you the choice to hire temporary workers for short assignments or temp-to-hire staff to test the waters to be sure the candidate is a good fit. These options can also help you reduce turnover.
- Increased productivity – because staffing firms know how to find the best workers, best suited for your job. This means an increase in productivity, sooner.
- Added flexibility – You can hire temps from a staffing firm to ramp up or slow down when you need to. You can have extra hands when you need them—for maternity leaves, sick leaves, vacation time, seasonal work, or unexpected surges in business—but you don’t have to commit to paying these workers once the work slows down again. You won’t have to deal with layoffs and downsizing either.
Fuse3 Solutions is a leading provider of professional staffing services for Temp / Contract, Contract to Perm, and Direct Hire Staffing Services in the following specialties:
- IT / Technical Staffing
- Accounting / Finance Staffing
- Federal and State Government Employment Services
- Executive Search / Executive-level Staffing
- Human Resource Staffing
- Administrative / Clerical Staffing
We warmly invite you to come visit with us about your hiring needs for your business and to find out your yourself the real costs /benefits of working with us! You might be pleasantly surprised…or downright thrilled!!
Call today to schedule a Free Consultation to discuss fees.