Today’s unemployment rates are at a record low. Great news, right? While it might be exciting to the general public, it doesn’t always feel that way to employers. Low unemployment rates translate to less eligible employees looking for a job. Of course, they are out there…just significantly more difficult to find.
If you’re the owner of a company, you already know that the hiring process can be long and excruciating…and that’s with a decent pool of candidates.
While there are plenty of ways to make sure you allocate the appropriate amount of time and resources to hiring, that’s not what we’re going to discuss in this article (but if that’s what you need, check out this recent post).
Have you ever considered how much it’s costing your business not having your next employee in place?
We’re going to lay out an example to make you aware of the weight this situation holds. Let’s say your company is in need of a Field Technician. Whether you’re experiencing growth or had an employee leave, you have a position to fill. Consider how much this technician is worth. In this example, we’ll say that you bill this particular technician out at $100/hr. One day not having this employee in place and you’ve already lost $800! That adds up to $4000/week and $16,000/month.
As the owner of the company, you pay yourself $150,000/year (roughly $72/hour). Consider your own time spent on the hiring process. Writing and placing a job posting, screening resumes, calling qualified candidates, interviewing candidates, checking references and finally, putting together your final offer for the one you select. We’re going to estimate this will take between 20-40 hours of your time, depending on your process. Using the salary mentioned above, this equates to somewhere between $1400-$2900.
Finally, consider the effect on operations as a whole by not having this Technician in place. You’re short-staffed and your efforts are focused on hiring, so maybe you miss out on getting a proposal to a client in a timely manner. For this example, we will assume this happens once, resulting in a loss of $20,000.
Summary of Costs:
- 1 Month Revenue: $16,000
- Your Time Spent Hiring: $2150
- 1 Lost Proposal (Gross Margin): $20,000
Total Revenue/Time Lost: $38,150
The goal of getting these numbers in your head is to inspire you to not only hire quickly, but hire smart. The last thing you want is to rush this process and end up having to do it all over again in a month because you hired the wrong person.
Also, consider the fact that hiring might not be your strong suit, and taking that task on alone might be a waste of your time. You’ve heard it said in business, if you want to be successful, stick to your core competencies. If no one on your team has experience hiring, you might want to outsource this task. By now you’ve considered the cost of NOT having the right employees, so keep that in mind when you think about your next hire.