Hiring costs being underestimated by Australian businesses

Kelly Services, has found that Australian businesses are inconsistent when documenting and analysing the cost of hiring an employee.

In what appears to be an Australian first, the Kelly Services Cost-per-Hire survey studied the formulas, processes and costs associated with hiring an employee.

Director of Kelly Services, Stephen Shepherd said, ìThe results showed that there is no set formula to measure Cost-per-Hire in Australia and many organisations fail to record the necessary data, even though it is a highly important budgeting and assessment tool for Human Resource (HR) departments.

ìAn industry standard is needed, because although most organisations surveyed had consistent internal processes, they cannot compare their results externally because other organisations use different methods.

ìAll of the participating businesses included print, online and advertising costs in their formulas; however costs including screening, travel, staffing, technology and facilities were missed by some, creating inaccuracies in the processî.

The survey found that the cost of hiring a graduate, production, trades, customer service or administration employee was under $5,000. Business operations managers, mid-level executives and senior executives ranged from $5,000 to $20,000.

To hire an executive officer or director, the cost jumps to $40,000.

Added to these direct costs is the cost of ëempty chairí time - the impact of hiring delays on turnover, the costs of losing embedded knowledge, and lost promotional potential. Some 67% of vacancies were filled between two to six weeks.

The survey also addressed employersí future recruitment intentions. Some 67% of businesses anticipated hiring up to 16 employees per month across Australia.

Interestingly, given the importance of recruitment to an organisation, the survey shows that a significant number of HR employees devote a relatively small amount of time to this function. A total of 76% of HR employees spend 50% or less of their time on recruitment duties. The average base salary of HR employees was $63,148.

ìWith such an important role in the operations of the business, HR departments and hiring staff need to be able to measure their costs along with their success, and this cannot be done without accurate collection, collation and analysis of the costs of hiringî, said Mr. Shepherd.

Kelly Services conducted the survey in late 2006, involving middle to senior HR professionals from 59 businesses in industries including transport, IT, government, manufacturing, professional services, banking and finance and retail/wholesale.

The survey came out of recent executive discussions facilitated by Kelly Services Outsourcing and Consulting Group which highlighted Cost-per-Hire as a hotly debated issue.