When the economy and job market improve, so does the competition for hiring the best talent possible. When that competition gets fierce, the cost of hiring and retaining full time employees goes up. According to the Society for Human Resource Management, the average cost of hiring a new employee was $3,337 in 2013. When you evaluate WordPress outsourcing versus hiring in-house, you need to consider some of the factors that contribute to the rise in the cost of hiring and retaining full time employees:
Evaluate WordPress Outsourcing: High Turnover Rates and Cost of Hiring
Turnover rates are high in certain industries such as retail and food services. To replace lost employees, businesses have to spend money on hiring. There are many steps involved in hiring a new person, including advertising, interviewing, screening, and finally hiring. All those take time out of someone’s day, and in the workforce, time means money.
Evaluate WordPress Outsourcing: Cost of Training
New employees have to be trained when they come onboard. Over 2 to 3 years, companies are likely to invest 10-20% of an employee’s salary into training. When employees leave before their 2 or 3 years are up, companies don’t have adequate time to recoup the cost of their investment.
Evaluate WordPress Outsourcing: Loss of Productivity
A new hire may take 1 to 2 years to reach the productivity that matches an existing employee. Coupled with the cost of training, if employees leave prematurely, companies end up losing a lot of money.
Evaluate WordPress Outsourcing: Loss of Engagement
Employee morale is something that can’t be bought. Employees who see a high turnover will find it difficult to not disengage and lose productivity, which all translates into loss of profit.
Evaluate WordPress Outsourcing: Competitive Benefit Packages
In order to attract and retain talented full time employees, companies are required to offer more competitive benefit packages. These can include anything from matching retirement programs, health insurance, life insurance, flex time, employee discounts, telecommuting and other intangible perks. These benefits are typically 1.25 to 1.4 times the base salary.
Evaluate WordPress Outsourcing: Cost of Hiring Bad Employees
When the job market improves, demand for employees can be higher than the supply. This leads companies to rush through their hiring decision to fill positions quickly. That can be an expensive mistake, as hiring full time employees that are cultural misfits or not right for the job will cost companies down the line. It is estimated that a poor hiring of a candidate earning $100,000 per year could cost companies an average of $250,000. And that money comes right off the bottom line.
The job trend has long changed for the so-called millennials, who are expected to change jobs every 2 to 3 years, exactly the amount of time companies invest in their training. The circle of hiring, retaining, losing, and rehiring full time employees will continue to be costly for companies. Even if companies foster a working environment more conducive to staying and offer the best benefit packages, some people will still leave. Companies can adapt and incorporate the cost of turnovers in their budget, while continuing to develop and improve their employee-retention strategies.