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What Is the Cost To Hire A New Employee?

The cost of hiring an employee is arguably one of the largest expenses of running a business. Unfortunately, it's very hard to clearly identify an exact cost for hiring a new employee. However, there are some general guidelines you can use to make an educated guess.


Recent studies show hiring an employee in a company with 0-500 people costs an average of $4,967 with an average of 42 days to fill a position. This is only cost to hire and does not include training or other hidden costs.

“Turnover could range from 21% to 153%

depending on industry”


On average, companies experience 21% annual turnover depending on industry. Industries with the highest turnover rates include retail, supermarkets, fast food and hospitality. Rates for these industries range from 58% - 153%. (Bureau of Labor Statistics 2020 Report)

When hiring for an existing role due to voluntary and non-voluntary termination, stakes get even higher. Research shows to replace an employee, it can cost up to 50% - 60% of the employee’s annual salary (according to SHMR research). Sound steep? Not really when you consider all the of the hidden cost.

“33% of new employees leave within the first 90 days!”


  • Administrative and onboarding paperwork time: Filling out forms for benefits, taxes, and insurance ties up new employees and HR staff.

  • Premature turnover: Alarmingly…33% of newly trained employees leave within the first 3 months and 58% leave within the first 6 months (BambooHR Survey).

  • Overworked remaining staff: Those who remain have their own jobs to do in addition to the duties of the open position. This could hurt morale and risk further turnover.

  • Supplies for new employees: This can be a major expense if your company supplies employees with a full office of products that include printers, laptops and other basic supplies.

  • Manager attention: New employees often need more attention from managers, which takes higher-paid managers away from their other work.


  • Create a succession planning process aligned with company strategy to identify internal talent to fill new and existing roles.

  • Develop employee engagement and retention strategies.

  • Leverage employee referral program.

  • Maximize internal job posting system – not so fun fact, only 2.1% of employees apply for jobs internally.

  • Bring purpose to work - Create and update employee job descriptions with role clarity and measures of success.

  • Implement mentorship programs with key leaders and high preforming employees.

  • Foster a high-feedback culture using 2-way employee feedback process for new and existing employees

  • Create effective hiring, onboarding and training processes – do not cut corners.

  • Conduct exit interviews and develop tactics to address themes.

Next steps? Use the data above and pause to understand the cost, impact to hire and train for your organization. Identify practical solutions to reduce your cost.

Not sure where to start? Let’s connect - to learn more about practical solutions, tools and resources to reduce cost to hire and train and engage your team, schedule a free consultation with us today.

**$344 Billion - 70 Million jobs filled in 2019 (Bureau of Labor Statistics). Average cost to recruit and hire an employee $4,967. $83 billion spent on training in 2019 (Bureau of Labor Statistics).


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