An employee is the most valuable investment made by a company. Hiring someone new is essentially like inviting a stranger to become a part of your family, basing your decision on a series of emails, phone calls, and meetings. The time you spend in hiring adds up to a significant amount of capital spent on each individual you meet. In our previous posts, we’ve discussed some ways to find and retain your top talent. In this post, we will dig into the true cost of hiring an employee. Based on our research and the hundreds of clients we’ve worked with, these numbers can be quite substantial.

When we think of the cost of hiring, we tend to quantify it as a dollar value. However, this is only one of the many costs involved in hiring someone new. The amount of time invested in each hire by various individuals and departments adds up quickly and includes salaries of those interviewing (HR, Hiring managers, team members, executives) and lost opportunity cost (what would these people be doing if they weren’t interviewing?). In addition, there is a lost opportunity cost of not finding someone quick enough or burnout as a result of the team working extra hours to compensate for being understaffed, thereby resulting in additional lost time.

Real-World Example
We engaged with a client that had interviewed 100 people for one of their positions before engaging us. These numbers are actually low; according to Glassdoor it takes small and medium-sized businesses 120 candidates to make a single engineering hire.

Let’s look at the numbers: the first and second-round interviews were being done by the Director of Development & VP Technology & the final was done by the CTO. The Director’s salary is 150K/year, the VP’s salary is 200K/year and the CTO’s salary is 250K/year (hourly rate of the Director is $72, the VP is $96 and the CTO is $120). Each candidate had done one interview and only ½ were brought to the second round. 16 candidates did a final interview with the CTO. No hires were made. Here is the math:

• 100 first-round interviews done by the Director and VP = $16,800
• 50 second-round interviews done by the Director and VP = $8,400
• 1 Final interview by the CTO = $1920

That means the total cost of the companies’ time to hire when looking on their own (minus lost opportunity cost) was $27,120.

Once we engaged with the company, the story gets a little brighter. We sent 4 candidates that each did 1 interview ($672), 2 candidates did a second interview ($336) and one did a final interview with the CTO ($120). That means the cost of time was $1128. Our fee was $18,000.

As you can see, the total cost of hire through Sage Recruiting was $19,028, vs. the cost of the clients’ time interviewing without Sage was $27120. This doesn’t even include the cost of marketing, job boards or lost opportunity cost.

SEO on your website, branding, updating your corporate website with relevant jobs & corporate culture & maintaining an ATS are all costs associated with hiring and can add up to tens of thousands of dollars per month. On average, marketing budgets made up 11.1% of total company budgets in 2018 and companies in the B2C product space allocate the largest portion of their total budget to marketing, averaging 16%. That said, nowhere near as large of an expense as job boards to market for candidates.

Job Boards
LinkedIn job postings can cost as much as $495 for a 30-day posting plus the cost of sponsored postings with an additional recommended spend of $200. charges $375 for a 60-day posting and $395 for 90-days. Their rates can run upwards of $999 per month for 5 postings. ZipRecruiter is another popular job board with a meagre price of $249 per month for one user. Although that seems reasonable, the average amount of time it takes to fill a role is 42 days. If you’re using an average of 3 job boards for an average of 2 months, the cost is $3,383.

Lost Opportunity Cost
This is the cost of the work that is not being done as a result of your team spending time interviewing AND as a result of being understaffed. According to LinkedIn Talent Solutions, The cost of calculating an unfilled position is fairly simple and can equal up to $14,463,670.

So what’s the total cost?
If we add together the lost opportunity cost as per LinkedIn, plus marketing, plus the time it took our client to interview the 100 candidates (as shown above), the cost of hiring can easily be over $150,000. That’s an astronomically high number! This really makes you think, is it time to hire cheaper, faster and better with an experienced technical recruiter at an experienced technical recruitment agency?

An Expert in Technical Recruitment:
Sage Recruiting is founded by Ashley Alfred, an Engineering Recruiter veteran with a focus on helping start-ups and SMB’s to grow. Ashley has helped countless startups to save time, costs and effort in hiring over the past 8 years and has relationships with some of the top engineering talent in the GTA. For more information, visit and check out our twenty nine 4.9* Google Reviews to read what people say about working with Ashley & the Sage team.

Ready to get started? Contact us today to discuss your hiring needs!