One of the most important investments any business makes is in hiring their staff. Hiring is a vital process in the running of any business and one that requires management, planning, patience and money.
Hiring IT talent in particular can be a challenge and comes with a range of hidden costs that business owners aren’t always fully aware of.
So, what is the truth behind the cost it takes to hire IT talent?
First, you have to think about the hidden factors that are involved, and begin to make your calculations. Hiring costs are not just one umbrella salary figure; there are plenty of factors that you have to add into your costs too. Here is a breakdown to show you the hiring costs which take place when hiring IT talent:
- An external hiring team.
Many companies in the IT industry find it easier to bring in an external hiring team rather than to have their own bespoke HR team to handle recruitment. Having an external team will remove the pressure from business owners’ shoulders as it has been proven in the past that small business owners can waste up to 40% of their working day on hiring. Even though recruiting someone with the IT talent that you are looking for will eventually create profit, in the early stages it is actually a waste of resources and time.
Bringing in an external hiring team will ensure that the hiring process is as focused and concise as it can be to ensure that you have the ideal candidate at the end of the process. The costs may seem expensive upon first glance but when looking for an external hiring team, you can pick a company that have it in their conditions that they will only get paid if they find the right candidate for your business.
However, it isn’t a simple hourly fee structure used by many headhunters. The majority of them will base their fees upon the talent’s salary that you are looking to hire – for example, if you are searching for someone that will have a salary of £20,000 then the external hiring company normally asks for 15-20% of this salary for a general administration role or something similar. Unfortunately, the most expensive IT recruitment companies, can charge up to 30% of this salary.
2. An internal HR team.
If you have a bigger business then it may be worth looking into having your own HR team source IT talent rather than incurring the costs of an external hiring team. Even if this is just one dedicated HR person, it will ensure that their sole job role will be to focus on hiring and the general wellbeing of your current employees. However, this is another salary outgoing that you would have to factor into your finances – the general salary for a member of an HR team can start from £25,000 and rise if they are of managerial status.
Discuss with your team whether you believe that this addition to your workforce would be beneficial as it would take a great deal of work away from the managers. The HR team would be in control of setting up job vacancies on advertising websites and other platforms, screening applicants, contacting applicants, holding interviews and then offering the job. They can also act as a point of contact for your current employees if they are facing any issues.
3. Attending career events.
Although a majority of recruitment is done over the internet with hiring websites and job boards, it is sometimes beneficial to use networking to find your newest IT talent. Attending a career fair or a recruitment event will help you to get the name of your company out there and make connections with potential candidates to join your workforce. This could be at a college or university career event where students will be looking for their options after they complete their qualifications.
75% of all employers attend these events which shows how necessary and beneficial they could prove to be for you and your company. When looking for new IT talent, it would be an excellent idea to attend a career fair at a college or a university so that you could hire a college graduate. Although they may not have the experience that you are looking for, they will be eager to learn and you will be able to ensure that they do everything as you require it to be – not how they have completed the same tasks with different employers.
4. Fees for putting your vacancies on job boards.
Whether you, your HR team or an external member of staff have written the perfect description for your latest vacancy; you need somewhere to put it. However, putting a job ad online doesn’t come without another cost to be considered when you are looking to hire IT talent. As we mentioned earlier, it is one of the more regular platforms for recruitment now, and one that many people use.
Some job sites work on a subscription method where you can buy a fixed price plan for a number of days while your job post is up while some use a pay-per-click model.
Dependent on how easily you wish your vacancy to be found, you can pay a higher fee in order to be higher on the search list or you can pay a smaller fee and be lower. On average, the fees can be around £250-£270 a month for just one job position for a month. If you haven’t found an appropriate candidate by then, you would have to pay for longer until you can find the IT talent that matches your requirements. This is known as your TTH or your time-to-hire which is exactly as it seems it would be – it is the time that it would take you to hire a candidate for your IT position. The longer it takes for you to find the right candidate, the more money you will have to spend on this feat. But it is also important to remember that if you choose too quickly and don’t find the right candidate that this can incur its own costs.
5. Background checks.
You’ve found the ideal candidate for your vacancy – they fit all of the requirements that you laid out in your job description and you can see a lot of potential for them in your company. However, it is always safe practice with a new employee to perform a background check on them. By carrying these out, you can verify their education, their previous employment and whether they have had any criminal convictions. Dependent on which check you would like carried out, the prices can range from £40 to higher – another fee to be taken into consideration when planning out your finances when it comes to hiring.
Once all of the checks have been carried out and you are ready for your new employee to begin, it is time for another cost that many forget is a cost – training. Even though your new candidate is perfect for the role, it will still take a while for them to be comfortable with the processes and to settle into their role. On average, it can take from 8 to 26 weeks for an employee to be able to reach full productivity. During this time, it means that you are effectively losing money as you aren’t reaching your full productivity within your workforce – studies show that companies could lose 1% of their total revenue while a new recruit is being trained. However, if they are well-trained, then they will hopefully bring in more profit than what you lost during the time that they were training.
With regard to your IT talent, they will already have the detailed knowledge that it requires for them to have achieved the role in the first place so it will be an easier process that you will just have to teach them how to best utilise their role.
Finally, a cost that you have to bear in mind during the hiring process for your new IT talent is their salary. While it is the employee’s responsibility to complete their work and ensure that you are happy with what they are doing, it is your responsibility as an employer to ensure that their pay is given to them on time and that it is the correct amount. This means checking that their taxes, pension and any other benefits are all correct – whether you have someone in your finance team or HR team that is specifically aligned to payroll, it is of vital importance that their paycheck is correct. As much as they are proving themselves to you in the early months as an employee, you are proving yourself as an employer.
The longer you have someone on your team, the more they will expect from their salary, too. They will expect that as their experience and loyalty to your company grows, so does their salary. If there aren’t any increments for them to be able to climb up, it will be likely that the employee will look for work elsewhere where they can complete the same job for a higher salary. While you can’t promise them a disproportionate salary, it is important to bear pay rises in mind.
So, what are the overall costs for hiring IT talent? It is hard to calculate an exact figure as every company is different and every company has different requirements for their IT talent. There are many factors that would affect how much the hiring would cost – how long the company has been established, what sort of candidate they are looking for, what checks are required etc. Estimated figures included in this study on the costs of hiring range from £3,500 to £7,000 per new hire.
The figures are completely altered if you are replacing a previous employee, too. Currently, employees on average turn over every 6 years with a smaller percentage of 30% employees changing their job every three years. 20% of all new hires will quit their job within the same year that they were hired.
When considering taking on a new member of staff, do not rush into it. Hold a meeting with your board members and the rest of your management and put down onto paper how much approximately you believe that the hiring process will take for your new IT talent. Obtain quotes from job recruitment sites and agencies and write down everything that you can to have a solid picture of how much it will take. The right candidate will be worth the cost so it is worth taking the time to plan the recruitment process and costs fully.
About Prosyn, your IT Support Partner
Prosyn are one of the most trusted IT support providers in London. If you would like more help advice and support with saving on IT costs for your business, contact us today to see how we can help.