Cost to Hire a New Employee

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Cost to Hire a New Employee

Background checks for small business can greatly reduce the cost wasted on a hire who was unlikely to work out, but what does it cost on hire a new employee?

At background check central, our services go beyond simply looking for recent criminal convictions. We can help you to identify information that is both relevant and potentially predictive of future behavior which gives real insight into the applicant’s experience, capability, truthfulness and character.

Don’t Be Fooled, Not All Background Checks Are The Same!  A Weak Background Check That Costs Less Is A Complete Waste Of Your Money!

Here is how your hard earned money and your time go to waste when you hire someone who is not truly qualified or capable of working out:

What is the cost of hiring a new employee?

Advertising a job posting:

When you post a opening on a recruiting website, the cost can range from $49 to $599 or more. You pay this for one position and the cost is incurred even if you get no qualified candidates to apply.

When it comes to leveraging your success, if you include that the applicant must pass a background check within your job requirements, that alone will keep some of the bad apples from ever applying. This is a big win for you not only in saving time, but also in saving money by keeping them from ever being on your radar.


The simple act of checking with a prospective employee about their ability to pass a background check before you take the time to interview them is invaluable. This allows the applicant an opportunity to mention anything that might be an issue that could be uncovered in the background check process. If they area candid and forthright with you, you have your first sign of their character before you invest any real time in the process.

On-boarding a new employee:

Once you hire someone, the on-boarding process begins and, as you can imagine, there is absolutely no opportunity for you to make any money off of the efforts that the new hire nor your team that is working with them during this phase. This is straight up sunk cost. Worse yet, during new hire on-boarding, the fact that the new employee will not work out doesn’t begin to show up yet. Everything that they are doing is paperwork, becoming familiar with how things work at your company and the logistics of working for you. As with the other phases, a real employee background check would have helped to eliminate this cost in its entirety.


When someone is hired who either lacks that education, skills or experience to succeed at the job, they hope that the internal training you provide will make up for their short comings and that the job training alone can get them through. A major problem with this is, most jobs aren’t for people with no real education, experience or skills. Rather, it is extremely likely that  required a certain level of expertise or education in your job posting and that you are offering premium compensation for same. When your new hire begins the relationship with your company by lying to get extra compensation they don’t deserve, you are likely in for more problems despite how well the training goes.

Had you conducted a real background check, like the ones the team and BGCC provides, you could have uncovered many of the deceptive, overstated accomplishments on their resume / application and eliminated them before they cost you the time and money to make it to the training stage.

Failed performance, or worse:

Provided that the wrong hire has made it through training, this is where the real problems begin to occur. At this point, if the person has character problems, real trouble can commence. This is where they begin to mess up on the job. Sometimes it means lost profits,other times it means lost profits AND:

  • Trouble with co-workers
  • Damaging relations with clients / customers
  • Time theft
  • Asset misuse
  • Safety concerns for themselves and others
  • Incurring some type of liability for the company
  • Actual theft of cash or assets

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Sadly, you are now months into this relationship that was doomed from the beginning, all because you lacked the vital, relevant information that you get from a quality employee background check. On top of all that, once you end up firing this person, they will likely be collecting unemployment benefits for months that are charged to your account.

Here is a quick guide to some of the sources we identified and utilized in our research about the money lost, in part due to a lack of, or reliance on low quality background checks for small business owners, along with our take-aways, that might be of value to you:

  • Investopedia
    • In 2016 SHRM estimated that companies spend an average of 42 days to fill a position and $4,129 per hire.
    • Small companies spent, on average, more than $1,500 on training, per employee, in 2019.
    • It can take up to six months or more for a company to break even on its investment in a new hire.
  • Cost of recruiting
    • Not every new hire will require the same process, but even an $8/hour employee can end up costing a company around $3,500 in turnover costs, both direct and indirect.
  • Cost of training
    • Employee devoted an average of 42.1 hours to training and companies spent an average of $1,286 per year on training an employee in 2019.
    • Around the five-month mark is when a company breaks even on a new hire.
  • The Balance Careers
    • One study estimates that you’ll spend 38% of an annual salary to train a new hire.
  • ADP
    • Cost of benefits
      • Benefits account for an average of 29.9% of the total employer costs for an employee’s compensation.
  • Cost to train and hire
    • According to SHRM, it costs employers an average of $4,129 and takes an average of 42 days to fill an open position.
    • Larger organizations spent $1,046 per employee, compared to midsized companies at $868 and small companies at $1,096.
  • Toggl
    • Career events
    • The cost of participating in a single event ranges $125-225; however, that does not include accommodation, travel, marketing.
    • Advertise a job online
      • Costs around $300 per month to advertise a single job position.
    • Onboarding and training
      • It will take 8 to 26 weeks for an employee to achieve full productivity.
      • On average, a company loses anywhere between 1% and 2.5% of their total revenue on the time it takes to bring a new hire up to speed.
    • Salary & extras
      • A basic salary of $50,000 per year, the employer’s costs are anywhere from 1.25 to 1.4 times higher than the base.  This means for an employee to receive $50,000; the employer has to pay from $62,500 to $70,000 per year.
    • Total cost for hiring an employee
      • Hiring an employee in a company with 0-500 people costs an average of $7,645.
      • SHRM stated the average cost to hire an employee is $4,129, with around 42 days to fill a position.
      • Glassdoor stated the average company spends about $4,000 to hire a new employee, taking up to 52 days to fill a position.
      • If you are replacing someone instead of filling a new position, it can cost you up to 50-60% of their annual salary.
      • Turnover can sum up to a total of 90-200% of an employee’s annual salary.