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As you look to drive more business in 2023, you might need more team members to help take on the extra work. While expanding your team is an exciting step, it’s important to understand all of the hiring costs that come with building out your team. 

The total cost of hiring a new employee can be surprising if you're new to the hiring process. While the exact amount varies, a recent Glassdoor study found that the average cost per hire is around $4,000, with an average break-even timeline of six months according to a Harvard Business School survey.  

Calculating the cost of onboarding an employee beforehand will help inform your budget for the new year and help you make more informed hiring decisions. Let's take a look at what costs to expect, and also how to reduce the expense. 

Typical cost of hiring an employee 

On top of annual salaries and added benefits, hiring a new employee also requires additional expenses like recruitment costs, job board fees, training costs, and more. 

Recruiting 

External recruiters are a great tool for finding the best candidates for your role, especially if you're a small business that doesn't have a human resources team to help. Benefits of using an agency to recruit include: 

  • A pool of qualified candidates to draw from

  • The right tools and resources to find new candidates 

  • Interviews and candidate screening

Prices vary depending on the recruiting agency you choose, but typically you can expect to pay anywhere from 15-25% of your new employee's base salary. 

Job posting 

A solid job description will ultimately help you find top candidates for your open position — but you have to distribute the post correctly to get it in front of as many job seekers as possible. 

The best way to attract the right talent is to post your listing on multiple online job boards, and you'll need to pay for the service to get the most out of your post. Each site has their own pricing structure, but according to Indeed, you can expect to pay around $300 per month per job posting. 

Background checks 

Once you find the right candidate for the job and are ready to take them on as a new hire, it's time to perform a background check to ensure they're being truthful about their past. Background checks are used to verify basic information such as work experience, education, criminal history, and past identities. 

Report costs vary depending on what you want to include. For example, choosing to only look into the candidate's criminal history is cheaper than if you need to verify the rest of their experience and background. 

Depending on the type of report you choose, you can expect to pay anywhere from $10 to $500. 

Training

Training your new employees also requires a considerable investment — but it's arguably one of the most important expenses. A good training plan ensures your new team members get up to speed faster and sets them up to make important contributions to your growing business. 

Training Magazine's most recent Training Industry Report says the average cost per employee is $1,207 and 62 hours a year (or 7.75 workdays). 

Tip: A good way to keep an eye on how much time your new employees are spending on training is to get them set up in Harvest on their first day. Not only can your team use the app to accurately track hours and tasks, but you'll also be able to review past data and improve future training practices. 

Job-specific equipment

Hiring costs include extra items your new employee needs to successfully do their job. These expenses could include: 

  • Computers and other electronics

  • Desks

  • Software 

  • Uniforms or protective gear 

Employee referral programs 

Referral programs are tools used by many businesses to use their existing employee network to find quality new hires. While not a required aspect of the hiring process, a well-planned program can greatly improve your candidate search. 

According to employee referral service ERiN, businesses are four times as likely to hire a referred candidate over other applicants they don’t have a direct connection with. However, since they include incentives for the existing employee that referred the chosen candidate, you'll need to budget that incentive into your hiring plans. 

How to reduce hiring costs

There are several strategies you can put into place to reduce hiring costs, from optimizing your website to utilizing social media. 

Use that employee referral program 

As mentioned above, employee referral programs are a great way to find the right talent. While they do cost money in the form of incentives, you'll reduce hiring costs by not having to use an external recruiter to find quality candidates. 

Make your careers portal count

Before getting serious about your candidate search, make sure you're hosting an effective careers portal on your website. Use it to not only post your open job descriptions but also to showcase your company values and culture so candidates see it as a place they want to work. 

Creating a compelling careers page could potentially reduce the amount you have to spend on multiple job boards and gives other employees a place to point candidates to when referring them for a job. 

Create your own pool of talent 

It's easy to forget about the other solid applicants you didn't hire for a particular position, but they could be a potential fit for your business later on down the road. Hold on to the resumes of your second or third choices and let them know you'll remember them when hiring in the future. 

Doing so could save you time and money when an unexpected role opens up. You'll have an easy list to start with instead of starting over from scratch. 

Promote your roles on social media 

The power of social media isn't just for building brand awareness — it's also an incredibly effective tool for connecting with candidates. The National Association of Colleges and Employers found that 2/3 of organizations have hired employees they found through social media. 

It's free to post on your channels, so take advantage of the resource. Just like with your careers portal, make sure your profiles highlight your company's story and culture so job seekers are eager to learn more. 


As you grow your team, Harvest is here to help. With Harvest, you can keep track of everyone's time and capture critical project data that allows you to learn from the past, keep current projects on track, and better estimate for future plans.

And when you need to hire more team members, it's easy to add them to the Harvest club. Get started with a free trial today