Hiring isn’t just about filling a position, it’s a major investment that impacts finances, productivity, and business success. While direct costs like salaries and job postings are obvious, hidden expenses (such as recruitment expenses, onboarding costs, and training expenses) can have an even greater financial impact. Understanding these costs is key to making smarter hiring decisions.
The Rising Cost of Hiring
Hiring is becoming more expensive. The Society for Human Resource Management (SHRM) reports that the average cost to hire a new employee in 2025 is around $4,700. Deloitte estimates that replacing an employee can cost 150–200% of their annual salary, meaning a $100K employee could cost up to $200K to replace. These figures include recruitment expenses, onboarding costs, and lost productivity from vacant roles.
Beyond Salary: The True Cost of Hiring
A traditional cost-per-hire (CPH) calculation includes recruiter fees, job ads, and HR staff salaries, but the real financial impact extends further:
- Lost Productivity: Unfilled roles force existing employees to take on extra work, leading to burnout and inefficiency.
- Employee Turnover Costs: High turnover increases hiring frequency, driving up recruitment expenses and disrupting team stability.
- Onboarding & Training Expenses: Time and resources spent integrating and upskilling new hires affect operational efficiency.
- Legal & Compliance Costs: Background checks, terminations, and legal fees further increase hiring expenses.
The Cost of Delayed Hiring
Leaving positions vacant isn’t just inconvenient, it’s costly. According to Northwestern University, a company facing the average amount of hiring difficulty experienced a 3% negative impact on revenue. Unfilled roles lead to:
- Revenue loss: Reduced productivity and missed business opportunities.
- Lower morale: Overburdened teams facing added stress.
- Competitive disadvantage: Slower innovation and reduced market responsiveness.
Strategies to Optimize Hiring Costs
- Leverage Staffing Partnerships: Partnering with firms like Nelson Connects reduces recruitment expenses and time-to-hire.
- Invest in Retention: Competitive compensation, career growth, and engagement strategies minimize employee turnover.
- Streamline Hiring Processes: Utilizing applicant tracking systems and structured interviews cut onboarding costs and training expenses.
- Utilize Flexible Workforce Models: Contract and temporary hires help manage costs and workforce fluctuations.
The Bigger Picture
The true cost of hiring extends beyond what’s on paper. By understanding these hidden expenses, businesses can refine their hiring strategies, reduce financial strain, and strengthen their workforce.
Want to optimize your hiring process? Download our "Hidden Cost of Hiring" factsheet for insights and actionable strategies.
Connect with a Nelson Connects representative to discuss how to best utilize this resource.
