The cost of training an employee cannot be determined with a simple formula. It depends on the industry and the position the new employee will be taking. According to online employment search company Monster, the cost of training a new employee can cost 150 per cent of the salary paid to the employee being replaced.
Finding the Candidate
Before training an employee to fill a vacancy in an existing position, the business must first find the right candidate. These costs can vary and can include putting an ad in a newspaper or online job board, hiring a headhunting firm and taking the time to interview potential hires. And while this is taking place, other employees have to take on more work to cover for the departed employee.
Because colleagues of the former employee have to take on extra tasks while the company searches for, hires and trains a new worker, they cannot focus solely on their own jobs. That means the company is not outputting its maximum amount of productivity.
After the candidate has been hired by the company, costs can include the use of training seminars and training materials, compensating an instructor and, if necessary, travel to the seminar directly related to the job. The company has to also take time to educate the employee about the company.
Another cost for companies to consider during the training period is the performance level of a new employee. A company cannot expect a new hire to step in and immediately work and produce at the same level of the departed employee. To achieve 80 per cent proficiency can take at least three to six months.
- Monster: How Much Does Onboarding New Employees Cost?; Mark Swartz
- Todd Drummond Consulting: True Cost of New Employees; Dan and Terry Tontarski
- Center for Community and Economic Development: How Much Does Your Employee Turnover Cost?; William H. Pinkovitz, Joseph Moskal and Gary Green
- ZDNet: The True Cost of Training Staff; Tim Landgrave; July 2004
- Society of Human Resource Management: Training Cost Per Employee
- Entrepreneur: What is the Average Cost for Bringing on a New Employee Including the Interview Process, Hiring and Training?; Penny Morey; November 2007