How Much Does Hiring A New Employee Cost?

How Much Does Hiring A New Employee Cost?

How Much Does Hiring A New Employee Cost?

The UK employment industry is performing the best it has in over 50 years (ONS 2020), yet recruiters are experiencing increasing difficulties sourcing talent. And yet it is still hard for employers to find the perfect candidate! Part of the reason are the huge costs associated with hiring and recruitment. According to the 2019 Open University Business Barometer, organisations spent £4.4 billion on temporary staff, recruitment fees and increased salaries over 12 months in 2019, because of difficulties finding employees with the right qualifications and experience. And over time, that situation has only gotten worse in the following years. Did you know that replacing a member of staff can cost an employer £30,614? That’s per employee!

In a survey from the British Chambers of Commerce quoted here, it showed that 70% of recruitment firms that had tried to hire staff in the three months from April to June 2021, struggled to do so. 

Which means there is a prime opportunity for skilled candidates to find their perfect job. But for employers, it isn’t so simple. There are many costs associated with new hires. But how much does it cost to hire a new employee?

The following HR Costs Guide shares a number of insights on recruitment costs in the UK:

Crafting The Job Specification

According to the guide, when hiring for the average-salaried employee, producing the right job specification would take up two hours of a business owner’s time. Based on its valuation of time, that comes to £200.


Employment screening comprises the procedures involved in deciding an individual’s suitability to hold employment in a given role. Appropriate screening measures help to make sure that only the right people are working within your organisation. The average salaried job takes up roughly 24 hours in screening, or £2,400.

Initial Calls

On average, 20% of applicants get an interview. On average, this comes to 24 candidates and to let all of these people know means around 12 hours of work according to the guide, which totals a cost of £1,200 to the business.


On average, a quarter of the candidates contacted for an initial call make it through to an interview, with the average face-to-face interview lasting about 45 minutes. This is represented by four-and-a-half man hours, and an overall cost of £450.


An effective employee onboarding process transforms promising candidates into top-performing employees. It gives new employees the information they need to be comfortable enough in their new working environment to do their best work. The guide finds this process to take four hours, equating to £400 as a cost to the business.


Training a new employee to reach their ‘Optimum Productivity Level’ can cost up to £25,181 per employee. That’s probably because it’s reported that on average, workers take 28 weeks to reach their ‘Optimum Productivity Level’ – over half a year! And more than that, the guide suggests that there are similarly high costs to training new employees:

  • According to a report by Bersin, the average UK company spends £1,068 per employee

  • According to the Employer Skills Survey 2019, this stood at £1,530 per employee

  • According to the Undercover recruiter, the average UK company spends over £1,000 per employee on training

But that’s not all! There are additional HR costs to consider, which include holiday cover, cover for maternity leave, sick days, company cars, software licenses and more, depending on one’s industry.

In this article from 2014, Linda Smith, HR Director of Unum said: “While the logistical cost of replacing an employee will probably come as no surprise to businesses, the financial impact of having replacement workers learn the ropes is probably a cost that businesses have not before considered…I would encourage businesses to place more emphasis on retaining talent and developing good staff to reduce the cost of staff turnover. Put simply, people stay with companies that demonstrate they value – and care for – their employees.”

The message is clear – if you are the type of organisation to value your employees, not only will you receive applications from the very best candidates, but you will retain those people as loyal employees in the long term. 

Luckily with Employin5, our candidates are the very best, selected not only for their experience and skills but also their personality and suitability to their working environment, thanks to our personality test. And as a result, we only attract the UK’s best companies.   

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