The high sales cost of a new recruit

£HOW MUCH??

In a previous post we have seen how expensive it is to recruit new employees to the business, but there is a further cost to the business that is considerably higher. How much business does your company have to do, selling its product or services to then pay for the recruitment costs?

Just take a low point figure from the range previously mentioned, say £5k, as a figure for this example. Also you need to have an idea what the net profit is for the company, and for this example let's use two - 5% and 10%. Therefore for each £100 of gross sales, the company would make £5 and £10 profit accordingly. In simple terms, you need to produce sales values of 20X and 10X respectively, of the value of the fee, just to break even on the fee alone!!

• For a £5k recruitment fee  for a company with 5% net profit, you would need sales of £100k
• For a £5k recruitment fee for a company with 10% net profit you would need sales of £50K

And of course you won't just be recruiting just one person for the year will you? - After all the government statistic for employee attrition is 18%, so most companies will likely lose nearly a fifth of their staff through natural attrition!!  Recruitment is an expensive part of business, so all you can do to reduce recruitment costs is surely the only way forward......isn't it?

You need to look at recruiting more people directly, and using different methods to this effectively.