The situation OP is describing would drastically cut costs by not filtering out good employees who are either bad test takers, having an off day, or didn’t have an “ahh ha” moment early enough in the evaluation.
I was trying to find a source for this, and I see that it is really variable. Most sources I see are saying more like <$10k, though some go as high as "3-4x the employee's yearly salary", which is what I'd like to know more about.
I don't see anyone explaining how that latter number gets so high. I assume most of the cost is the time of multiple interviewers across multiple candidates, but that still seems outrageous to me. Even 1x the employee's salary would be 4 similarly-paid colleagues doing nothing except interviewing candidates 40 hours a week for three months, which I've never seen happen. Even the most grueling interview process I've been a part of has been more like 2 hours a week for a couple months.
> A common estimate is that the hiring process costs a year of salary.
If the company wants to make hiring incredibly difficult (too many companies do), I can see it costing that much.
So stop doing that.
Having been in many startups doing a lot of hiring, if each hire cost a year of salary we'd have burned through out funding many times over and yet we didn't. So it doesn't have to cost that much. Keep it simple, hire fast.
Is there any citation for this stat? I'm having a very hard time wrapping my head around this stat because it doesn't seem even remotely reasonable on the surface.
It's going to be the cost of filling one headcount, not the cost of hiring a specific person. In other words it will cover:
• Recruiter/sourcer fees. These are typically a fraction of the salary, so that right there is a large chunk of it.
• The cost of all the interviews needed to locate enough candidates that one accepts. If you interview 60 people in order to make one hire, and conservatively assume an interview takes one hour for doing it and one hour for prep+writeup+hiring manager/committee analysis, then that's 120 hours of skilled labor.
• Hiring bonuses.
• Relocation fees.
• Travel costs for all the people you interviewed on-site.
• On-boarding cost (HR, legal, IT setup, possibly desk provisioning and equipment purchase).
• For some types of employees, time spent in negotiation, meets and greets etc.
I can see an inefficient company with a bad manager that doesn't really know what they want spending a year's salary in a bad process where they're continuously changing requirements, meeting in committees, inventing new rounds of interviews, etc.
What throws me is the claim that this is possibly around the average.
There are efficient companies out that there that can pick through the resumes in a few hours, arrange a few interviews, and have somebody hired in a week or two.
So if there are efficient companies out there dragging down the average to a year, does that mean there outliers out there that are spending 2 years, 3 years , or more worth of salary to fill a position?
If you spend an entire man year in senior productivity to vet a single employee, perhaps that's the problem then?
I have often seen this problem explained (for example by Paul Graham) that a bad employee is a negative value, they make bad commits and stupid decisions that net out as a massive negative for the company. But it seems very counterproductive to try to solve this problem at the selection moment using stupid proxies such as leetcode memorization, instead of during the trial period, when the employee is, you know, interacting with your company.
