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Employee Benefits
Companies must consider many personnel costs. These costs include employee benefits, such as health insurance and vacation days.
What are other employee benefits?
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Lesson Objective
Calculate the cost of recruiting new employees.
Content Vocabulary
recruitingrecruiting
The act of soliciting qualified people to work for a company.
recruiting
The act of soliciting qualified people to work for a company.
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Talbot Manufacturing Company is searching for a person to head its production department.
The personnel department placed advertisements for a total cost of $6,495, and employed Empire Executive Search Company to locate candidates.
Example 1Example 1
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Empire recommended Alice Welch, Tomas Valdez, and Cleveland Adams. Talbot paid for the candidates travel expenses (i.e., transportation, lodging, and meals) for interviews.
Alice Welch Total travel expenses: $517
Tomas Valdez Total travel expenses: $735
Cleveland Adams Total travel expenses: $674
Example 1 (cont.)Example 1 (cont.)
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After the interviews, Talbot hired Cleveland Adams at an annual salary of $154,900.
Talbot paid these expenses to hire him.
Moving expenses $3,600
Sale of home (real estate broker’s fee) $9,470
Empire’s fee (25 percent of Adams’s first salary) $38,725
Example 1 (cont.)Example 1 (cont.)
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Step: Find the total recruiting cost.
Advertising + Interviewing + HiringExpenses Expenses Expenses
$6,495 + ($517 + $735 + $674) + ($3,600 + $9,470 + $38,725)
$6,495 + $1,926 + $51,795 = $60,216
Example 1 AnswerExample 1 Answer
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A financial services firm searched and found a senior-level investment banker. Advertising for the position totaled $12,500.
The firm narrowed the search down to 3 finalists. It spent $3,890 on interviewing expenses.
Example 2Example 2
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It decided to hire Jane McNally.
The firm paid $5,000 in moving expenses and a 6 percent realtor’s fee on the selling price of her home.
The home sold for $348,000.
What is the total recruiting cost?
Example 2 (cont.)Example 2 (cont.)
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Step: Find the total recruiting cost.
Advertising + Interviewing + HiringExpenses Expenses Expenses
$12,500 + $3,890 + [$5,000 + (6% × $348,500)]
$12,500 + $3,890 + [$5,000 + $20,910]
$12,500 + $3,890 + $25,910 = $42,300
Example 2 AnswerExample 2 Answer
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Trebor Technology is recruiting for a programmer position that pays an annual salary of $38,000.
The company spends $859.50 in advertisements and hires the Quality Employment Agency to search for candidates.
Practice 1Practice 1
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Quality’s fee is 25 percent of the first-year salary.
Trebor spends $1,287.98 on interviews and hires one of Quality’s candidates.
What is Trebor’s total recruiting cost?
Practice 1 (cont.)Practice 1 (cont.)
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$11,647.48
Practice 1 AnswerPractice 1 Answer