cost of hiring

What Is the Cost of Hiring Employees in the UK in 2023?

When hiring new employees, businesses must consider the various costs associated with recruitment and employment. 

Beyond just the salaries and benefits of new hires, there are several other expenses, such as recruiting and training expenditures, that contribute to the overall financial implications. 

This article will provide insights into the different employment and hiring costs in the UK and provide tips on how to mitigate hiring costs when recruiting new employees. 

What Are “Hiring Costs”?

What are hiring costs?

Hiring costs refer to the expenses incurred by a business when bringing new employees on board. Also known as recruitment costs or placement fees, hiring costs encompass the expenditures incurred during the recruitment and selection process. 

These costs are expenses aimed at attracting, assessing and securing suitable candidates for job openings. These costs are incurred during the initial stages of bringing new employees into the organisation. 

Understanding and managing these hiring costs is essential for businesses to effectively plan their budgets, make informed financial decisions and ensure the successful integration of new employees into the organisation. The components of hiring costs can vary depending on the specific recruitment process and organisational requirements. 

Here are some common aspects that contribute to hiring costs:

Candidate Sourcing

Businesses invest in various methods to attract potential candidates, such as advertising job openings on job boards, social media platforms or through recruitment agencies.

These advertising expenses form a part of the overall hiring costs.

Screening and Selection

The process of screening and evaluating candidates includes activities like reviewing resumes, conducting interviews, skills assessments and background checks.

These activities may require the involvement of hiring managers, interviewers and other staff members, incurring both time and cost.

Recruitment Technology and Tools

Businesses may utilise applicant tracking systems (ATS), recruitment software or other technological tools to streamline the hiring process. Costs associated with the implementation and maintenance of these tools contribute to the overall hiring costs.

Negotiation and Offer Process

Once a suitable candidate is identified, there are costs associated with salary negotiation, finalising employment terms and preparing employment contracts. Legal or professional services fees may also be incurred during this stage.

Lots of small businesses without their own HR team may have to pay for an outsourced HR service here.

Onboarding and Training

Onboarding and training new employees are essential components of the hiring process, but they also contribute to overall hiring costs. These activities involve orientation, training and providing necessary resources to integrate new hires into the organisation. 

It is important to optimise these processes to minimise the impact on other employees’ time and maximise efficiency. By streamlining onboarding and training through technology-driven solutions, companies can allocate resources effectively and enhance the value of their investments in new employees. 

Prioritising efficient processes allows organisations to foster employee engagement, productivity and retention while minimising the time impact on existing employees.

Hiring Costs vs. Employment Costs

Find out the difference between hiring and employment costs

Hiring costs and employment costs are both related to the process of recruiting and hiring employees, but they refer to different aspects of the overall expenses involved. 

Employment costs encompass the ongoing expenses that arise from employing individuals within an organisation. These costs are continuous and continue for as long as the employees remain with the company. They include both direct and indirect expenses.

Direct Employment Costs

Examples of direct employment costs include: 

  • Salaries and wages paid to employees for their work
  • Benefits provided, such as healthcare coverage, retirement plans and other perks
  • Bonuses and incentives offered to recognise and reward employees’ performance
  • Payroll taxes, which are levies imposed by governments based on employees’ wages
  • Workers’ compensation insurance, which provides coverage for workplace injuries or illnesses

Indirect Employment Costs

Examples of indirect employment costs include: 

  • Training and development programmes to enhance employees’ skills and knowledge
  • Employee engagement initiatives aimed at fostering a positive work environment and boosting morale
  • Benefits administration, including managing employee benefit programs and associated administrative tasks
  • HR personnel administration, such as maintaining employee records, handling employment contracts and ensuring compliance with labour laws.

7 Tips to Mitigate Hiring Costs

Find out how to reduce hiring cost

According to Monster, the financial impact of filling a vacant position can be substantial, with an average recruitment cost reaching approximately £4,500. 

In order to stay competitive, it is crucial for organisations to adopt strategies that mitigate hiring costs while ensuring a streamlined and effective recruitment process. 

To help navigate this challenge successfully, here are seven valuable tips designed to optimise recruitment efforts and drive cost-efficiency in hiring endeavours. By implementing these strategies, organisations can not only attract top talent but also achieve significant savings and maximise the return on their recruitment investment.

1. Streamline Recruitment Processes

Companies can optimise recruitment processes to reduce time and resource investment. By streamlining procedures, hiring managers can maximise efficiency and minimise the resources needed for hiring. 

This can involve implementing automated systems, hiring third-party recruiters, leveraging technology and adopting best practices to streamline candidate sourcing, screening and selection. 

For example, companies can utilise video screening technology to review more candidates in less time, replacing traditional screening phone calls. Additionally, organisations can make use of scheduling software like Calendly to eliminate the need for back-and-forth communication when organising interviews. 

2. Use a Flat-Free Recruiter

To simplify the recruitment process and optimise cost-efficiency, businesses can make use of Get Staffed’s flat fee recruitment services

Unlike traditional recruitment agencies that charge a percentage of the candidate’s salary as a fee, flat fee recruitment offers a transparent and predictable cost structure. This means that businesses pay a set amount for the recruitment service, regardless of the level of the position being filled. 

Hiring a flat fee recruitment company offers additional benefits, such as cost savings on job board credits through their buying power. This means they can save businesses money compared to going directly to the job boards. Their help and expertise in optimising job adverts can also enhance the return on investment by increasing the likelihood of attracting strong applications.

3. Optimise Productivity

Companies can take strategic steps to minimise their hiring costs by prioritising productivity enhancements throughout the application and recruitment process. By implementing effective strategies, organisations can streamline the hiring process, attract suitable candidates efficiently and optimise their resource allocation. 

Here are some specific ways to optimise the hiring process:

Identify and Address Recruitment Barriers

It is crucial to identify and address any obstacles or inefficiencies that hinder applicants from effectively navigating the recruitment process. This could involve streamlining application procedures, simplifying the submission process and ensuring clear communication channels.

Set Clear Criteria through a Comprehensive Person Specification

Clearly defining the desired qualifications, skills and characteristics of the ideal candidate through a comprehensive person specification helps to streamline the recruitment process. This specification serves as a guideline for both recruiters and applicants, ensuring that only suitable candidates are considered, reducing time wasted on unsuitable applicants.

Streamline the Interview Process with a Standard Scoring System

Implementing a standardised scoring system for interviews can enhance the efficiency and effectiveness of the selection process. By using predefined criteria to evaluate candidates consistently, organisations can objectively compare applicants and make well-informed hiring decisions.

By adopting these strategies, companies can reduce hiring costs associated with prolonged recruitment timelines, excessive screening processes and inefficient decision-making. 

A more streamlined and productive hiring process enables organisations to attract top talent, enhance the quality of hires and minimise the need for costly recruitment campaigns.

4. Evaluate Benefit Programmes

By strategically promoting enticing benefits during the recruitment process, companies can significantly enhance their ability to attract top-tier candidates while maximising the return on their advertising investment. 

A well-planned and managed employee benefits programme serves as a powerful differentiator for organisations, positioning them as employers of choice in the competitive talent market. 

By offering attractive benefits packages that align with the needs and aspirations of potential hires, companies can effectively communicate their commitment to employee well-being and satisfaction. This not only helps in attracting highly qualified candidates but also improves the overall perception of the organisation as an employer, making it more appealing to talented professionals. 

Optimising the management of employee benefits leads to improved recruitment outcomes, as candidates are more likely to view the organisation as a desirable place to work, increasing their willingness to join the company. By strategically leveraging and managing employee benefits, companies can gain a competitive edge in the recruitment process, attracting top talent and driving positive outcomes for their hiring efforts.

5. Utilise Technology

Companies can optimise their hiring processes and reduce costs by leveraging HR systems and technology solutions such as Applicant Tracking Systems (ATS). 

Automation tools within these systems streamline tasks like online job posting, candidate screening and interview scheduling, freeing up valuable time and resources. Advanced analytics and reporting functionalities enable data-driven decision-making and process optimisation. 

Technology also enhances communication and collaboration among team members, leading to improved coordination and productivity. By utilising available HR systems and taking advantage of integrated features like video interviewing, companies can streamline their recruitment efforts and achieve a more efficient and effective hiring process.

6. Retain and Develop Talent

The best way to reduce hiring costs is not to need to recruit at all! A strong focus on retaining and developing talent within your organisation is the best way to save a fortune in the long run.

By investing in employee retention strategies, such as providing avenues for career advancement, offering competitive compensation and benefits packages and fostering a positive work environment, you can encourage talented individuals to stay with your company for the long term. Retaining employees reduces the need for frequent hiring and training, which can be costly and time-consuming. 

When employees feel valued, supported and motivated, they are more likely to remain committed to their roles and contribute to the success of the organisation. Providing opportunities for professional development and growth also helps to enhance employee skills and expertise, enabling them to take on new challenges and responsibilities within the company. 

7. Continuously Monitor and Analyse Hiring Costs

Regularly monitoring and analysing hiring costs is essential for optimising and reducing expenses in the recruitment process. By closely examining these costs, including the cost per hire, companies gain insights into the effectiveness of their strategies and processes. 

This data-driven approach enables informed decision-making, proactive cost-control measures and efficient resource allocation. 

Continually measuring the cost per hire provides a benchmark for efficiency and helps identify areas of success and improvement. By adopting a proactive approach to hiring cost management, organisations can make data-driven decisions that positively impact their bottom line and ensure effective talent acquisition practices.


Before starting the recruitment process, it’s crucial to have a clear understanding of the total costs involved in the hiring process. Effectively managing and mitigating these hiring costs is crucial for businesses in the UK. 

By diligently examining the different aspects of hiring expenses and implementing strategies to optimise costs, companies can enhance their financial planning, reduce recruitment expenses and establish a more efficient and cost-effective hiring process. 

With a proactive approach to cost management, organisations can make informed decisions, allocate resources efficiently and achieve successful talent acquisition outcomes. 

Contact Get Staffed to find out more about our flat-fee recruitment services. Our packages are designed to help businesses streamline their hiring process while minimising costs. Our comprehensive services cover everything from job advertising to candidate screening, ensuring you find the right talent for your organisation without breaking the bank.