When I worked at IBM, the company had calculated the total financial cost of replacing an individual employee. On average, it was approximatly £40,000.
That’s simply to replace them. That’s on top of the salary! It cost almost a whole year of salary every time an employee left. How did they get this figure?
Hidden costs of recruitment
Here’s an example, in which many costs are missing, and I’m only guessing at others:
|Write the advert||1 hr||£0|
|Place advert in a few places||0.5 hrs||£150-£1500|
|Read 10 x incoming applications||1 hr||£0|
|Arrange supply teacher for each interviewed candidate||0.5 hrs||5 x £100|
|Chase references||1 hr||£0|
|Teacher + HoD + SLT discussion (+supply for two of them)||0.5 hrs||£100||Cover while hiring|
|Three weeks of supply teachers||1 hr||£2000||Repeat the process if candidate withdraws|
|1 in 5 withdraw||x 1.2||x 1.2||Repeat if teacher fails probation period|
|1 in 10 fail||x 1.1||x 1.1|
We then have to account for the hours of lost work. Admin staff get circa £24k / year, regular teachers circa £36k / year, HoDs circa £42k / year, and SLT circa £48k / year.
SubTotal: (£3350 + (4hrs * £12) + (1.5 * £18) + (0.5 * (£21 + £24))) x 1.2 x 1.1
Total: approx. £4,500 (I low-balled the cost of advertising; let’s be penny-pinching)
Variations: cost of an agency
Agencies should take no more than 5%, if you have purchasing power (multiple schools bulk-buy) and you have a canny negotiator; without the buying power, but with good negotiation, I’d expect perhaps 10-12%. In practice, I’ve heard they take up to %15-%20.
One year salary for average teacher above: £36,000
Agency cut: £3,600 – £7,200
Variations: cost of newspaper adverts
Most of the big national newspapers have schools/teaching/public-sector weekly job sections.
Cost of half-page newspaper advert: £2000-£5000
Even conservatively (low-balling ad costs and agency costs) our £4,500 has grown to:
Subtotal: £4,500 + (1.2 x (1.1x (£4000 + £3000)))
Conclusion: merely hiring 3 teachers may cost a year’s salary
…however, in reality, this amount of money is a drop in the ocean of a Secondary school’s spending. I suspect that there are many more un-obvious costs and indirect costs (that need applying with a percentage weighting) – I’m only giving an illustrative example.
But compare this to the appeal at every school I’ve been in for “please do less printing, we can’t afford to waste paper”. £14,000 buys a lot of paper!
If you’re spending the cost of a brand-new family car every time you recruit, how much care and diligence should you be putting into the process? How much extra time is it worth to avoid the cost of repeating it a year later?
In competitive industries it’s that “cost of repeating it same time next year when this candidate goes somewhere else, or has to be fired for poor performance” that’s the most frightening. I have no idea what the figures are for schools; anecdote and rumour suggest that significantly many SLT decide they can’t afford it and keep newly-hired bad teachers on for years and suck down the costs to morale, to exam results, to other teachers quitting in frustration, etc.
I believe that most SLT know all this by heart, but for the benefit of people who’ve not been hiring managers before, here’s some basic good practices that are common once you’re tracking hiring data:
Weighting: how much was each pound worth?
In the example above, we spent almost half the budget on the agency. Each time you hire, record how many times the agency was the deciding factor in success. Record the same data 1 year later – were agency hires more or less likely to stay on, and be good teachers?
Divide the total money spent on each source by the number of teachers it found; this gives you the “Cost per £ per source”. High costs should be negotiated down or dropped.
Low costs which are still successful sometimes – try increasing the spending! If you are spending 1/10th as much on TheLocalHerald as on the Telegraph, but getting the same response rate, try doubling the local paper spend and halving the national paper spend.
Ask each candidate where they found the advert. Record this in a spreadsheet. Each year compare the number of candidates source by each newspaper / website / agency … and then compare the percentage hiring rate for each source.
Sources that do poorly? Drop them! That’s free money you can spend elsewhere.
Agencies love finders fees; they are a rip-off. Agencies typically make £4000-5000 per candidate hired. They pay finders fees typically of £100-200 per candidate referred who goes on to be hired.
A few years ago I published an article stating that I would happily refer candidates to recruitment agencies for a small fee – I only want 5% of the first-year salary. This is typically £2,000. I felt this was very fair considering I’d be doing all the work, and the agency was getting the credit + the money.
If you’re a school, and you’re spending £14,000 per hire … why is your finder’s fee anything less than 50%? Yes, that’s a huge amount – but if it saves you £7,000 by hiring from a recommendation from existing staff, or from a parent of a pupil, isn’t it worth it?