The cost of hiring your first employee begins long before you add another person to your payroll, but you can keep the pain localised to your bank account if you follow the appropriate steps while recruiting. Because the only thing worse than lack of staff is employing someone who’s not the right fit. From writing an effective job advert to avoiding indirect discrimination, we’ve covered everything to help ensure your first hire is a keeper.
Calculate the cost of hiring
Before you put together a job spec and an advert, you need to make sure you can cover the cost per hire. For example, if you enlist the help of a recruitment agency, then you might need to pay them around 20-30% of your new hire’s salary.
You can also consider advertising the job yourself via LinkedIn (between £650–2,450) or a job site such as Monster (£100–600), which will cost considerably less. However, this method is likely to take up more time you might not necessarily have. (Though our tips on time management might be able to help with that.)
All in all, there can be a fair few key annual costs associated with taking on an employee up to and beyond recruitment:
- Recruitment agency fee – £5,000 (based upon 30% of the government’s reported £27,600 average UK salary. This fee will depend on the agency you are using and might be £0 if you hire directly).
- Annual salary – £27,600 (based upon the national average). What you pay your employees should be based upon experience and salaries offered by competitors for similar roles.
- National Insurance (NI) contribution – £4,037 (based upon employer’s Class 1 NI of 13.8% of £27,600).
- Training – £1,068 on average depending on the role and whether you are willing to provide training or not.
Still confused? Read our guide on how to pay your employees for the first time to find out all you need to account for when calculating the cost of a new hire.
Writing a job advert
It’s key to get the job advert right. It should outline the duties required in the role and sell the benefits of working for your company. But make sure you paint an accurate picture of what the job entails, including duties that might be deemed less desirable. You don’t want someone to come on board and then leave because they feel it’s not what they signed up for.
Here are the main things you should include:
- Job title
- How the role sits within the team and wider business
- Details of direct reports
- Role duties and responsibilities and expected deliverables
- Scope for role progression and promotion
- Required skills, experience, education, and training (break this up into essential and desirable skills)
- Required personality traits that are key to success in the role
- Location and travel requirements (e.g. do they need a driver’s licence?)
- Salary scope and benefits package (use a minimum and maximum salary and state this will be determined based upon experience)
- Summary of your company’s identity, place in the market, and internal culture
As an employer, it’s your duty to fulfil the legal requirements that are in place to protect your business and your potential employees.
Keeping your operations within laws and regulations is always a good idea. Not only does it mean you’re less likely to run into issues later, like grievances and reprimands, but it shows you’re a professional outfit to your stakeholders, which will encourage trust.
- When calculating salary, you need to pay your employee at least the National Minimum Wage.
- You can only consider applicants who have the legal right to work in the UK. While the UK remains in the EU, the rights of EU nationals living in the UK remains unchanged.
- If the role requires the need to work with children or vulnerable individuals, you’ll need to carry out a Disclosure and Barring Services (DBS) check (formerly known as a CRB check).
- As an employer, you need employer’s liability insurance. Failure to comply can cost £2,500 for each day you are uninsured.
- You must register as an employer with HM Revenue and Customs (HRMC) – this can be done up to four weeks prior to paying your employee’s first salary.
- If you first became an employer on or after 1 October 2017 you must enrol eligible staff in a workplace pension as soon as their employment begins.
Believe it or not, but it’s quite easy for employers to accidentally discriminate when hiring. Even if unintentional, it’s taken very seriously and can lead to steep penalties.
An example of indirect discrimination would be restricting your advertising only to online sites aimed at male students, or a magazine aimed at women over 40.
Make sure to give your advert a wide appeal and avoid phrasing that implies you’re looking for someone of a certain age or gender, for example.
Ask anyone with any recruitment experience and they’ll tell you how hard it is to find exceptional candidates. Rarely does the best talent come knocking on your door, and the marketplace is flooded with job-hunters who will apply for roles without so much as reading the job spec or looking up your website.
For this reason, you need to be prepared to receive a stream of undesirable applications and figure out how best to separate them from the ones you want.
- If a candidate hasn’t bothered to write a covering letter the application may have been sent to numerous companies. If so, the applicant could know little about the role and even less about your brand
- If the application includes spelling mistakes and poor grammar it may be the candidate hasn’t put much thought or dedication into applying. Would they be suited for a role that requires effort and attention to detail?
- Unless you’ve requested otherwise, anything more than two sides of A4 is probably unnecessary. Consider why they haven’t cut to the chase. Could those reasons be a deal-breaker for you?
- Look carefully at applications that list irrelevant skills and experiences. Chances are the better candidates will have tweaked their CV to show they match the requirements mentioned in your job ad.
Interviewing candidates doesn’t come naturally to everyone. And you may have no formal training. Along with lack of preparation, this can lead to an unproductive interview or hiring the wrong person.
To combat this, write a list of open questions that will give you insight into the candidate’s skills, experience, and personality. Think about things like:
- Make your candidate feel relaxed. Not only will it be a more pleasant experience for everyone, but people tend to let their guard down more when they feel comfortable.
- It may seem obvious, but start by asking the candidate to summarise their career to date. Past experience can tell you a lot about where someone is going, and it gives them the chance to demonstrate their self-awareness.
- Quiz them about their current employer’s status, position in the market, and any challenges they face. Does this person have an awareness, or are they just there to pay the bills?
- Ask how this person would fit into your business. Do they bring anything new to the table? Will they clash with other members of the team?
- Check their understanding of the position they’ve applied for and discover if they have a willingness to progress.
You should always try to interview a handful of candidates, even if you are blown away by your first interviewee. Besides a bigger pool to choose from, bt if your chosen candidate doesn’t work out you could have a back-up plan in place.
Some people interview brilliantly, but turn out to be completely different when they’re in an actual work environment. Background checks can help safeguard against this. When looking at a candidate’s employment history, you should seek evidence for the last five years to see if there any gaps in their employment and track the way they’ve moved from role to role.
Gaps in CVs can sometimes be covering something the candidate does not wish to disclose, so you might want to carefully think about that. If your business happens to be within the financial sector, then it’s common practice to ask successful candidates to provide you with a clean credit file from Clearscore or Experian.
The recruitment journey can time consuming, but when it goes your way and you end up with an excellent recruit, your business will reap the benefits. For more advice, find out how much it costs to keep your workforce happy and the different ways you can keep your team engaged.