10.1
Employee Recruitment
Costs
GOALS
 Calculate the cost of employment
advertising
 Calculate the cost of hiring an employee
 Calculate the cost of outside agency
recruitment
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 1
Employment Advertising
 One of the ways that employers recruit future
employees is through advertising.
 They place ads in print media such as local
newspapers, national publications, or trade
magazines.
 Ads may also be posted on Internet job sites.
 The cost of an ad depends on its size and the
number of days it will run.
 Other costs include the costs of preparing the ad.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 2
Classifications of Employees
 There are two basic classifications of employees:
exempt and nonexempt.
 Exempt employees are usually paid a salary and do
not qualify for overtime pay.
 Nonexempt employees are usually paid by the hour
and do get paid overtime pay.
 Nonexempt employees may include skilled and
unskilled workers in a factory, support employees in
an office, or service workers, such as security
guards.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 3
BUSINESS TIP
 In many companies a Human Resource (HR)
department hires employees.
 The HR department may also be known as
the Personnel Department.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 4
Hiring Costs
 The hiring costs for exempt employees are
generally greater than those for nonexempt
employees.
 Also, the hiring costs for high-level executives
are much greater than those for lower-level
exempt employees.
(continued on the next slide)
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 5
Hiring Costs
(continued)
 Labor costs are a large part of the hiring
costs for many employees.
 Human resource staff members process
applications, verify prior employment, check
references, conduct interviews, and complete the
paperwork necessary to add an employee to the
payroll.
 Employers may also spend money to recruit
employees when they hold job fairs or send staff
to interview graduates on college campuses.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 6
BUSINESS TIP
 Overhead costs are not directly related to a
specific activity, such as interviewing an
applicant.
 They include such costs as a manager’s time,
heat, power, light, office space, and
depreciation on furniture and equipment.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 7
Employment Agency Recruitment
 Some employers use an employment agency
to do some employee recruitment.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 8
Executive Recruiters
 Some employers may use executive
recruiters, often called headhunters, to find
full-time employees for management or
specialized technical positions.
 Executive recruiters make all the contacts
with potential employees, screen their
suitability for the position, determine their
level of interest in a new position, and identify
their salary and benefit requirements.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 9
Paying Executive Recruiters
 These recruiters are paid either a
contingency fee or a retainer fee.
 Recruiters who are paid a contingency fee
get paid only if they find a suitable employee.
 The recruiters who are paid a retainer fee get
paid even for an unsuccessful search.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 10
Temporary Help Agencies
 Instead of recruiting permanent employees, some
firms use temporary help agencies.
 These are companies that have a pool of people who
will accept work as contract employees.
 Contract employees are temporary employees who
receive their paychecks and benefits from the
temporary help agency.
 The employer who hires contract employees pays a
fee to the agency for each contract employee.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 11
BUSINESS TIP
 One of the benefits of using outside agencies
is that employers pay for the recruiting
services of executive recruiters or for the cost
of contract employees only when they are
needed.
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 12
BUSINESS MATH
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Lesson 10.1
Slide 13
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 14
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 15
BUSINESS MATH
© Thomson/South-Western
Lesson 10.1
Slide 16