How Much Will a New Hire Really Cost You?

Posted by: 8. February 2016
ROI Calculator screenshot

The ROI Calculator enables you to determine the impact of a new hire on your shop's bottom line.

So you know there’s a skills gap. You know you need to bring on fresh talent if your shop is going to thrive and adapt.

But where do you begin?

How about with answering the question: “How much will this cost?”

Hiring Takes Time and Money, but How Much?

The Manufacturing Institute has released a free online tool to help businesses calculate just how much money the skills gap will cost to them. The ROI Calculator, produced in partnership with the National Aviation Consortium (NAC), is available at

In a brochure, the institute lays out some of the variables inherent to the hiring process: “Finding quality workers takes time and money. Training them up to your standards takes even more. Now consider what happens if you can’t fill a position—or if a new hire doesn’t meet your expectations or doesn’t last. Not only do you have to start the recruiting process again, but in the meantime you will likely pay overtime, increase use of staffing agencies, and reduce production until you are back to full strength. But just how much is it costing you?”

Using research by the Manufacturing Institute and The Brookings Institution, the ROI Calculator is intended to translate shop numbers into a coherent answer to that question.

How the Calculator Works

The ROI Calculator comprises four steps in which the user enters shop and human resources data. At the end, the program produces a table showing an expected ROI with options to download the report as a .pdf.

1. Cost of an Open Position: In this step, the user inputs information about the business’s existing labor situation, advertising costs, staffing firm fees, and on-the-job costs like training and supervision.

2. Business Impact: This step tries to fill in information about the hidden impacts of overtime, downtime and cycle time in the process of hiring new labor.

3. Possible Savings: Looking beyond the hiring process, this step anticipates potential savings in reduced turnover and hiring costs by seeking certified workers and partnering with educational institutions like community colleges.

4. Cost to Implement: Having calculated the savings from certifications and partnerships, this final step calculates the investment costs of establishing those partnerships and managing candidate flows.

The ROI Calculator can be found online at

Do Partnerships Pay Off?

It’s no surprise that a tool funded by a consortium of community colleges is going to advocate for investment in partnerships with local colleges. The ROI Calculator begs the question of whether investing in educational institutions is a viable route to bringing on fresh skills. But the site makes an intriguing case for it, citing research indicating that employee retention can improve by half or more when companies hire certified candidates. Other survey results are said to indicate that businesses partnering with community colleges can reduce the number of candidates they have to interview by as much as 50 percent.

But if that’s not convincing enough, it’s not hard to find positive press these days about increased rates of credentialization, manufacturer partnerships with higher ed and advocacy groups, and local engagement. When it comes to making a dent in the skills gap, maybe there’s something to the theory of creating a skills pipeline with schools and getting involved in the local community.

Let us know your thoughts in the comment thread below. And if you try out the ROI Calculator, tell us how it went.

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