How to Reduce Hiring Costs in 2025
Hiring a new employee can be expensive, with U.S. companies spending an average of $4,700 per hire, according to the Society of Human Resource Management (SHRM). The costs of hiring the wrong employee can be even higher. When bad hires don’t work out, their unfinished tasks often create additional problems. You may need to bring in temporary staff, assign overtime to current employees, or risk missing important deadlines. We’ve seen time and again with clients that the extra load can hurt team morale and directly impact efficiency.
There are also hidden, indirect costs of a vacant position that can be easily overlooked. When you make a new hire, you probably do not anticipate it going wrong. After all, you would not have hired them in the first place if you knew they would not work out, right? When you have already spent valuable time and resources on interviewing, hiring, and onboarding an employee you thought was the right fit, it can be a shock to realize they actually are not. Now, you will have to repeat the whole process to find their replacement, which you likely did not factor into your budget or timelines.
The upfront cost of hiring may seem manageable at first, but expenses can add up quickly if you’re not careful. Fortunately, there are strategies you can use to keep hiring costs under control without compromising on quality.
What You Must Do First: Analyze Your Current Hiring Process
Reducing hiring costs starts with understanding where your money is going. Begin by auditing your existing hiring process. Add up expenses like job ads, recruiter fees, background checks, and the time your internal team spends on hiring—which people frequently overlook.
Calculate your cost per hire to get a clear view of your spending. Use this simple formula:
Total hiring costs ÷ Number of hires
For example, if you spent $50,000 on hiring from January to December and made 25 hires, your cost per hire is $2,000.
The tricky part is identifying every expense. Be sure to include both internal and external costs:
Internal Costs:
- Salaries of in-house recruiters
- Hiring software (ATS, email platforms, etc.)
- Recurring fees (subscriptions, job boards)
- Employee referral bonuses
External Costs:
- Third-party recruiter fees
- Job advertisements
- Career fairs and events
- Candidate assessments
- Background checks and drug testing
Once you’ve accounted for everything, dividing the total by the number of hires will reveal the true cost of adding new employees to your team. Understanding this number is the first step to identifying where you can cut costs and improve efficiency.
Next, look for inefficiencies that may be slowing things down or adding unnecessary costs. Are your job postings lingering on job boards and failing to attract qualified candidates? Is your interview process too lengthy, causing you to lose people to faster-moving competitors? Take an honest look at your company and the procedures your have in place if something isn’t working you need to know. Pinpointing these issues can reveal areas where you can streamline without sacrificing quality.
Once you’ve identified key problem areas, establish simple KPIs (key performance indicators) to track your progress. Metrics like time-to-fill, cost-per-hire, and candidate quality can help you measure improvements and identify ongoing challenges. By analyzing your hiring process and setting clear benchmarks, you’ll be better equipped to control costs and improve results.
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So, What Is the True Cost of a Bad Hire?
A Harris study found 41% of employers reported that a bad hire cost their company more than $25,000, and 25% said it exceeded $50,000. These costs are often tied to the role itself — positions with higher salaries or specialized skill requirements tend to be even more expensive to replace since finding a qualified candidate takes longer.
Hiring the wrong person isn’t just a minor problem; and it shouldn’t be treated as such. So, how can you avoid these expenses and improve your overall hiring outcomes?
For starters, partnering with a professional staffing agency can significantly improve your chances of hiring the right person the first time. Staffing experts are skilled at identifying top talent, reducing the risk of costly hiring mistakes. In addition to improving placement accuracy, agencies can also speed up the hiring process and help you manage costs more effectively.
While some companies assume staffing services are too expensive, they usually end up saving money in the long run:
- Faster Hiring Timelines: Staffing agencies have deep talent pools, which means they can find the right candidates faster, helping you fill roles quickly and avoid the costs that come with an empty desk.
- Smarter Screening: Professional recruiters know exactly what to look for. They use targeted screening methods to spot candidates with the right skills and experience, giving you a better shot at hiring someone who’s a great fit.
- Less Work for Your Team: A staffing agency can take care of sourcing, screening, and those early interviews, freeing up your team to focus on their day-to-day work.
For the right company, partnering with a staffing agency can be a smart move that quickly pays off. It saves you time, lowers the chances of a bad hire, and helps you build a stronger, more reliable team.
How Do You Reduce Your Hiring Costs?
Now that you know how much a bad hire can cost — and how working with a staffing agency can help you avoid those expenses — I’d like to focus on practical ways to reduce hiring costs moving forward. The good news is that you can use several tried and true strategies to improve your hiring outcomes.
Avoid turnover
Few things drain your hiring budget faster than turnover. When a new hire doesn’t work out, you’re not just losing the money spent on recruiting but also out the time and resources invested in training that employee. Then, you have to start the process all over again.
According to SHRM research, replacing an employee can cost 50-60% of their annual salary. That’s why preventing turnover should be a top priority.
Working with a staffing agency can help minimize this risk. A good recruiter will know how to look at not just the technical requirements of a role but the culture and style of your team and company. By placing the right person in the right role the first time, you’re far less likely to find yourself paying twice to fill the same position.
Related: Highly Effective Strategies for Employee Retention
Recruit from within
Sometimes the best person for the job is already part of your team. Promoting from within can dramatically reduce hiring costs since internal candidates often require less training and no additional onboarding expenses.
Internal hires also offer a big morale boost. Employees are more likely to stay with a company that invests in their growth, and internal promotions are a great way to show your team that you value their hard work and dedication.
Related: Hiring From Within: The Dos and Don’ts
Ramp up your referrals
Employee referrals are an overlooked and cost-effective ways to find quality talent. While referral bonuses come with a price tag, they can save you a significant amount of time and effort in sourcing and screening.
Referred candidates often stay longer too, after all, someone they know is vouching for the team they’re joining. Encouraging your employees to recommend people they trust is a simple yet powerful way to improve your hiring success.
Related: How to Make Your Employee Referral Program a Powerful Recruitment Tool
Optimize the interview cycle
A lengthy hiring process frustrates candidates and costs your company money. The longer a role sits unfilled, the more it disrupts productivity.
Staffing agencies can help speed things up by streamlining the interview cycle. For example, on our team, we aim to deliver fully screened and qualified candidates within 48 hours. We make this possible by:
- Maintaining relationships with passive candidates
- Leveraging our vast database to track interactions with candidates
- Keeping a network of active job seekers ready to move
This efficient process helps you get the right person in place faster. The sooner your new hire is trained and contributing, the sooner they start adding value.
Go virtual
Career fairs and in-person recruiting events can be effective, but they often come with high costs and aren’t always practical. Virtual alternatives can deliver similar results at a fraction of the price.
Online career fairs and networking events are a great way to connect with candidates without travel expenses, booth fees, or printed materials. Plus, they make meeting talent outside your immediate area easier, expanding your pool of potential hires.
Related: Tips for Hosting Virtual Hiring Events
Avoid a bloated tech stack
Technology is essential in modern recruiting, but it’s easy to end up with a bloated tech stack full of tools that overlap or go unused. Ask me how I’ve learned this lesson. You should take time each year to review your recruiting platforms, subscriptions, and software. Cut what’s no longer delivering value and look for areas where AI-powered tools can streamline your process.
AI can help automate tasks like resume screening, candidate matching, and interview scheduling, reducing manual work and speeding up hiring timelines. Rather than relying on multiple platforms that don’t talk to each other, look for integrated solutions that combine automation, analytics, and applicant tracking in one place.
Not only does this simplify your hiring workflow, but it can also reduce your overall spend by replacing multiple tools with more innovative, more efficient technology.
Keep rising costs from getting you down with our ‘Reducing Labor Costs’ eBook.
Learn from our experts on how to streamline your hiring process.
Free up your in-house resources to be used more effectively
Your team’s time is incredibly valuable. When internal employees are buried in time-consuming tasks like posting job ads or sorting through resumes, it pulls them away from higher-value work.
Outsourcing these front-end hiring tasks to a staffing agency can be a game-changer. By allowing professional recruiters to handle sourcing, screening, and initial interviews, your internal team can focus on their core duties.
Related: The Top Recruitment Assessment Tools and Technologies
Have access to more recruiters
Managing unexpected hiring spikes can feel overwhelming if your in-house team is small or stretched thin. Staffing agencies offer a larger team of dedicated recruiters who specialize in finding the right talent quickly.
Treat recruiting agencies like any other specialized tool. Use them when you have a big project, need to backfill key roles, or handle seasonal demand. This way, you can grow your team without overburdening your internal staff.
Lower Your Cost of Hiring an Employee By Partnering With The Right Recruiting Firm
At the end of the day, reducing hiring costs isn’t about cutting corners — it’s about making better decisions at every stage of the process. From improving efficiency to avoiding costly hiring mistakes, working with a trusted staffing partner can help you reach your hiring goals faster and more affordably.
Whether you’re hiring for one role or building an entire team, 4 Corner Resources is here to support you. Our experienced recruiters use proven strategies, industry insights, and a nationwide network of top-tier talent to help you make the right hire the first time.
Headquartered in Orlando and consistently ranked among the top staffing firms in the country, we work with companies of all sizes and industries across the U.S. If you’re ready to save time, cut hiring costs, and build a stronger workforce, we’d love to help.
If you need to hire someone, get in touch to learn how we can support your hiring needs — without the high cost of going it alone.
