It takes more than a classified ad in a major metropolitan newspaper to find a needle in the haystack according to Ken Arendt, vice president of information services for California-based Saratoga Institute, an international research firm specializing in the economics of hiring. "While advertising accounts for five to 10 percent of the hiring cost," Arendt notes, "other expenses must be considered. Relocation, for example, can be as much as 30 to 40 percent of the total hiring expense."

"The cost of hiring is like an iceberg," cautions Jon Harvill, our APICS chapter's Employment Coordinator. "It's easy to calculate the cost of running a classified ad in a local newspaper or industry trade publication," explains Harvill, "but all too often there is a false sense of what it actually costs to hire someone. The part of the iceberg that's underwater and out of view is often ignored or miscalculated, yet accounts for the most significant percentage of hiring costs.

"What's easily forgotten," adds Harvill, "is the 67.8 hours, on average, it takes a conscientious hiring manager to search through a 200-resume avalanche that results from a well-written classified ad. At this point, the quest for that proverbial 'needle in the haystack' has still only been narrowed to the top five candidates." Since a worker's productivity is generally valued at five times the annual salary, a hiring manager earning $52,000 is worth $125 per hour to the company or $9,725 for every 200 resume received.

Harvill estimates that the perceived cost of hiring is usually dwarfed by the productivity and profits a company loses while engaged in the search for the perfect person. "Lost Opportunity Costs can easily exceed the other costs of hiring even when the search for the 'needle in the haystack' is not particularly protracted," he notes. Even more disconcerting, when the ideal candidate is uncovered, he or she, may not accept the offer and the process must start all over.

Experienced hiring managers often partner with professional search firms, like Harvill's firm (Professional Search of Atlanta), outsourcing their search for the needle. When a search firm places a job candidate, the client company pays a fixed fee, a fee based on a percentage of the applicant's starting salary, or the hourly rate charged by the search consultant.

Our Chapter's Employment Coordinator will provide member companies a free advisory service. Harvill will discuss the pros and cons of various methods for identifying and securing needed talent. He can assist you in estimating probabilities of success and time estimates for filling positions with each method, to guide you to the least cost method in staffing.