1. SECTION
13-1
Hiring New Employees pp

2. Key Words to Know recruiting (p. 424)
The act of soliciting qualified people to work for a company.

3. Formula Recruiting Expenses Expense Expenses Cost
Total = Advertising + Interviewing + Hiring
Recruiting Expenses Expense Expenses
Cost

4. Example 1
Taliban Manufacturing Company is searching for a person to head its production department.
The personnel department placed advertisements for a total cost of $6,495, and employed Empire Executive Search Company to locate candidates.

5. Example 1 (cont.)
Empire recommended Alice Welch, Tomas Valdez, and Cleveland Adams. Taliban paid for the candidates travel expenses (i.e., transportation, lodging, and meals) for interviews.
Alice Welch Total travel expenses: $517
Tomas Valdez Total travel expenses: $735
Cleveland Adams Total travel expenses: $674

6. Example 1 (cont.)
After the interviews, Taliban hired Cleveland Adams at an annual salary of $154,900.
Taliban paid these expenses to hire him.
Moving expenses $3,600
Sale of home (real estate broker’s fee) $9,470
Empire’s fee (25 percent of Adams’s first salary)
$38,725

7. Example 1 Answer Step: Find the total recruiting cost.
Advertising + Interviewing + Hiring
Expenses Expenses Expenses
$6,495 + ($517 + $735 + $674) + ($3,600 + $9,470 + $38,725)
$6,495 + $1,926 + $51,795 = $60,216

8. Example 2
A financial services firm searched and found a senior-level investment banker. Advertising for the position totaled $12,500.
The firm narrowed the search down to 3 finalists. It spent $3,890 on interviewing expenses.

9. Example 2 (cont.) It decided to hire Jane McNally.
The firm paid $5,000 in moving expenses and a 6 percent realtor’s fee on the selling price of her home.
The home sold for $348,000.
What is the total recruiting cost?

10. Example 2 Answer Step: Find the total recruiting cost.
Advertising + Interviewing + Hiring
Expenses Expenses Expenses
$12,500 + $3,890 + [$5,000 + (6% × $348,500)]
$12,500 + $3,890 + [$5,000 + $20,910]
$12,500 + $3,890 + $25,910 = $42,300

11. 425: 1-17