1. GOALS BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 1 10.1Employee Recruitment Costs Calculate the cost of employment advertising Calculate the cost of hiring an employee Calculate the cost of outside agency recruitment

2. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 2 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.

3. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 3 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.

4. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 4 BUSINESS TIP In many companies a Human Resource (HR) department hires employees. The HR department may also be known as the Personnel Department.

5. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 5 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)

6. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 6 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.

7. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 7 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.

8. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 8 Employment Agency Recruitment Some employers use an employment agency to do some employee recruitment.

9. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 9 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.

10. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 10 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.

11. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 11 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.

12. BUSINESS MATH© Thomson/South-WesternLesson 10.1Slide 12 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.

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