IMPORTANT – Before reading through the costs calculated below, have a guess as to how much you think an empty Sales or Lettings negotiator seat might cost an Estate Agency or Property Developer…
Write it in the comments below and see if you’re close!
So, I’ve been doing some workings on the cost per hire for Sales people within the Property sector.
Here are the potential costs of what might go into securing a suitable Sales Negotiator, Lettings Negotiator or Property Consultant…
- Assuming that the position will remain open for 2 months and it will take this person 2 weeks to be fully integrated into the company – (based on a conservative £10k / month target) lost revenue – £25,000.
- Job Advertised across multimedia platforms– cost of £1500
- 600 CV’s will be received and need to be reviewed:
- Typical review time is 3 minutes per resume – 30 hours of time.
- 25 phone screens will take place (15mins / screening) – 6 hours, 15 minutes of time.
- 8 face to face initial interviews will occur – 8 hours of time.
- 3 face to face, 2nd, more detailed interviews will occur – 3 hours of time.
- Background checks and reference checks will take – 2 hours total of time.
- Hiring Manager earns £100k per year or £48.08 per hour (assuming only one person is involved in the hiring decision). Time invested of 49.25 hours = £2367.94.
- Training and two-week ramp up of new employee – £1,500.
Total cost: £30,367.94
I haven’t included the time lost from the core responsibilities of the hiring manager; they could be devoting a whole extra week per hire to generating revenue for the business.
Or they could be spending more time with the existing team to develop them and increase productivity and retention. This, in turn, would reduce the need to recruit.
Then, of course, you must also take into account the bad hires, people who aren’t right. These are the people who also take a wage out of the business and don’t generate revenue!
If you lose 1 out of 4 people hired at the end of their 3-month probation that would be £30k in lost revenue PLUS their wage cost of £4500 (3 months at £18,000pa) = £34,500 in total.
Spread that over the 4 placements = £8,625 / placement extra for each hire.
If that turnover is higher, I know many property companies and estate agencies where the turnover rate is as high as 1 in 2, that’s £17,250 extra/placement!
This makes the total cost per hire = £38,992.94 (or £47,617.94 if there’s a 50% dropout rate)
Of course, the biggest cost here is the loss of revenue – £33,625 / placement and the cost of bad hires.
So you want to see the best people as quickly as possibly but it’s important not just to hire anyone as you will be going through the whole process again, at more cost. Of course, recruitment companies can help but make sure you pick the right one – but before going down that route see my blog “recruitment agencies are a waste of time!”
The most important thing is getting the RIGHT person and do all you can to keep your BEST people. If you would like more information or advice on interviewing and selection as well as the best ways to increase retention – feel free to get in contact with me (firstname.lastname@example.org)
Really interested to hear if your guess on the cost per hire was close! And if you have anything to add or feel I’ve missed anything in my calculation please comment!
If you are interested in further reading on this topic here is an article posted in the Telegraph, it’s not specific to property sales people, however they calculate similar costs across various sectors…