The Success Series – the costs of making a new hire

Hiring a new staff member is more costly to your business than you’d think and costs more than just their salary therefore it is so important that you make the right hire to minimise this cost as much as possible!

A breakdown of the costs that you can expect to pay when bringing someone new into your IT sales team is as follows:

Recruitment costs

In order to find the ‰’right’ person you will need an agency to explore as much of the market as possible, best going exclusively or on a retained basis through your preferred recruitment agency – this will get you the best assessed candidate!

Regarding the costs of finding the ‰’right’ candidate – the industry standard rate is between 20%-30% of the candidate’s basic salary which can total anything from £7,500+.

Estimated one-off cost: £7,500


The obvious and biggest cost, once you’ve found the candidate for the job you’ll need to pay them! This varies massively dependent on the level of the role however current UK Government figures (2017) put the average salary at £27,600.

Estimated annual cost: £27,600


In a lot of sectors bonuses don’t come into to play however, in sales, commission is a huge factor. A candidate’s bonus in the IT market very much depends on the market sector they’re working within, i.e. the reseller/ MSP market tends to be very commission heavy in comparison to the vendor/ distribution space. On average though, an organisation will often look to have a candidates OTE at double their basic salary.

Estimated annual cost: £27,600

National Insurance

Every employer needs to pay 13.8% of an employees’ total pay (including commission etc.) in National Issuance (NI).

Estimated annual cost: £7,617


In 2016 the UK Government put into place the auto-enrolment scheme; this means that employers have to pay a minimum of 1% towards the employee’s monthly salary – rising to 3% in April 2019.

Estimated annual cost: £276 (rising to £828 by April 2019)


Dependent on whether you train your team using in house methods or use an external training provider – training is a cost that certainly needs to be considered and is often forgotten. The average cost per employee sits at just short of £1,000 dependent on the employee’s experience and seniority.

Estimated annual cost: £900

Office lease and equipment

Whether you assign your new employee a desk etc. or if you hot desk, you will need to provide equipment as well as a space for them to work. In regards to the cost implications of this, it is predicted on average this will cost around £4,000. This will cover office furniture, a proportion of the office lease, laptop, company phone etc.

Estimated annual cost: £4,000

Other costs

As well as all of the above – there are multiple other costs from sick pay/ holiday cover through to software licenses – all in this can add up to £8,000.

Estimated annual cost: £8,000

Total cost

Therefore, even before you think of what you’re going to pay the candidate, there is an estimated £28,293 needed to both find and train your new potential employee.

This is further supported by a 2014 Oxford Economics study which states that it costs on average £31,808 to replace an employee in the ‰’IT & Tech space’ and can cost up to £39,887 in other industries. The report also covered the less monetary repercussions of losing a staff member and how long it takes to reach ‰’optimum productivity’ with the new employee on board. Oxford Economics found this to be 29 weeks – leaving an organisation at less than 100% productivity for over half a year!



To summarise, recognised authorities state the cost of replacing an employee to be anywhere from £20,000 all the way up to £40,000. Therefore this shows that the repercussions of making a bad hire can be incredibly detrimental to a business, without even considering the negative implications hiring a bad egg can have in a cultural sense.

Because of the large cost associated with hiring, it is vital that businesses work alongside a trusted and specialist recruitment partner vastly mitigating the risk of them making a bad and costly hire!

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