Hidden Employee Costs with New Hires: Part 3

Most industry analysts believe that the cannabis industry will experience massive growth over the next 18 to 24 months. The Vangst 2024 Salary Guide reports that 86% of cannabis companies plan to hire additional staff this year, and with pending cannabis reclassification the industry’s future is optimistic. Unfortunately, many companies overlook the hidden costs of adding additional staff to their team and are caught off-guard by its impact on their bottom line.

To help companies budget for growth, we’ve broken it down into 3 main areas - Fees, Labor-Management, and Tech Stack. In this post, we’ll be covering Tech Stack.

In the recently published Forbes article, it referenced a report from the Society for Human Resource Management (SHRM) that stated the average cost per hire was $4,129 in 2019 but rose to $4,700 in 2023, a 14% increase.

Tech Stack can include:

Payroll Software

The cost of HR and payroll software can vary depending on the range of payroll features and services provided. The providers available on the market can encompass a variety of options, from simple payroll and HR systems to advanced global payroll platforms, all offered on a Software-as-a-Service (SaaS) model with monthly subscription plans.

For basic payroll and HR systems, pricing usually consists of a monthly base fee alongside an additional charge per employee. Base fees typically fall within the range of $10 to $99 per month, with per-employee charges ranging from $2 to $10 per paycheck.

Recruiting Software - ATS

A simple method to gauge the cost of applicant tracking systems is to grasp the variations in ATS pricing structures. Below are four distinct models employed by SaaS companies specializing in hiring solutions:

Pay-Per-Recruiter: ATS tools utilizing a pay-per-recruiter approach charge according to the number of software users. This model is a popular choice for companies with a small recruiting team that handles all hiring needs. Typically, pay-per-recruiter models range from $70 to $100 per month per recruiter.

Pay-Per-Employee: The pay-per-employee model calculates charges according to the employee headcount within the company. This pricing structure aligns with the company's growth, ensuring that costs only rise as the business expands. Typically, pay-per-employee models range from $2 to $8 per employee every month.

Pay-Per-Job: The pay-per-job model uses either a per-role or a per-candidate cost. With per-role, companies pay a few hundred dollars upfront for unlimited candidates. With per-candidate, companies will pay more frequently, but in smaller increments. However, costs can accumulate swiftly with this pricing model, particularly for businesses engaging in extensive hiring. Pay-per-job models typically charge between $200 to $500 per open position or $0.02 to $0.05 per candidate every month.

Flat Fee (or Free): Among ATS pricing structures, the flat-rate model is pretty straightforward. This model entails either a subscription fee or a one-time license fee, granting complete access to an ATS feature set. Though appealing, this model often lacks customization options. Flat fee models range from $50 to $500 per month.

Job Board Access and Fees

Employers can post jobs for free or choose the pay-per-click option to attract more candidates.

Free job postings include job description, location, skills and qualifications, and experience required and appear in the general search results when job seekers search for jobs that meet the criteria listed in the job posting.

Sponsored job posts are paid on a per-click basis. This means employers will pay each time a job seeker clicks on their job post. These job posts on Indeed start at $5 per day and can be changed in the daily budget at any time. According to Indeed, sponsored job posts are four and a half times more likely to result in a hire.

Background Checks

The cost of background checks varies depending on the provider. Typically, basic background checks for employee hiring range from $30 to $50 per individual. For more comprehensive screenings, costs can escalate to over $100 per employee.

Onboarding Software

The expense of onboarding software varies significantly based on features, organization size, and business requirements. For instance: Basic Onboarding Software: Offering fundamental features like document management and new hire checklists, prices typically range from $50 to $200 monthly, contingent on employee count and customization.

Comprehensive Onboarding Software: Including advanced features like electronic signatures and HR system integrations, costs can vary from $200 to $500 per month.

Ads via Social Media for Marketing Purposes

As of March 8, 2024, typical social media advertising rates can range from $15 to $200 per day for account management fees paid to agencies or consultants, while monthly expenses can vary from $450 to $6,000. Additionally, monthly ad spend on various platforms can range from $200 to over $50,000 paid to ad networks.

In Conclusion

It can be pretty expensive when bringing new employees on board. It's important to consider all the additional expenses beyond their salaries. If you’re interested in learning how Vangst can help avoid buying all these various software on your own, feel free to contact us here.