Businesses are costly things to run. Between ever-mounting operational costs and the often-mercurial movements of industries and markets, it is difficult enough for many established businesses to keep the metaphorical doors open, let alone newer start-ups.
As a newer start-up on the verge of some exciting expansion, you may be looking to expand your workforce.
This is obviously a significant expense, but that expense isn’t solely limited to the salaries you agree to pay.
There are other costs and considerations – but what are they? And how much can you expect to spend when it comes to onboarding new staff members?
1. Recruitment and Onboarding Expenses
The first expense in hiring new staff comes in the form of recruitment. Many businesses will utilise recruitment companies here, in order to outsource the various steps involved in reaching and screening quality candidates – which include marketing and advertisement as well as HR man-hour costs.
Even when a shortlist of candidates for interview has been reached, there are business costs incurred during the interview process.
Managerial staff have to give their own valuable time to the interview process, with knock-on impacts for existing projects or workloads.
The average cost-per-hire in the UK is approximately £3,000, a number which will differ widely depending on the size and nature of your business and recruitment process.
2. Salaries and Mandatory Contributions
The most obvious cost related to staffing is, of course, salary. This is a complex enough consideration, particularly when it comes to fielding a competitive cohort of candidates; it is this reason for which an employment cost calculator can be a powerful tool for balancing cost against competitiveness.
However, beyond gross salaries, employers must also account for National Insurance Contributions (NICs) and pension contributions.
As of April 2025, the employer’s NIC rate is set to increase from 13.8% to 15%, which will inevitably impact the affordability of certain staff costs or pay rises.
Additionally, there are statutory benefits to consider, such as holiday pay, sick leave, and family leave policies.
Employers may also offer additional perks like private healthcare or bonuses to attract top talent, which can further increase costs.
3. Training and Development Costs
Many of the costs associated with hiring staff extend beyond the moment of hiring, too. New staff, whether experienced or at the start of their career, require at least a basic level of training and development in their new role with you – and benefit greatly from more investment in this arena, too.
Failure to properly invest in the development of staff is a key reason for low staff retention, where proper investment in employee training can be crucial for building a staff cohort with staying power.
Beyond the cost of initial training, employers should also factor in ongoing development expenses.
This might include professional qualifications, leadership training, or even certifications needed to keep up with industry standards.
These costs not only add to the financial investment but also increase the value and effectiveness of employees, making them a worthwhile consideration for long-term growth.
4. Overhead and Operational Expenses
Finally, and unavoidably, employing new staff often necessitates additional expenditures on office space, equipment, and other such resources.
Consider the cost of a new desk, new computer and peripherals, additional sundries for the office kitchenette, and potentially new licenses for necessary software. Altogether, these costs easily approach £5,000 per employee.
Coupled with the cost of training and onboarding, you can expect to spend an average of £9-10,000 on each new employee outside of salary-related costs.
If your business operates remotely or in a hybrid capacity, these costs may look different.
Remote work can mean spending more on digital infrastructure, such as video conferencing tools, project management platforms, or cybersecurity measures. However, it can also save significantly on physical office costs, such as rent or utilities.
In summary, while salaries might represent the most obvious expense when hiring new employees, the true cost is much more multifaceted.
Recruitment, onboarding, training, and operational costs all add to the total, meaning careful planning and budgeting are essential to ensure a return on your investment.
Hiring the right people, and investing in them appropriately, is key to creating a successful and sustainable workforce.
Proper budgeting is not just an expense—it’s a pathway to growth and efficiency for your business.
