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September 8, 2022 - 10:32am

Labor costs have always been a big chunk of a construction company’s budget. There are direct costs, like paying your workers their hourly wage, and indirect costs like insurance and workers’ compensation. And since projects can’t be completed without labor, it’s a necessary expense but one that’s steadily rising. 

According to the U.S. Bureau of Labor Statistics, hourly earnings for construction workers have been steadily rising throughout 2022, with July’s average wage being $32.65 per hour, up more than $1 since July 2021.  


Reasons for Rising Labor Costs 

But no matter the reason behind recent wage increases, paying higher wages ultimately eats into profits. Since you must hire workers to complete projects, the solution is to digitize areas of operation where you can save money, like recruitment and onboarding. 

Digitization of Recruitment Processes Reduces Your Cost to Hire

It is estimated that it costs about $4,000 to hire a new employee. Those costs can be attributed to the time and money spent writing and posting a detailed job description, attending a job fair, doing a background check and interviewing candidates. When you use an applicant tracking system or ATS, those costs can be reduced by speeding up your time to hire

Why the Time to Hire Metric is Important

The time to hire metric equals the number of days it takes to hire a new employee. It begins when a candidate responds to your job posting and ends when he or she accepts an offer, spanning the length of time a candidate is in your talent pipeline. According to LinkedIn, the average time to hire is 30 days. If your time to hire is typically longer than average, if could mean there are inefficiencies in your process. For example, 

The longer it takes to hire a candidate, the more money you’ll spend. If you take too long to recognize and respond to candidates, the right candidate may decide not to accept an offer or have taken another job and you have to start the process over. 

How an ATS Makes Recruiting More Efficient

An ATS can speed up your time to hire by automating many of the hiring processes’ most time-consuming tasks. An ATS can automatically post job descriptions to multiple job boards and help source candidates, reducing recruitment costs. An ATS tracks every applicant who applied for a position with your company. That information—name, state, zip code, email, resume, etc.—all gets stored in a candidate database that can be viewed, reviewed and searched at any time. Starting your search in your system saves time, money and builds on the relationship that already exists with past candidates. 

A full-featured ATS will automatically track all applications, providing reports to maintain EEOC and AAP compliance. It also allows you use candidate batching, which targets candidates based on pre-screening questions, so you don’t have to report on hundreds of candidates. 

Digitization Reduces Onboarding Costs

Once you hire an employee, there are other costs to consider, like onboarding. It can take six, nine or 12 months to fully onboard an employee and integrate them into the company. Training is a big part of onboarding and the longer it takes to train, the more expensive the process becomes.  

Costs Associated with Onboarding

Onboarding is a process. There are several steps to follow to make sure your new employee is up-to-speed on what’s required to do the job. 

Calculating your onboarding costs is similar to calculating your cost per hire. You add up all the costs, including man hours, required to onboard new employees and divide the amount by the number of employees you’ve onboarded this year. 

How Onboarding Software Reduces Onboarding Costs

A good onboarding system can streamline workflows with built-in automated efficiencies. You can send communications to hires about logins, schedules and training. All necessary forms can be filled out by the employee from home, before day one – eliminating the need to do it from the job site. All documents are stored and HR administrators are alerted when an new employee has completed an action, so you never waste time before moving on to the next step. Ongoing training and development is scheduled for the employee. He or she can complete it on their own time and they can track their progress.  

A great hiring and onboarding process is a must, and not providing one because of the costs involved will only cost you more down the road. With HR software’s ability to automate some of the most time-consuming processes, investing in one will help reduce your future hiring and onboarding costs.  

The cost of labor may go up and down, but you can offset the changes by adopting systems that help you become more efficient in other areas, reducing your overall costs. 

New Webinar on Tuesday, November 15: register now to learn how to Be More Efficient with Integrated HR Management/Construction Accounting Software