Chris M.Updated
The real cost of recruiting the right person
A £100,000 salary is not a £100,000 decision. On a realistic UK model it is roughly £133,000 to £143,000 in first-year cash cost, and around £147,000 to £157,000 in first-year economic cost once lost productivity during ramp-up is counted.
In the built environment an employee is rarely just a salary line. They are a bundle of direct expense, time demand and operational risk, and firms are hiring into a market shaped by skills pressure, rising employment costs and tighter commercial scrutiny.
What does the standard calculation miss?
Almost everything except the two most visible items. Most businesses model employee cost as salary plus employer's National Insurance and stop there.
| Cost component | Included in the usual model | Actually applies |
|---|---|---|
| Salary | Yes | Yes |
| Employer's National Insurance | Yes | Yes |
| Employer pension | Sometimes | Yes |
| Recruitment fee | Rarely | Yes, and it is a percentage, not a flat cost |
| IT, software and equipment setup | Rarely | Yes |
| Director and HR time to hire | Almost never | Yes |
| Onboarding and mentoring time | Almost never | Yes |
| Ramp-up productivity shortfall | Almost never | Yes, and it is the largest hidden item |
| Absence | No | Yes |
| Failure and reset risk | No | Yes, and it is the one that hurts |
The context tightened in April 2025, when the employer NI threshold fell to £5,000 and the rate rose to 15%. The Institute for Fiscal Studies estimated that change alone adds roughly £900 per employee on median earnings. The Office for National Statistics puts median full-time earnings at £39,039.
Recruitment fees are the item most often modelled wrongly. UK recruiter-market guidance commonly places permanent-hire fees at 15% to 20% of salary, with some published terms higher. A 10% to 20% modelling range is commercially reasonable, and 10% is the low end rather than the norm.
What does the true figure look like?
Run the full definition, salary plus employer NI plus pension plus recruitment fee plus IT setup plus internal hiring and onboarding time plus absence plus ramp-up shortfall plus reset risk, and two reference points emerge:
| Median hire (£39,039) | Senior hire (£100,000) | |
|---|---|---|
| Employment package before hiring costs | n/a | ~£115,600 |
| First-year economic cost | ~£60,900 to £64,800 | ~£147,000 to £157,000 |
| Range driven by | Recruiter fee percentage | Recruiter fee percentage |
Substitute your own recruiter fee and ramp-up assumption and the shape holds. The point is not the exact figure, it is that the gap between the salary and the decision is roughly 47% to 57% on a senior hire.
What happens when a hire does not work out?
You pay twice, and the second time costs more than the first.
The business loses the recruiter fee, leadership and HR time, onboarding and mentoring, equipment setup, output during the vacancy, and process knowledge that never got written down. Then it funds a second recruitment cycle. On a £100,000 hire the agency line alone may be £10,000 to £20,000 before management time and lost momentum.
This is the strongest argument for treating employment as a risk-adjusted operating cost rather than a payroll number.
How does this change the automation decision?
It reframes it, because the honest comparison is not automation against salary. It is automation against true first-year cost including reset risk.
The case for automation was never that it replaces people. It is that it lowers the risk-adjusted cost of employment by removing repetitive admin, improving consistency, surfacing issues earlier and reducing dependency on expensive human hours for low-value work. In practice: less director time chasing information, fewer missed steps, better documentation, lower rework risk, and senior staff spending their hours on judgement and client-facing work.
Put side by side, an automation layer typically costs a fraction of one mid-level hire's true first-year cost, and the two work best together: the automation absorbs the admin, so the person you do hire spends their year on the work you actually hired them for. That is why the cost of doing nothing about admin and the cost of hiring are the same conversation, and why connecting the systems you already own usually beats adding a person to operate them.
None of this is an argument against hiring. Growing firms hire, and the built environment needs every good person it can attract. It is an argument for making each hire count: bring people in for judgement, relationships and delivery, give the repetitive admin to systems that handle it without being asked, and the same salary buys a producer instead of an administrator. Firms that get that balance right can afford to grow their teams faster, not slower.