Tatjana Day Director of ManageMe Services looks at the real costs of employing staff.

Adding a new team member is a big call but it can also be an inspired move giving you ability to grow or gain access to skilled resources.

How do you know if you need additional help?
Some signs that your business may need some additional employees are –

● Current staff can’t handle any new jobs or orders
● Important tasks are left undone despite everyone working overtime
● Customers start to complain about delays or a general decline in service
● Too much time is being spent on duties that don’t actually make money
● Revenue starts to suffer

Cost of Employing Staff

Being a provider of outsourced services we are often compared initially on hourly rates. This article looks at why it’s worth digging deeper than simply the wage cost to understand the true cost of employing staff.

Understanding the true cost of a hire is essential when evaluating whether or not your business can afford the expense of hiring, onboarding, insuring and paying an expanded staff?

Sitting down to figure out the true cost of hiring is a surefire way to give yourself a shock. Often salary is the main consideration but there are other Direct and Indirect costs that add considerably to the total cost of any hire.

In New Zealand you will need to add on to the salary an ACC and Kiwisaver contribution to an employees salary. There are also significant discretionary costs in recruiting whether there is an external agency used or adverts placed on Seek or TradeMe. Time is then invested in reviewing applicants, reference checks and interviewing. All of which is a significant HR cost.

Once the employee is onboard they will need to be set up with a Desk, Chair, Computer and Software at a minimum. Time is then invested in training which is usually conducted by a current staff member taking them away from their own responsibilities at a cost while they bring the new employee up to speed.

All of this is done with no guarantee the new employee will stay in the role with the company long enough to recoup these costs. You need to decide whether it’s worth the investment, or if you’re better off looking into alternatives to taking on additional help.

Alternatives

Outsourcing can offer an alternative to a traditional hire and can provide you with more flexibility. Not all tasks are suited to outsourcing but shifting some of the non-customer facing back office activity can free up your current staff to focus more on value add activity. The main advantages are the ability to scale up when required, avoid big up front costs of hiring and reduce the risk of staff retention.

Whether or not hiring a new employee is worth it for your business will come down to your individual circumstances. What’s apparent is that there is a significant cost over and above the direct cost of hiring an employee, conservatively 40% on top of the hourly rate. This needs to be included in the equation as well as the responsibilities that come under employment law with hiring instead of contracting.

If you feel that your business is ready to hire and you are considering outsourcing as an option get in touch for a chat.