Before recruiting new staff you need to carefully consider the costs of employing new staff.
RECIPE FOR SUCCESS INGREDIENT CARDS
Ingredient 3: Staff Management
Question:
What are the costs associated with employing new staff?
Answer:
Before addressing any of the other considerations with regard to employing a staff member, it is crucial that you weigh up the costs involved in such a decision against the additional productivity and profitability that your business will achieve as a result. Will the projected long-term gain repay the investment in the person? You need to be sure that your business is earning or will earn sufficient to justify the extra expenditure.
It is important to remember that there are hidden costs in employing staff the weekly wage is not the only cost to be met. Don’t forget to calculate the cost of:
-
- wages
- on costs, such as employer-funded superannuation, worker’s compensation insurance, annual leave, long service leave and leave loadings (these can add 25% to wages costs)
- upgrade of premises to meet occupational health and safety regulations
- work station, equipment and tools
- your own productive time to be spent on supervising the new employee.
These costs add considerably to your wage bill and cannot afford to be overlooked.
Having weighed up the costs and benefits in taking on a new staff member, you must now decide on the type of employee that will best fulfil the roles, functions and tasks required within your business.
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