It’s expensive to employ people. There’s the base wage, then superannuation, then payroll tax, workers compensation premiums, annual leave loading, penalty rates – and that’s just the start!
Let’s take a look at the indirect costs. First there are the hiring costs which includes the managers time given to investing in screening and interviewing candidates. Studies show that works out to be around $460. Once the person starts there is the induction training. Let’s say that is 3 hours of your time, and 3 hours of theirs. We’ll call that $300. What about the regular performance discussions once per week at 30 mins each? That’s $800 per year. Then there is payroll administration which is around $200 for one employee per year. The big one which is really hard to determine is lack of productivity (sick leave, carers leave, and sometimes being at work, but not really there), which studies show is at least $3000 for an employee earning $65,000 per year.
This makes a total of $4760 on top of what you thought you were paying. Wow.
What can you do about this? Here’s three things that would make a big difference straight away:
1. It’s important that your accounting system picks as many of these costs up as possible. Talk with your Finance Manager or Accountant to ensure that these costs are being allocated correctly so that when you are considering hiring a new person you truly understand what it will cost.
2. Have processes and policies in place that ensure recruitment is an efficient and effective task. Standardised interview questions and skilling up managers to hold quality interviews will go a long way on ensuring the right person is selected.
3. Keep a track of your company’s presenteeism rates. Measure sick days taken, and get an engagement or culture survey done of your organisation (teams as small as 5 can do this and get statistically significant data). This will give you loads of information that will help you correct the reasons why people decide to not to come to work (either physically or mentally).
Want to learn more? Email info@eirgroup.com.au or call 1300 788 834.
