For a $50,000 wage, that makes the standard range $70,000 to $100,000.
Recruitment is the first cost. In professional services this can be as high as $5,000 made up in job advertising, recruitment fees, interview time and admin.
Once on the books, extra costs come from taxes and benefits such as social security, medicare, and holiday pay, to admin and payroll costs.
Training then adds a huge sum. Think how much time you’ve lost training new employees in the past. In some positions it takes over 100 hours. One study even suggests it’s 1 to 2 years before an employee is ‘fully productive,’ and with turnover these days, they may have moved on well before that.
With all this you really have to hope you get the right employee! But most employers state they’ve made bad hiring decisions in the past. When 41% of people who responded to a Harris Interactive poll said the cost of a bad hire was $25,000, that’s some penalty!
The calculator on the right is a great little tool to highlight some of the major additional costs.
So now you see how the true cost of an in-house employee can be as much as double the salary, if not more, is there an alternative?
A Managed Service Provider
A great alternative is to utilize a managed service provider.
According to Forbes: Aetna, where 14,500 of 35,000 employees don’t have an ‘in-office’ desk, shed 2.7 million square feet of office space, saving $78 million. American Express also reported annual savings of $10 to $15 million thanks to its remote work options.
Research from Aberdeen Group stated that half of top-performing companies employ flexible workers as more than 40% of their overall workforce. As a result, these companies are 30% more likely to grow their revenue by more than 10% every year. Combined with a reduction in expenses, this generates a great ROI.
If training and finding the right employee are a concern of yours, you can hire external workers or teams that are already highly trained and certified, ready to deliver from day one.
In-house employees are and always will be important for most businesses and the extra costs are part and parcel of the territory. Hey, we have a number of in-house employees ourselves.
But when it’s possible to use a managed external team, you should always consider it as an alternative, and in doing so, you will often find it’s the best solution. From inbound sales to marketing, customer support to customer success, the positions and possibilities are endless.