How to Find Hidden the Costs of Employees
If a company employee makes $60,000 per year, one might assume that her work costs the company about that much money each year. However, this is not the case. Aside from the money she is paid, an employee's benefits package and added expenses can cost a company a significant amount of money. According to BusinessInsider.com, in 2010, an employee who had a $59,000 salary actually costs her company $79,000 per year, and the employee only took home $44,000 of her salary after taxes and insurance costs.
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Instructions
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Analyze the cost of employee benefits. This includes costs for medical insurance, dental insurance, 401(k) match and more. According to MIT.edu, the cost for employee benefits are typically 1.25 to 1.4 times of an employee's base salary. As an example, health coverage alone can cost a company more than $7,000 per year for an employee and his family.
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Examine the amount of space used in an office building. Determine how much space the average employee at your company has for their workspace. If you rent the building, you can then determine the cost per employee workspace based on the cost per square foot of the facility.
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Determine the amount of money spent on office supplies. In an office environment, each employee most likely needs a desk and a computer, at minimum. Also factor in added supply costs, like the price for computer software, notebooks, pens and other supplies. You can determine an average office supply cost per employee by adding up the total amount of money spent for the year and dividing it by the total number of employees.
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Look at the money spent on taxes and insurance. A business must pay payroll tax for its employees, as well as carry enough insurance to cover incidents at work. These costs grow with the number of employees in a company.
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Consider cost reimbursements that go to employees. For example, a company may pay a mileage reimbursement, tuition or the costs for attending professional events. These costs can become significant if many employees take advantage of them.
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Think about recruitment costs. Whether you use an internal recruitment department or an outside agency, the cost to post a job, screen and interview candidates and choose the best person for the job can be significant.
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Tips & Warnings
Understand that some expenses are necessary, while others may be costly but beneficial. For example, benefits like tuition reimbursement can be expensive, but the benefit could entice employees to work for your company.
References
- Business Knowledge: Hidden Employee Costs
- MIT: Practical Advice for Entrepeneurs
- Hanley Wood Remodeling: Finding Employees' Hidden Costs
- Books Onsite: The Hidden Costs of Employment
- Business Insider: It Costs Our Company $74,000 To Pay An Employee $59,000--Of Which She Keeps $44,000 Read more: http://www.businessinsider.com/it-costs-our-company-74000-to-pay-an-employee-44000-2010-8#ixzz1CzXkgeNo
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