How to Calculate Staffing Costs

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Staffing costs are the total expenses that a business incurs in the process of recruiting, training, remunerating and maintaining personnel. Recruitment costs encompass job advertisement, interviews and orientation of new employees as well as the costs incurred on leaving employees. Training costs comprise expenses on continuous on-job training programs, reading and literary materials, training equipment, workshops, professional, human resource consultancy services and team building trips. Remuneration costs are the amounts of money spent on employee rewards with regards to salaries and wages, whereas personnel maintenance costs include relocation, health, safety and personnel administration costs.

List all permanent employees and the total amount of salary and perks for each employee to determine the total amount of money you spent on the salaries of the permanent staff. Also list all the temporary employees and add the total amount of their wages. Categorize your listing according to different departments of the organization to get the total personnel costs for each department.

Add the total amount of money spent on recruitment of new employees, with job advertisements, interviews, orientation and training. Add the total amount of money spent on leaving employees, such as retirees’ pension, terminal dues and legal compensation for wrongful dismissal.

Calculate the total training expenses including on-job training programs, reading and literary materials, training equipment, workshops, professional, human resource consultancy services and team building trips.

Add the total expenses on personnel maintenance with a focus on the cost of maintaining the personnel office, relocation costs, employee safety materials and equipments and any expenses in legal compensation for employee injuries.

Take the totals of the salaries and wages costs, recruitment costs, training costs and personnel maintenance costs to establish the overall staffing costs. Commit a specified percentage (usually a range of between 15 and 20 percent) of the total staffing costs as the payroll costs on items such as employee performance benefits, taxes and compulsory social security contributions.

Tips & Warnings

  • Breakdown the salaries and wages of employees to individual and departmental levels to recognize the variances of individual salaries and wages, according to the work positions of different employees.
  • Do not include payroll costs such as employee performance benefits, payroll taxes and compulsory social security contributions as part of salaries and wages costs because they are calculated as a percentage expense of the total staffing costs.

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References

  • Bola.biz: Staffing Costs
  • “Strategic Staffing: A Comprehensive System for Effective Workforce Planning.”; Thomas P. Bechet; 2008
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