The Hidden (and very real) Costs of Employees

With the economy slowly recovering,  employers are beginning to hire carefully.  Perhaps in your organization,  you are  adding new employees.  In any business, it is essential to balance expenses and investments with the value gained. Is there enough value to warrant the costs?  Do you know what the real costs of an employee are?

There are two critical components…the hard costs and the indirect/soft costs.  The hard costs are those represented in your accounting records.  For a great tip, check this out from my colleagues at Silicon Valley Accounting Solutions.   While accurate and true, this only represents the partial cost of an employee.

Additional costs of a new hire include the time, resources and money required in the search, interviews, hiring, and on-boarding of each new employee.  Also, you must include the additional equipment and office space need for the employee.  While the new candidate may be a terrific hire,  studies indicate that it takes from 6 months to 18 months to be fully productive.  Ok, so factor that in.  Training in your systems, processes and programs, along with the inevitable mistakes, extra supervision, coaching and mentoring time are also normal investments in a new hire.  These all should be factored into the real costs of a new hire.

I consider training costs, successful onboarding, and coaching  as  investments in a valued asset, your employee.

Are your employees treated as a line item on a general ledger or a valued asset?  That’s certainly a topic for future discussion…..


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