Workforce Management Featured Article
Don't Neglect the Total Cost of New Hires
I’m a serial entrepreneur, which means I’m hyper busy (indeed, I’m writing this article from a plane, one of my prime opportunities for writing and reflection). Recently I recognized that I needed an assistant for one of my businesses, so I invested a fair amount of time and found a quality candidate in Asia that also met my budget.
There was more than a little bait and switch with my hire, however. While the cost of the assistant was low, I also quickly discovered that training and cultural differences required a substantial additional outlay of both time and money. My “value” employee was not so cheap after all.
The total cost of ownership in human resources is often neglected by small- and medium-sized businesses like those I run. That’s because it is easy to overlook the overall costs of each new employee, and because calculating the total cost of an employee is a devilishly hard task.
While 54 percent of midsized business owners say that managing employees is a daily concern, according to the ADP Research Institute, only one in three leaders has done any formal cost analysis of total human resource costs.
ADP, which makes it their business to handle human resource issues of all types, noted in a recent Entrepreneur article that one way to get a handle on the full cost of each employee is to employ what they call the “five human capital management pillars.”
These five pillars include payroll, employee benefits administration, talent management, human resources administration, as well as time and labor management.
By covering all five of these pillars, says ADP, the challenging task of figuring out the total cost of workers can become manageable.
While that should help, though, it still is a tough task to both track and calculate intangibles. That’s where workforce optimization software makes sense; WFO simplifies the task of seeing worker efficiency, making improvements, and getting an overall view of the situation with employees. Managing employees is hard enough; businesses shouldn’t complicate things by building home-grown solutions when there is professional WFO software that’s already designed for the task.
It took me about a year and two hires before I figured out how to make my assistant actually save me time and money. With people, the devil is always in the details.
Edited by Stefania Viscusi