What does it really cost to hire a new staff member? Twice as much as you think.
Let’s talk headcount and the much-maligned “gig economy”. Because hiring ain’t cheap, entrepreneurs!
Serviced office provider BE Offices has produced a wondrous infographic to help bosses calculate the real cost of making a new hire and funding them through their first year at the company.
So first off, you have to find said employee. This is your first big, “what-the…how we gonna pay for that!” moment.
A typical recruitment consultant, says BE, will charge 20-30% of a new employee’s first year salary. We know, right? That’s £5-8k for somebody on a “government estimated average salary”.
And, well you have to pay them a bonus, too, right, to make sure they don’t hot-foot it to your biggest competitor. Call it £1,656. Add National Insurance, that’s £4,037 pa, oh and there’s “compulsory” pension auto-enrolment; that’s going up, from £276 pa, to £828 pa by YE Apr 2019.
Nice. Now you need to train your new member of staff (£1,086 per employee), and they must sit somewhere you can keep an eye on them – that’ll be £4,800, please.
Nearly there – all you have left to worry about is holiday cover, maternity or paternity leave, sick days, the company car, software and all that good stuff – bill? Around £8k.
Now, you probably thought “we’ll get someone at the going rate, that’s a £27k annual salary, and, meh, stick on an extra £3k so we can train them and give them a desk and stuff.
Yeah – try £23k. We’ll just let that sink in. £23k. “Excuse me, Mr Entrepreneur, but I’ve had a great first year…it’s just, I don’t really think my ambitions are being fulfilled here, and I want to work closer to my mates / home / pet terrapin, so I’m afraid I’ll be handing in my resig…”
Now you start to see just how tricky it is to be a successful entrepreneur, and just why the gig economy, freelancers, digital nomads and Fiverr make up such a prominent part of the modern economy. They look after themselves, so you don’t have to double your staff budget just to get someone through the door.
When will the robots be ready?