Few business leaders are aware of the full extent of the costs associated with their personnel policies. Use this tool to quickly identify areas of progress and areas of opportunity.
- How much money was spent on bad hires in the last year? Use an average of one-to-one, based on the average yearly salary of each employee. A $50,000-a-year employee, for example, will set you back $50,000.
- During the past year, how much has it cost your company to lose any good employees? Use a minimum of a 1:1 ratio once more.
- Increasing productivity by just 5% could have a significant impact on the bottom line. Use 5% of your whole annual salary. To illustrate: $1,000,000 multiplied by.05 equals $50,000
- Keeping bad personnel costs money, don’t you think? In this case, would you be relieved or unhappy if they quit? Calculate the effect they have on the rest of their squad. (As an illustration, the team’s payroll is $240,000, which is multiplied by.05 to arrive at $12,000)
- What are you getting in return for the money you’re spending on benefits? What would happen if you increased that percentage by 2%? 35 percent of payroll should be allocated to benefits.) $350,000 x 0.02 = $7,000), for instance
- Do your risk management and return to work procedures result in higher yearly workers’ compensation modifier costs? This suggests you’re paying more than the competitors.
- What employee claim have you had to deal with? It is estimated that every year, 1 in 4 employers get sued for $250,000 or more on average.
Costs associated with your company’s human resources practices: ________________________________________________
- To get your money back, you’ll need to generate at least three times as much revenue as you spent.
The total amount of money earned: ____________________________________________________
At the most basic level, this is what your HR and compliance policies are costing you. Half of the risk is borne by the company, with the remaining half largely unaddressed. How much of your time and money are you willing to commit in order to get this figure down? How much money would you be willing to put down in order to get started? Consider the following question as you come up with an answer: You’d have to do a lot of work in terms of sales to match that amount of money.