The costs of investing in staff

invest in recruitment or outsource?Replacing an employee who is leaving, or adding additional staff as a business grows can be a costly endeavour.

This is not only at the point of recruitment but also it is important to consider the additional costs of employers’ duties, such as National Insurance contributions, auto-enrolment in a pension scheme and so on, and the investment required for induction to help a new employee to understand the corporate culture and the training necessary for them to learn how to do things the company way including systems, procedures, reports, using equipment or following the brand bible. And this is before investing in any staff development or changing their role.

If, however, you think this investment is expensive and are concerned they might leave once trained, consider the cost of not training staff and them staying.

Recruitment

If sourcing from an agency, especially for a senior level position, it is important to understand the agency’s fee structure. In a recent example one of our clients had recruited a manager using this route and paid the full fee of £16,000 which was refundable on a sliding scale if they left within three months.  Unfortunately, the new recruit left after four months leaving the employer with the cost of having to replace them.

Recruitment is not only a cost in terms of advertising the position and, in this case, the agency fee, but also in the time spent in selecting candidates for interview, conducting interviews and following up on references.

In addition, once in post, a business will have to factor in the time it will take for the newcomer to settle in and be able to function effectively.

Are there alternatives?

It can be difficult when a company’s order book is growing so that the volume of work is greater, reaching the point where existing staff can no longer manage the workload.

If this is starting to affect the relationship between business and clients this will add to the pressure.

While it can be tempting to save time by using an agency, online services or finding ways of using in-house resources to recruit key staff may avoid unnecessary costs such as that in the example above.

However, before embarking on recruitment, it may be worth a business having a look at its systems to see whether anything can be automated or improved in other ways.

Systems for processing and tracking orders through to final invoice may not have been automated when the business was smaller, but with increased volume it could be more cost effective to install a new system.

Another option may be contracting work out so that the business does not have to consider recruitment and payroll costs at all.

A third option may be to invest in training an existing employee and promoting them, then recruiting an apprentice or a lower-skilled addition to the team.

Innovative thinking is always necessary to business survival and to keeping costs under control, but never more so than when a business is growing.

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