{"id":1484,"date":"2011-02-13T03:51:55","date_gmt":"2011-02-13T03:51:55","guid":{"rendered":"http:\/\/www.shanecampbellcfo.com\/?p=84"},"modified":"2011-02-13T03:51:55","modified_gmt":"2011-02-13T03:51:55","slug":"cost-of-an-employee","status":"publish","type":"post","link":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/","title":{"rendered":"What is the true cost of an employee?"},"content":{"rendered":"<p style=\"text-align: justify\">The true cost of an employee?\u00a0Well, there&#8217;s salary, payroll taxes, benefits, and workers&#8217;s compensation. But to fully understand that question, one should speak to an experienced HR professional, which is exactly what I did.\u00a0 Karen Alary, SPHR, Human Resources Consultant (<a href=\"mailto:karen.alary@gmail.com\">karen.alary@gmail.com<\/a>) explains it as follows: <span style=\"color: #0000ff\">&#8220;The true cost of an employee starts long before they even set foot in the company\u2019s front door.\u00a0 Identifying the need to create or fill a position, defining the position, recruiting, and the time it takes to fill the vacant position make up some of the initial costs that many employers don\u2019t necessarily even recognize as hard costs.\u00a0 But remember that these activities all take time, that time is money, and that money equates to the true cost.\u00a0 And then there are the recognized costs associated with the pre-employment phase such background checks, referral bonuses, agency fees, relocation costs, etc. Studies show that a formal onboarding process results in significantly higher worker productivity year-over-year, but in the meantime new hire training and the time it takes a new employee to \u201cget up to speed\u201d means the company isn\u2019t receiving the full benefit of the employee\u2019s potential contribution.&#8221;<\/span><\/p>\n<p style=\"text-align: justify\">Maybe we should be more concerned with the productivity and value that the employee brings to the organization, which sometimes is not so\u00a0easily measured, and then compare to cost.\u00a0 Karen Alary continues: <span style=\"color: #0000ff\">&#8220;An employee\u2019s intrinsic motivation speaks directly to the level of engagement and productivity.\u00a0 If an employee lacks motivation he is not contributing his maximum potential.\u00a0 And low productivity directly impacts a company\u2019s bottom line, adding to the true cost of an employee.\u00a0 This is probably the most difficult aspect to measure yet one of the most important ones in which to take heed.&#8221;<\/span><\/p>\n<p style=\"text-align: justify\">But should we also consider the opposite side of the coin, namely what is the\u00a0true cost of replacing\u00a0an employee?<!--more--><\/p>\n<p style=\"text-align: justify\">What is the cost of replacing an employee? Studies indicate that the true cost of employee turnover is 25% of that employee\u2019s annual salary for low level employees and up\u00a0to 500% for \u201cC\u201d level positions. So let\u2019s just say that in Northern California, the average wage is $50,000, the turnover rate is 25% (the national average), and your company has 40 employees. The turnover cost would be $125,000 per year.<\/p>\n<p style=\"text-align: justify\">Certainly, a strong consideration should be made to keep existing employees if at all possible, considering the high cost of replacement, as well as the organizational distraction that turnover creates. Granted, some employees go so far wrong that termination and replacement is the only option. We are all familiar with that aspect and probably have experienced\u00a0it first-hand. But at least some of the time, the reason that an employee has underperformed is because the employer has failed to communicate expectations, need for improvement, etc.<\/p>\n<p style=\"text-align: justify\">How many of your employees get annual reviews? How much thought, time and effort goes into the annual reviews that do get done? How timely are the reviews? Are managers trained to perform annual reviews, or are they left to \u201cwing it\u201d? Over my thirty years of business experience, I have rarely seen companies\u00a0handle this process even remotely well. Annual reviews are in my view a bad idea to begin with, but are often the only feedback that employees receive.<\/p>\n<p style=\"text-align: justify\">Why not do frequent employee coaching\/mentoring sessions instead. These sessions are very short discussions with your direct reports. They are informal and designed to communicate praises for work well done, as well as to address problem areas quickly and efficiently. Without such a mechanism, poor performance issues tend to fester and result in frustration on the part of you the employer\u00a0and the employee. Then the high cost of employee attrition can kick in.<\/p>\n<p style=\"text-align: justify\">Most, but not all employees want to do a good job, and want to know if they are meeting your expectations. The more frequent the coaching they receive from you, the more quickly they can figure out how to perform optimally, and the more responsibilities you can comfortably delegate to them. You are right if you think I am recommending that\u00a0you\u00a0again\u00a0read <a href=\"http:\/\/www.amazon.com\/Minute-Manager-Ph-D-Kenneth-Blanchard\/dp\/0425098478\">The One Minute Manager <\/a>by <span style=\"color: #0000ff\"><strong>Kenneth Blanchard and Spencer Johnson, <\/strong><span style=\"color: #000000\">which you probably have not blown the dust off since reading shortly after its publishing\u00a0in 1982.\u00a0 <\/span><\/span><\/p>\n<p>photo credit: <a href=\"http:\/\/www.flickr.com\/photos\/125303894@N06\/14365668676\">Business Woman<\/a> via <a href=\"http:\/\/photopin.com\">photopin<\/a> <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">(license)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;What good is calculating cost when we have not calculated benefit? But maybe we are still not looking at this question right. Maybe we should be more concerned with the cost of replacing that employee.&#8221;<\/p>\n","protected":false},"author":25,"featured_media":7904,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[22,16],"tags":[21,23,24],"class_list":["post-1484","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-best-practices","category-shanes-really-deep-insights","tag-budgeting","tag-business-development","tag-business-expansion"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is the true cost of an employee? | CFO Services | B2B CFO<\/title>\n<meta name=\"description\" content=\"The true cost of an employee starts long before they even set foot in the company\u2019s front door. Want to learn more? Read our B2B CFO\u00ae partner\u2019s article!\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is the true cost of an employee? | CFO Services | B2B CFO\" \/>\n<meta property=\"og:description\" content=\"The true cost of an employee starts long before they even set foot in the company\u2019s front door. Want to learn more? Read our B2B CFO\u00ae partner\u2019s article!\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/\" \/>\n<meta property=\"og:site_name\" content=\"Shane Campbell\" \/>\n<meta property=\"article:published_time\" content=\"2011-02-13T03:51:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-content\/uploads\/sites\/33\/2011\/02\/True-cost-of-an-employee.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"221\" \/>\n\t<meta property=\"og:image:height\" content=\"240\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Shane Campbell\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shane Campbell\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/\"},\"author\":{\"name\":\"Shane Campbell\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#\\\/schema\\\/person\\\/8ee8bc641094acda4505098bb405e653\"},\"headline\":\"What is the true cost of an employee?\",\"datePublished\":\"2011-02-13T03:51:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/\"},\"wordCount\":732,\"image\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/wp-content\\\/uploads\\\/sites\\\/33\\\/2011\\\/02\\\/True-cost-of-an-employee.jpg\",\"keywords\":[\"budgeting\",\"business development\",\"business expansion\"],\"articleSection\":[\"Business Best Practices\",\"Shane's really deep insights\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/\",\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/\",\"name\":\"What is the true cost of an employee? | CFO Services | B2B CFO\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/wp-content\\\/uploads\\\/sites\\\/33\\\/2011\\\/02\\\/True-cost-of-an-employee.jpg\",\"datePublished\":\"2011-02-13T03:51:55+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#\\\/schema\\\/person\\\/8ee8bc641094acda4505098bb405e653\"},\"description\":\"The true cost of an employee starts long before they even set foot in the company\u2019s front door. Want to learn more? Read our B2B CFO\u00ae partner\u2019s article!\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/wp-content\\\/uploads\\\/sites\\\/33\\\/2011\\\/02\\\/True-cost-of-an-employee.jpg\",\"contentUrl\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/wp-content\\\/uploads\\\/sites\\\/33\\\/2011\\\/02\\\/True-cost-of-an-employee.jpg\",\"width\":221,\"height\":240},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/cost-of-an-employee\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What is the true cost of an employee?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#website\",\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/\",\"name\":\"Shane Campbell\",\"description\":\"B2B CFO\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#\\\/schema\\\/person\\\/8ee8bc641094acda4505098bb405e653\",\"name\":\"Shane Campbell\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g\",\"caption\":\"Shane Campbell\"},\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/author\\\/shane\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What is the true cost of an employee? | CFO Services | B2B CFO","description":"The true cost of an employee starts long before they even set foot in the company\u2019s front door. Want to learn more? Read our B2B CFO\u00ae partner\u2019s article!","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/","og_locale":"en_US","og_type":"article","og_title":"What is the true cost of an employee? | CFO Services | B2B CFO","og_description":"The true cost of an employee starts long before they even set foot in the company\u2019s front door. Want to learn more? Read our B2B CFO\u00ae partner\u2019s article!","og_url":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/","og_site_name":"Shane Campbell","article_published_time":"2011-02-13T03:51:55+00:00","og_image":[{"width":221,"height":240,"url":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-content\/uploads\/sites\/33\/2011\/02\/True-cost-of-an-employee.jpg","type":"image\/jpeg"}],"author":"Shane Campbell","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Shane Campbell","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#article","isPartOf":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/"},"author":{"name":"Shane Campbell","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#\/schema\/person\/8ee8bc641094acda4505098bb405e653"},"headline":"What is the true cost of an employee?","datePublished":"2011-02-13T03:51:55+00:00","mainEntityOfPage":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/"},"wordCount":732,"image":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#primaryimage"},"thumbnailUrl":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-content\/uploads\/sites\/33\/2011\/02\/True-cost-of-an-employee.jpg","keywords":["budgeting","business development","business expansion"],"articleSection":["Business Best Practices","Shane's really deep insights"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/","url":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/","name":"What is the true cost of an employee? | CFO Services | B2B CFO","isPartOf":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#primaryimage"},"image":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#primaryimage"},"thumbnailUrl":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-content\/uploads\/sites\/33\/2011\/02\/True-cost-of-an-employee.jpg","datePublished":"2011-02-13T03:51:55+00:00","author":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#\/schema\/person\/8ee8bc641094acda4505098bb405e653"},"description":"The true cost of an employee starts long before they even set foot in the company\u2019s front door. Want to learn more? Read our B2B CFO\u00ae partner\u2019s article!","breadcrumb":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#primaryimage","url":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-content\/uploads\/sites\/33\/2011\/02\/True-cost-of-an-employee.jpg","contentUrl":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-content\/uploads\/sites\/33\/2011\/02\/True-cost-of-an-employee.jpg","width":221,"height":240},{"@type":"BreadcrumbList","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/cost-of-an-employee\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.b2bcfo.com\/shane-campbell\/"},{"@type":"ListItem","position":2,"name":"What is the true cost of an employee?"}]},{"@type":"WebSite","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#website","url":"https:\/\/www.b2bcfo.com\/shane-campbell\/","name":"Shane Campbell","description":"B2B CFO","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.b2bcfo.com\/shane-campbell\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#\/schema\/person\/8ee8bc641094acda4505098bb405e653","name":"Shane Campbell","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g","caption":"Shane Campbell"},"url":"https:\/\/www.b2bcfo.com\/shane-campbell\/author\/shane\/"}]}},"_links":{"self":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts\/1484","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/comments?post=1484"}],"version-history":[{"count":0,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts\/1484\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/media\/7904"}],"wp:attachment":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/media?parent=1484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/categories?post=1484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/tags?post=1484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}