23 Sep 2011

Making your staff pay…

What your employees earn for the organisation needs to be more than what you pay them, but how much? There are costs to cover having employees, so it makes sense to earn more than just what they cost the organisation.
In some organisations they seem to have no idea how much value their people add to the organisation, so lets have a think about the issue.
Let’s look at a range of costs and how it all adds up (their wages while they are on holidays and wages for a person who may replace them, as well as superannuation, insurance etc).
How much?
If we work on a figure of $800 per week that’s nearly $42,000 pa. Here are the ‘hidden costs’.
- 4 weeks wages for a fill in employee while the other is on holidays    $6,400
- 1 week personal leave                                                                    $800
- Superannuation @ 9% pa                                                               $3,700
- Workers compensation Insurance                                                    $300
- Payroll tax @ 5%                                                                           $2,100
- Training and development or uniforms and ‘tools’                               $2,500
- Incentives and bonuses                                                                   $1,500
- Accumulated P/A savings to cover 10 yr long service leave                 $960
- Accumulated P/A savings to cover the other worker on 10 yr leave       $960
TOTAL:                                                                                         $19,220

That’s just under half of the annual wage so they need to be earning the organisation a total of AT LEAST $61,200 to pay their way and cover their costs.
Let’s break it down further, on average it’s suggested out of a whole year people only work 220 days so that makes it $324 per day or $40.45 per hour. If you take into account ‘slack or down time’ (it’s raining, they are waiting for supplies, not feeling too well, angry at the boss for spending time reading business articles.) then that figure could readily go up.
For some of our readers they will know this hourly figure intimately and they will have their employees earning solidly above the basic level so they know they can cover longer term costs and thrive readily.
The thing is though, now you have some starting points to work with how will you change things in your business to make sure your business covers its costs, makes a profit and you come out smiling with lower stress levels?


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