submitted by Detry Carragher, CPHR, SHRM-SCP, CCIP
Hiring is typically a sign that a business is growing and creating opportunities for people to contribute to the development of products or services. Have you ever considered what it costs the organization to create that opportunity?
Most people will say it costs their hourly wage or salary.
When calculating the cost of your job, it’s important to recognize that your pay is only the base cost. You gain a whole new perspective when you fully understand all the costs associated with bringing on new employees. Each of the following costs increases every time a new employee is hired:
Sample costs to a business (not all may apply)
- Mandatory employment-related costs (Employment Insurance, Workers Compensation, Canada Pension Plan)
- Statutory holiday pay and vacation pay
- Benefits and insurance costs (pensions, liability, health, disability, injury, employee assistance programs)
- Telephone, technology, and utilities costs
- Office space and maintenance costs
- Equipment and furniture depreciation or rental costs
- Building and property costs
- Overtime costs
- Health and safety costs
- Equipment and supplies
- Sick day costs and/or labour replacement costs
- Costs related to errors, unproductive time, or irritated customers
- Costs related to professional fees to address workplace issues
- Business travel and/or training costs (transportation, hotel, food, training costs, etc.)
- Recruitment costs
- Parking costs
- Holiday party costs
- Specialized clothing and/or equipment-related costs
Many other small and large costs could be part of this list, for example, free coffee, fitness memberships, or professional dues.
In order to be sustainable and to operate effectively, a company needs to generate sufficient revenue to exceed these costs along with all the other overhead expenses. Net profit margins, the money remaining after all expenses are paid, are generally very tight. Companies often use the remaining financial resources to expand, or to safeguard operations (and your job) against potential declines in revenues. To ensure job security, productivity outputs need to remain high enough to exceed the cost of operations.
When you believe you are entitled to a pay increase, it’s important to understand the challenges an organization may have in meeting this expectation based on the variable costs outlined above.
The information in this article is for general information purposes only and is not designed to substitute for, or replace, a professional opinion from legal counsel or a Chartered Professional in Human Resources. The views and opinions expressed only represent the opinion of the author.
About Detry Carragher, CPHR, SHRM-SCP, CCIP
As a Chartered Professional in Human Resources (CPHR), Detry Carragher is regularly consulted by employers, industry groups, and employees from across Atlantic Canada on a range of employment-related topics. Detry is the recipient of the prestigious HR Award of Excellence, representing Nova Scotia and Prince Edward Island and has twice been nominated for the Top 25 Canadian HR Management Consultants by the Canadian HR Reporter. Her work extends to several of Canada’s Top 100 Employers, Fortune 500 companies, and Best Places to Work in Atlantic Canada. She has contributed her insights on CBC, CTV, the National HR Reporter publication, and several regional news outlets.
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