Taking on employees could be necessary for maintaining or growing your business, however you need to make sure that you can afford to take on employees first. On top of being able to pay your employees a wage, there are many other hidden costs to budget for. Below are some of the costs that come with hiring employees and how to manage them.
Recruiting employees can take a lot of time and employees. Some employers find it easiest to pay a recruitment company to source talent. When doing this, you need to make sure that you shop around, so that you’re not paying expensive fees. It’s possible to not spend any money on the recruitment process by posting adverts on free job boards. Recruitment tasks like background checks will require paying some money and should only be done at the end of the process when you are otherwise certain about hiring an applicant.
Every employer must take out worker’s compensation insurance. This is so that if an employer gets injured or sick, you are able to provide financial compensation to help with their recovery. Different insurers will charge different rates, so it’s worth shopping around before taking out insurance. You can often lower your rates by making sure that your company has high health and safety standards.
Do you need to provide personal equipment to your employees such as a uniform, keys, tools or a computer? If you don’t already own this extra equipment, you’ll need to factor in the cost of supplying this. Equipment costs can vary depending on the type of business – an assistant working on a market stall may not need any personal equipment, whereas a delivery driver may need everything from their own vehicle to a work phone. Encourage customers to look after their equipment so that you’re not having to constantly repair or replace it.
In some industries, employees may need to pay for things like travel, fuel, food or event planning as part of their work. You cannot expect these employees to pay for this out of their own pocket, and so will need to budget for what your employees are spending. It could be worth investing in expense management tools to track what employees are spending. There may also be ways of encouraging employees to spend less such as offering rewards to the most fuel-efficient drivers or having a strict event budget.
There are some benefits that every employer has to legally offer, and others that are optional but recommended. These include things like bonuses, overtime pay, health insurance, sickness pay, maternity pay or free lunches. An attractive employee benefit scheme will help to win over the best talent and will encourage employees to be loyal. Therefore, this is something that you should not skimp on. Work out what is the best suited employee benefit package for your employees and work out how to implement this effectively. It could be worth using HR software to keep track of benefits like health insurance and sickness pay.