NOTE!
Do you really know how much your employees are costing?
If you said, wages plus super plus workers' compensation
insurance, that's only the beginning.
For your business to be successful and budget to make
a profit, you must review exactly the cost of your business
inputs, and a significant component of these are labour
costs.
How much per hour does an employee cost an
employer (1.) "Payrolling On Costs".
Additionally, allowance must also be made for business
(2.) "Overheads", including non productive
support or administration staff, and of course the necessity
to make a profit.
It's important to have a nucleus of permanent staff,
but effective management should employ Engineering Technical
staff on an "as needs" basis so as to create
business profitability.
The 2.5
multiplier (a conservative industry standard) used below
does not exist on supplied hourly rate contract personnel
supplied through a Labour Hire Firm.
Hourly rate contractors are priced into your project at
cost, you the client then ADD to the hourly rate a profit
component.
Contract personnel are supplied at an hourly rate,
so it is appropriate to
convert Permanent staff salary packages to a comparison
hourly rate.
For
a detailed explanation of what needs to be costed click
on this link
Comparison Hourly Rate = (Annual Gross Salary + SGL)
x 2.5
........................................1604
hours p.a.
The 2.5
multiplier is
made up of two components
1."Payrolling on-costs" comprising
of :
|
Holiday
pay
|
Payroll
tax
|
|
Sick
leave
|
Work
cover
|
|
Leave
loading
|
Public
liability
|
|
Long
service leave
|
Professional
indemnity
|
|
Product
Liability
|
Directors
and officers cover
|
PLUS
THE FOLLOWING
2."Overheads"
comprising of but not restricted to:
|
Non-technical support staff (HR, Legal, Accounts,
sales etc)
|
Maternity
leave of non technical support staff
|
|
Office
rental ( multiple ?)
|
Business funding
|
|
Office
equipment and furnishings
|
FBT
|
|
Consumables
|
Staff
recruitment and training
|
|
General overheads/ leases / maintenance
|
Audit
and legal fees
|
|
Business
and professional licences
|
Govt
charges
|
|
Technical
Library and Publications
|
Company
profit
|
The 1604
are the productive working hours p.a.
Callculated as follows - 38Hr week * 52.1 wks/yr = 1980
hrs
LESS
THE FOLLOWING NON PRODUCTIVE HOURS/YR
|
Public
holidays
|
92
hours
|
|
Sick
leave
|
76
hours
|
|
Annual
Leave
|
152
hours
|
|
Long
service leave
|
33
hours
|
|
Misc.
leave( family,injury etc)
|
23
hours
|
| Unproductive
hrs/yr |
376
hours
|
Productive
hours are 1980-376
= 1604
hrs/yr
Enter
the following equasion,
(Salary+9% SGL)*2.5/1604
eg
(50000+4500)*2.5/1604
= $84.94 /hr
Alternative
50000*1.09*2.5/1604
= $84.94 /hr
and click "Calculate"
!
The above emphasises the actual costs associated with
over staffing of unproductive employees.
The
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