For people getting into a business general way of calculating cost is cost of establishing infrastructure + employee salary and other day to day cost. They dont take to tender in other important aspects example addition of employees mean capability to process more business transactions. Which bring in other cost to business. Recently in discussion with another collegue let to working out metrics for calculating per employee/set addition cost to organization per month.
Now lets try to list down important functions for an organization
- Sales & marketing
- Technology
- HR
- Admin
- Accounts
Now lets analyze impact of addition of new employee to each function
Sales & Marketing – increase in cost to acquire more businesss to set off cost of hiring additional employee
Technology – cost of providing IT & Communication infrastructure like phone for making/recieving calls
HR – talk about microsoft advertisement on running people ready business. This is not only the payroll or salary but cost spent on training employee. Time given to settle down in organization and opportunity vs risk. Cost over 18 months to retain the employee with skill and careerpath vs other companies in segment.
Admin – Cost of having another employee may mean providing additional resources like space, lunch, transporation for employee, receptionist to manage if visitors make visit to staff
Accounts – Cost of processing additional business transactions in terms of account recievables collections and other account payables recieved.
Once all these above factors have been factored in only then can we really calculate the cost of addition of a new employee into organization.
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