Hiring employees is a sign that your business is expanding, has something to offer, and is willing to invest in itself. After all, of all the assets you could make use of, what is better than a capable, thinking, skilled person? Of course, they’re not technically a business “asset” and shouldn’t be dismissed as such, but it’s hard to argue that the right person in the right place can’t rocket-power success.
However, there is such a thing as “overhiring,” that is staffing a new department so widely or with the wrong kind of person that the business struggles to maintain itself. A lean operation isn’t necessarily a better operation, but it’s certainly superior to one carrying a huge amount of productive dead weight.
In this post, then, we thought it might help to discuss the true cost of taking on a new employee. That way, you may find it easier to consider your options:
New Tax Requirements
At the very least, you’ll need to register as an employer with HMRC, sort out PAYE for tax and National Insurance, and keep track of reporting dates through the UK taxation year. The timing of a new hire can absolutely alter how much you owe and when, so it’s worth paying attention to that early on.
Moreover, it’s important to remember that employer contributions soon become part of your usual costs. That includes national Insurance, pensions, and student loan repayments which will be divvied from your employee’s paycheck, but you also need to contribute to (except for the latter). It helps to have payroll software that handles this automatically, so you’re not worrying about late submissions too.
Training & Onboarding
Ultimately, bringing a new person in means you’re setting them up to understand how your business runs, what matters most, and who they can turn to for help. Giving someone time to settle in, shadow others, and ask questions makes those first few weeks a lot easier for everyone and it lets them become more effective more quickly.
Training costs can also come in a few forms, such as through any formal training and learning, one-to-one support, or extra supervision in the early days. It’s money well spent if it helps them get confident sooner and avoids any mistakes that your managers have to undo, and good onboarding can actually make a person want to stay for years.
Investment & Pay Rises
Try to think that every employee you bring in has potential, as it makes sense to plan for that from day one. Setting out a fair path for developmen and pay will keep them around, because ultimately nothing denigrates a hiring strategy like high turnover. That might work for some roles where people can pick up the role relatively quickly, but it’s not exactly like that in every single business.
Pay rises are also essential to keep in mind, because you have to ensure they feel compensated for their work. Not all companies give a pay rise each year, but when they do they must at least match inflation. This way, someone is less likely to look away and focus on their jobs.
With this advice, we hope you can more easily take on a new employee with confidence, while staying aware of the costs.
What's The True Cost Of Taking On A New Employee?