New Hire? Great! Now Calculate How Much It Really Costs


If your company asks the IT team to set up a new employee, be excited. It may be a little work, but if your shop is hiring, it's a good sign in what is still a stagnant job market.


New employees are still a lot of work, of course, and a lot of expense. If you are trying to justify a hire, running through all the initial and recurring costs is an absolute must before committing to a new team member.


The New Employee Cost Calculator, from our partners at Info~Tech Research Group, evaluates the finances of a new hire on about 30 cost factors, both for technology and non-tech categories. The tool is available free to IT Business Edge members here in the IT Downloads library.


As you'd expect, the Excel-based tool also lets you include expense categories that are specific to your business, and then breaks out the expenses into IT and current (one-time) and ongoing cost factors, both inside IT and for the whole enterprise. You can see a snapshot of part of the expense grid in the figure below.



Some costs included in the calculations are pretty self-evident. Obviously, a new employee is going to cost you for a company-issued laptop, and most companies have a swag on the per-employee Help Desk costs they expect to incur annually. However, some of the cost categories cited in this extensive background might otherwise elude the attention of tech and HR. Some interesting points you'll find in the tool's example breakdown of a $65,000 salaried employee include:


Printing and copying: This is one of those silent expenses that can really gnaw about your bottom line. The tool's example model lists it at $120 a year.


Network usage: If your bandwidth (or any other IT service) is on a metered model, it should be easy enough to identify the rate at which a job role should be consuming that resource.


The opportunity cost of paid time off for salaried employees: Obviously, direct compensation for employees who are relaxing on the beach is calculated in salary, but you may want to consider what this employee could be doing for you during that time away as a cost (particularly if you are modeling out a full-time hire versus hourly contractors).


After all assumptions are entered, the spreadsheet does the math and breaks down expenses by category. In the example model, the $65,000 salaried employee ends up costing the company more than $84,000 annually - not really surprising. As an added bonus, the tool calculates the percentage of overall expense per employee that can be assigned to IT. It's usually pretty low - in our example, it's about 8.5 percent in the current year.


As an added bonus, the tool includes a checklist of 17 IT tasks required to add a new user to the network, as you can see below.



In addition to the usual suspects, you'll find checkpoints for ensuring that all new employees sign off on applicable policies and a day-one checkup to make sure everything is going smoothly.


If you are evaluating a new hire, you should really check out this very useful tool.

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