When it comes to staffing, the real costs of hiring full-time employees can often sneak up on employers. From healthcare to taxes, these ancillary expenses add up quickly, making a significant impact on your bottom line.
For businesses looking to streamline their hiring process and reduce expenses, partnering with a staffing firm is a strategic move. Let’s break down the numbers with some simple “back of the napkin” math to show just how much you can save.
Breaking Down the Costs
Imagine you’re hiring an employee at $15 per hour. Here’s a look at the additional costs that come with this base rate:
- Healthcare Costs:
- Calculation: $400 per month / 160 working hours = $2.50 per hour
- Paid Time Off (PTO):
- Calculation: $15 per hour x 8 hours = $120 / 160 working hours = $0.75 per hour
- Taxes and Payroll Costs:
- Calculation: 20% of $15 per hour = $3.00 per hour
When you add these costs to the base hourly rate, the total cost per hour for a full-time employee becomes:
- $15.00 (Base Rate) + $2.50 (Healthcare) + $0.75 (PTO) + $3.00 (Taxes & Payroll) = $21.25 per hour
The Staffing Firm Advantage
Staffing firms absorb these ancillary costs for the first three months of employment, leading to significant savings. Here’s how it works:
- Total Ancillary Costs per Hour: $6.25
- Hours per Month: 160
- Total Costs Absorbed for 3 Months:
- $6.25 per hour x 160 hours x 3 months = $3,000 per hire
Practical Cost Comparison
Let’s compare the costs of a direct hire versus hiring through a staffing firm:
- Direct Hire:
- Monthly Cost: $21.25 per hour x 160 hours = $3,400
- 3-Month Cost: $3,400 x 3 = $10,200
- Staffing Firm Hire:
- Monthly Cost (Base Rate Only): $15 per hour x 160 hours = $2,400
- 3-Month Cost (Base Rate Only): $2,400 x 3 = $7,200
Total Savings Over 3 Months:
- $10,200 (Direct Hire) – $7,200 (Staffing Firm Hire) = $3,000
Why This Matters
This straightforward calculation demonstrates the financial benefits of using a staffing firm for your hiring needs. By covering the ancillary costs, the firm helps businesses save around $3,000 per hire over three months. This cost-saving strategy can be a crucial factor for businesses looking to manage their budgets more effectively.
Next time you’re discussing staffing solutions with a client or colleague, use this “back of the napkin” math to illustrate the potential savings. It’s a simple, effective way to highlight the advantages of partnering with a staffing firm.
Ready to Save?
For businesses aiming to optimize their workforce and cut down on hiring expenses, staffing firms offer a practical and cost-effective solution. By absorbing the ancillary costs associated with new hires, staffing firms provide a significant financial advantage.
If you’re interested in learning more about how we can help you streamline your hiring process and achieve substantial cost savings, reach out to us today. Let’s explore how a partnership with our staffing firm will benefit your business.
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About Gabe Gulick
CEO, Temporary Employment Services
Des Moines, IA
gabe.gulick@percipioworkforcesolutions.com
515-402-3978
With over 20 years of experience in management and leadership, the last 11+ in staffing and employment, Gabe brings robust experience to the team having previously served as an area manager, regional manager, regional Vice President, and CEO of staffing firms in the Midwest. Over the past 11 years, Gabe has opened over 10 locations, expanded to multiple states, and achieved industry-leading Net Promoter Scores (NPS) from clients and candidates. Gabe is a graduate of Leadership Iowa, an active member of Faith Lutheran Church, and is kept busy by his 3 active and energetic daughters.