Attracting the right staff can be a minefield and with recruitment agencies charging anywhere between 15 and 25% of your new employee’s salary it can be costly also. This is only the tip of the iceberg though as losing your carefully selected candidate in the medium term can cost a lot more than you might think.

So what are the true costs of taking on an employee versus virtual assistant employment?  Here’s a quick way to calculate the true costs of employment.

Including everything from deciding to hire through to the end of your probationary period, estimate the cost of each activity as an hourly rate. This can include scoping the position, advertising, agency fees, interviews, profiling, aptitude testing, reference checking, writing letters and contracts, training and even the employee’s salary during the period they are not contributing.

What about the indirect costs?

Unfortunately that’s not the whole story though as the real cost of employment is actually much higher than the figure you just came up with. Let’s now consider the indirect costs.

  • Lost productivity due to management’s involvement in the recruitment process.
  • Either missed sales opportunities or missed opportunities to contribute to the company’s profits in an indirect way.
  • Lost productivity within the role one month before and three months after recruitment.

It’s a fair assumption that these indirect costs can be at least as high as your direct costs. So the total cost of recruitment needs to include both which when added together can be considerable.

What about the investment risk?

To fully understand the investment risk in a new employee let’s now calculate how long it takes to pay back the total cost of recruitment and achieve break even. Using an average weekly profit contribution per employee use the following calculation:

Total direct & indirect costs / Average weekly profit per person = weeks to achieve ROI

This calculation can show that it takes up to 12 to 18 months for a new employee to show a return on your investment and any time prior to that equates to a financial loss.

What’s the alternative?

In contrast, when outsourcing to a Virtual Assistant there are no recruitment costs and time is not lost in search and selection. Outsourced VA services can provide all of the benefits of employing good people but without the costs, risks and commitment. Even so a VA can’t just come in and immediately understand everything about your business though! They will still need some time to learn about the company to become fully effective. In addition, VAs charge slightly higher hourly rates than the core cost of a standard employee. A VAs charges need to also cover office space, tax, law, pensions, motivation, sickness, holiday cover and experience within secretarial, finance, sales or marketing functions for the same hourly rate.

Employees and Virtual Assistants both have their own merits but overall employing a VA for specific roles can work out cheaper than traditional employment. Our blog virtual assistants vs temps, employees, freelancers and agencies might also prove useful. At the very least, investigating the use of a virtual assistant could be a worthwhile interim step. Why not try these top ten tasks to outsource for small business and entrepreneurs.

If you think you might be someone who needs a virtual assistant or would like to learn more about our virtual assistant services you can call 0800 994 9016, or use our contact form in the menu above.


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