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Want to know true cost of employing a staff member? It’s more than you think.

Updated: Feb 25, 2022


If someone were to ask you what you believed to be the true cost of an employee, do you think you’d be able to answer it?

In our experience, most people can’t.

The biggest thing standing in the way of those who can’t answer this is their inability to see things long term – they’d rather calculate figures on week to week basis and see that those costs are tracking correctly and align to their targets, rather than looking at the big picture.

With the end of the financial year luring, a lot of businesses are starting to look over their accounts, seeing that everything adds up just nicely. But – have you accounted for everything you needed to along the way? Have I got your attention yet? Good. I hope so. Because by not accurately accounting for all of your employee costs along the way can leave you in a rather sticky situation come the end of the year when you haven’t been accounting for those costs you thought back then could simply wait.

Most hospitality businesses follow this typical model that determines the breakdown of their expenditure:

  1. 30% Fixed Costs

  2. 30% Cost of Goods Sold

  3. 30% Employee Costs

  4. 10% Profit

The most controllable cost of all? Employee costs. When you aren’t calculating these correctly week after week – what percentage do you think gets cut into? Yep. You got it. And what business minded person wants to lose out on their profit.

You need to ensure you’re executing your employee payments accurately by paying the correct superannuation contributions and insurance each week and including these in your weekly outgoing costs. In doing so, you’re giving yourself a lot more clarity as to where you’re sitting financially as a business.



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