Administrative Cost of Employees

What is the greatest asset to a business? It is not the building where it operates or the equipment that produces the goods or the orders. It is the individual employees who facilitate the day to day operations to make the business run. We know how highly valuable employees are – without them your business can not run. However, these valuable employees are also a huge expense.

Just how much do they cost? We’ve broken it down for you. Here’s the SAMPLE scenario – you are a 25 person company in a white collar industry. You have a $500,000 annual payroll with a per employee average salary of $20,000. Your annual turnover rate is 10%.

We will assume the following costs:

Payroll Processing, Tax and Administration	$2,600
Payroll Delivery	$300
401k Retirement Plan & Vendor Administration	$3,500
Full Service Section 125 Plan & Vendor Administration	$2,400
Employment Practices Liability Insurance	$4,000
Total Vendor Cost	$12,800
Staff Administration Cost	$20,000
Total HR Administration Cost	$32,800

So what do these sample numbers boil down to? Your administrative function just to process payroll and benefits is 6.56% of your entire payroll. Per employee, per year that is an average cost of $1,312. Over 6,150 transactions annually are required to accomplish this. Quite the reality check, right?

There are solutions however – small to medium sized business choosing to outsource these administrative functions can make drastic improvements to their bottom line but also to productivity.