Possible Solution for High Employee Cost

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Wage Analysis as a Possible Solution for High Employee Cost

Employees are generally considered one of the most valuable resources that a company can have. Unfortunately, while many businesses have graduated pay plans for their employees, they may be garnering high employee costs unnecessarily. While increasing employee pay is crucial for continued success and growth, performing a wage analysis to determine a baseline is extremely important. This can not only ensure employees are all being paid fairly based on their Wage Analysis duties or position, but it can also ensure that high employee costs are kept to a minimum.

When an organization pays an employee more money than they should, it can often create a ripple effect among the employees around them and the organization as a whole. In many instances, this hinders employee development and can eliminate resources that could be used in other areas of the business that need it most. Overpayment is a common problem nationwide that doesn’t get enough attention. However, high employee costs can easily be offset when a wage analysis is completed to determine what fair wages may be – even if employee salaries can’t be decreased.

Business Team Working on Analysis

How Does Wage Analysis Improve Employee Costs?

During the ramp-up phase of a business, performing a wage analysis on vital positions can help determine if employees are being overpaid for the amount of work they are currently completing. With this information, employees that are presently overpaid may need to take on more duties to compensate for the level of pay that they are obtaining. But can a wage analysis directly impact employee costs or ensure that a business doesn’t inadvertently set itself up to lose cash that could be better utilized within the organization. Although, this often requires an ongoing commitment to maintain.

Performing a wage analysis can also provide valuable insight into what “pay caps” should be implemented based on positions. Once these pay caps are hit, the only way for employees to continue to make money is by being moved into a new, higher position within the organization. This process can create a system of checks and balances that ensures high employee costs are avoided at each step of the employee life cycle. In addition to this, new employees can be offered competitive salaries that allow room to grow if they decide to stay with the company long-term – creating a roadmap for success into the future and beyond.

Employee Business Meeting
Group employees using computers to analyze incoming information

It is counterintuitive to increase wages until they are exceeding what is typical for a position. Unfortunately, many businesses may be doing this unintentionally both when hiring an employee or increasing pay for existing employees. A wage analysis is considered one of the best ways to verify salary and set caps for future employees to ensure room for growth. For this reason, companies need to ensure that they are doing an annual wage analysis to keep up with changing markets. Through performance based staffing services, Certified Source can help any business ensure that they give employees adequate wages without sacrificing existing finances.

Targeted Recruitment & Retention Programs as a Possible Solution for High Employee Cost

As a company grows, the need for qualified employees increases. Often this is due to higher demand in the market. Demand can easily affect a company's budget if it is not approached with the right strategy. To prevent the budget from going overboard is crucial to develop targeted recruitment and retention programs strategy.

These strategies will help decrease employment costs while assuring quality and productivity. Targeted recruitment begins with a company defining its budgets, qualifications, and responsibilities for the position that needs to be filled. Keeping realistic expectations while determining these potential threats will help a company looking for specific skills target the most suitable candidates for any vacant position.

Human resources teams often battle to find quality employees without overspending. A qualified employee is aware of their talents and will often demand a higher price for their inherent worth. Therefore, by designing projected salary packages, companies can stay on budget without compromising the quality of employees. For projected salary packages to be successful, companies also need to invest in a retention program strategy that will help control their budget while ensuring long-term relationships with their employees.

Confident young man attending job interview

How can Target Recruitment and Retention Programs Decrease Employee Cost?

When developing a targeted recruitment and retention strategy, a company should never stop analyzing patterns from the process and then use them to track effectiveness. These studies should include the source of the hire, the cost of the employment, and the type of candidate recruited. Investing in the resources that more often lead to high-quality talent for the lowest price will allow companies to keep up with their budget.

Calculating the actual total cost of filling a position with top candidates is another way to implement a targeted recruiting program that can help decrease employee costs. Often, this cost goes beyond the proposed salary and encompasses the expenses of a recruiter’s services, the salaries of other members responsible for implementing developed strategies, any advertising costs, and additional fees that are accrued. While these costs can typically range between $3500 and $5000, calculating these expenses will help establish and maintain the company budget.

Recruitment manager reads resume
shaking hands and smiling while working

An additional strategy to decrease employment costs is by developing a solid retention program. It will make time and money available for other company plans while reducing the need to search for new candidates. Alternatively, these programs can help with maintaining top employees to ensure they stay motivated and productive. Companies that attempt to decrease employment costs can invest in new opportunities and attract and retain top talent.

Most employers do not have the systems needed to support targeted recruiting and retention programs to grow. Certified Source can help simplify the process of eliminating high employee cost through performance-based staffing services. With this strategy in mind, employees can rest easy knowing they are not only attracting the best talent possible but ensuring they have the incentivization to stay long term at the lowest price possible.

Pre-screening as a Possible Solution for High Employee Cost

There is a common misconception that employee cost is only calculated based on wages. However, many different factors contribute to employee costs, and they are essential to consider. Particularly for companies trying to improve their budgets.

The best approach to decrease high employee costs is to modify the hiring process. This process is directly responsible for the factors that cause excessive spending: onboarding and turnover. By utilizing pre-screening, hiring managers can ensure that the top candidates are a long-term fit and possess the skills required to perform on the job. Finding talented candidates looking for long-term career placement will lower turnover rates. This approach can help save the company time and money on its onboarding process.

Employee turnover can cost about two times an annual projected salary. For companies attempting to offset this problem, pre-screening is considered the most effective method that directly helps companies decrease their high employee cost. Pre-screening brings many benefits to a company, including finding top talent that aligns with the company's goals and values.

Young woman candidate

How Can Pre-Screening Decrease High Employee Costs?

With all the technology available in modern times, candidates can easily apply for multiple positions in just one click, often without needing to read over the requirements of a job. This increases the number of unqualified candidates applying for a position.

Hiring managers will often have to spend countless hours identifying top candidates without knowing if the best choice is being made. Companies usually implement a pre-screening process to avoid poor decisions to override these technology-based challenges and ensure that the top candidate is being selected in less time. A process that is guaranteed to help with reducing high employee costs.

With pre-screening, hiring managers can quickly discard all non-qualified candidates and better get to know the top talent. Pre-screening also accurately reflects a candidate's past job experience, skills, time employed, qualifications, and any other job history the company will be interested in.

handshake with the manager

 

With the extensive information pre-screening processes provide, hiring managers will be sure that the right choice is being made. By learning more about the candidates' experience, the company won't have to guess their intrinsic value and can more easily make a job offer that accurately represents their worth. This simultaneously eliminates the chances of overpaying for an underqualified candidate.

job interview concept

Depending on the position that needs to be filled, hiring managers should also consider personalizing and changing the pre-screening process. Once tailored, they can target qualified candidates and ensure that their character and personality align with the company's pre-existing culture—the chances for new employees to assimilate quickly and stay along-term increases, reducing turnover and poor quality.

Perfecting and implementing a pre-screening process is a lengthy process that could be harmful if done wrong. Certified Source has developed innovative pre-screening methods to ensure our performance-based staffing clients find the right candidate the first time while limiting the potential for high employee costs. By offloading pre-screening and other associated hiring processes to a staffing agency, companies can invest their time and money researching and negotiating additional growth opportunities.