Possible Solutions for High Employee Cost

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Wage Analysis as a Possible Solution for High Employee Costs

Most business leaders try to ensure that their employees are getting a fair wage for their services. When employees fail to meet expectations placed on them, yet annual raises continue to occur, an entry-level or mid-level position may become incredibly lucrative – especially when the employee is paid too much from the start. Although this is an avoidable drain on the business' cash reserves, is it a problem that could be fixed with a wage analysis? The answer is yes!

Paying employees more money than they are owed often harms the employees around them and the organization as a whole. Not only can this limit their development as an employee, but it can also spread resources thin company-wide. Becoming a market leader both regionally and nationally by paying increased wages is often considered a smart strategy. Although, it is crucial to ensure that overpayment is not leading to high employee costs. Fortunately, initiating a wage analysis is one of the easiest ways to account for this common problem and ensure a business protects its bottom line.


How Does Wage Analysis Improve Employee Costs?

Performing a wage analysis on the organization's vital positions can help determine a fair wage for all employees based on the type of work they are performing. This process can also help create a "pay cap" that can only be surpassed once the employee moves into a new position through recognized work or skills. If a team member is not performing their duties, they should not be entitled to a wage increase. But how does a wage analysis directly impact employee costs and ensure that a business is not inadvertently setting itself up to lose cash flow on high employee costs?

A wage analysis can provide valuable insight into the correct pay scale to provide employees based on both local and national data. Not only does this help business leaders determine a fair starting salary and benefits, but it can also create room for salary increases based on performance or provide guidelines for potential bonus opportunities that may be available. At the same time, this helps ensure that new employees are not being overpaid and draining the capital or financial resources that could be used to expand the workforce or improve services for external clients and internal shareholders.

Team at work
Group of Business people

Providing employees with a higher wage than competitors may seem like a smart business decision to attract the top talent. The only caveat to this approach is that the right checks and balances need to be in place to ensure high employee costs do not negatively impact the organization as a whole. A wage analysis is the best way to do this. However, continual research will need to be completed at least bi-annually to keep up with the changing market. Through options like performance based staffing, organizations can rest easy knowing that the employees they have are receiving the best wages possible without the potential for a financial drain to occur.

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

In many cases, targeted recruitment begins with a company knowing who they need to reach and the best ways to get a job listing in front of them. While this approach provides many benefits for businesses looking for specific skill-sets, it may also help control high-employee costs. Any time recruitment and retention efforts are leveraged, companies can be sure they are finding the right talent at the right price.

The ultimate challenge in recruiting is ensuring that the best candidates are being sourced at the lowest possible cost. While a quality hire often will take precedence, employers will often have to accept higher costs associated with the skills required for a position. With the right balance, companies can spend their recruiting budget efficiently without compromising on the quality they can receive from candidates. Having a solid targeted recruitment and retention program in place can help control high employee costs throughout the employee life cycle.


How Can Targeted Recruitment and Retention Programs Decrease Employee Costs?

A company needs to establish a process to track the effectiveness of its recruitment sources. Some important metrics to consider include the source of the hire, the cost of the hire and the type of candidate recruited. With this information, companies should determine patterns and learn which targeted recruitment sources are controlling high-employee costs. With this information, the company can invest more into those sources to continue finding top talent at the most affordable prices possible.

Many different factors go into a targeted recruitment and retention program. Companies may need to outline several additional expenses associated with this process to ensure they are getting the actual cost associated with hiring new talent. This can include the cost of working with a recruiter to find new talent, the salaries of other team members involved in the process, advertising costs and much more. When added up, the average associated costs could range from between $3,500 to $5,000 when everything is accounted for.

One of the easiest ways to decrease high employee costs associated with recruitment is to ensure that you have an excellent retention program in place. This can reduce the overall need to seek new employees and help save time and money while still ensuring that top talent is available internally year-round. Simply put, companies cannot afford to neglect their retention programs to ensure that their most valuable employees remain productive as long as possible.


Attracting and retaining top talent is a wise business decision for any industry. The only problem with this approach is that most employers do not have a system to ensure that they are investing in targeted recruiting and retention programs that make a positive impact. 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.

Exploring Pre-Screening as a Possible Solution for High Employee Costs

While wages are often seen as the only cash drain that an organization may have, two overlooked factors that heavily contribute to high employee costs are onboarding and turnover. While it is unlikely that these costs will ever be remedied completely, there are many great ways that organizations can utilize pre-screening. This can help ensure they are hiring candidates that are a long-term fit and possess the skills and education necessary to complete vital job functions. Decreasing high employee costs is often easily achieved through a comprehensive pre-screening model that includes aptitude tests, personality tests, cognitive ability tests and integrity tests.

According to the U.S. Bureau of Statistics, the average turnover rate nationwide is around 12% to 15% annually. When put into perspective, employee turnover can cost anywhere from tens of thousands of dollars to about 1.5 to 2 times their annual salary. This makes pre-screening to find suitable candidates one of the most effective ways to eliminate high employee costs while still ensuring that the top talent is placed in crucial positions at all times. While this is a staple among performance based staffing professionals, employers still need to understand the unique benefits that pre-screening provides to eliminate high-employee costs.


How Can Pre-Screening Decrease High-Employee Costs?

There has been a known talent shortage worldwide that affects nearly any industry, from manufacturing to accounting. According to a recent survey from Nearshore Americas, almost 69% of employers struggle to fill their vacant positions, a stark contrast from the 14% that found it difficult in 2010. Unfortunately, this leads many employers to settle on sub-par candidates as a band-aid solution to increase productivity and ensure corporate headcounts are being met. Typically this occurs at the expense of an employer as they pay steep onboarding and turnover costs.

With pre-screening, employers can make more informed decisions about the candidates they are pursuing. Not only will they have an accurate reflection of past job experience and the length of time the employee remained with the company, but they can also gather information about their skills and determine how they will fit into organizational needs. Suppose a hiring manager winds up hiring the wrong candidate. In that case, it could significantly cost the organization by further hindering productivity and limiting the growth that the organization can achieve. This makes ensuring candidates are only given an offer following extensive pre-screening.


Ensuring a candidate-friendly experience is critical for success with pre-screening to eliminate high-employee costs. Unfortunately, that means that pre-screening needs to be more robust than it was in the past. As technology-driven generations rely more on social media and mobile platforms, employers should also factor these characteristics into their pre-screening strategy. Using gamification strategies to attract talent in these audiences may be a great starting point while also challenging their skills or abilities as potential employees. Certified Source has developed innovative pre-screening methods to ensure our performance based staffing clients find the right candidate and limit the potential for high employee costs.