I didn’t read your post right. Sorry. It does have relevance. I don’t think it is directly relevant into cost to employ you but it gives an idea of what businesses expect. The reason I did not see it right is that, for me personally, it would be very difficult to judge what I ‘bring in’ to the company. However, on a division wide scale I can see.
This doesn’t get at my gripe though…which is how much it costs to employ me 
I would respectfully like to ask you to explain this. I certainly understand salary isn’t the only expense to pay someone…but I can’t see the total cost being 5 times that amount.
Health insurance, vacation, and all that I understand. But the cost to hire someone to do the payroll, and taxes, and tracking all of this - well, the company is going to have to do that anyway, aren’t they? So this person in HR, their expenses get added to mine? But…aren’t they doing the same for the hundreds of other employees already? And as Crown Prince says it’s not as though if you fire me you can let go of all of those other expenses. The HR person, the payroll person, all of these people are still going to be working there.
Can someone explain to me how all of those costs can get put on each person’s head?
Why can’t it be both?
Sure you do. If your company’s HQ is in San Fran and that’s where the accounting staff is, then part of the cost of employing you is to have payroll people in that building to handle your timesheets and paychecks/direct deposit, AP people who pay your expense reports and the rent/utilities for your office in MN, and AR people who bill your time out and collect the incoming payments.
If you still think this all has nothing to do with you, then go take a Cost Accounting class at your local community college and see if all the citeless assertions you’ve been making in this thread hold water.
A lot of it depends on the type of business the OP is in. A flower shop at the corner of Maple and Elm will have a much smaller overhead, and therefore a lower cost to employ someone, than a government contractor with 1,000 field offices all over the world.
I’m not an accountant and I’ll probably screw this up, but here goes.
There are costs that, on a marginalized basis, don’t go up with each new employee added. If one person is added or removed from the company, the total cost of buildings, janitors, lawyers (overhead) don’t change. But yet those costs need to be accounted for somehow. So the total costs for them, in a simplistic way, can be divided up among all the employees. Add an employee, and the cost per employee goes down. Drop and employee, and the cost per employee goes up. The cost to the company stays the same, though.
The HR person’s TOTAL expenses aren’t added to yours, just your portion of them. If you leave the company, the company won’t be saving your portion of her costs, but on a per employee basis they will be paying more for her.
Try to figure out how much it costs per mile to drive your car. There are the obvious direct costs: gas, wear and tear, depreciation. The more you drive the car, the more those costs go up. But then there is also insurance. In that case, the more you drive the less you’ll actually pay for it on a per mile basis. But your cost for insurance won’t actually change.
Ok, that’s how I thought it was, and thank you, cmosdes, for explaining, but that still doesn’t explain how the OP’s company came up with five times the amount of his salary? I would even accept double the salary as a valid number, but five times seems crazy.
[QUOTE=Anaamika]
Ok, that’s how I thought it was, and thank you, cmosdes, for explaining, but that still doesn’t explain how the OP’s company came up with five times the amount of his salary? I would even accept double the salary as a valid number, but five times seems crazy.
[/QUOTE]
Depends on what benefits they are offering (the OP seems to be saying ‘none’ but I find that hard to believe), and how much overhead they are paying (if they have a large HR staff, or a large IT staff, or some other large support staff, or all of the above, all of that is factored in). Taxes also add to what a company is paying per employee…companies have to put in their part of your unemployment, for instance, and social security.
Really big companies often have higher loaded costs, as cmosdes says. You could have assigned company property that is both a capital costs and a management/maintenance cost. You also could have a lot of overhead that goes to IT support, help desk support and simply HR type support. Payroll and tax, even job marketing if the company recruits…all of that factors in.
Also, we simply have to take the posters word that their $40k/year (with no) translates into $200k/year in loaded costs…though I wouldn’t be surprised. Generally cost loading is 2-3 times in my experience, but I’ve worked mostly for small companies when I was doing budgeting for new employees.
-XT
Well ok then…you should leap at my deal. Pay me twice my salary and I will take on all the expenses I need to do my job. If you don’t agree but still stick by what you say then maybe you should go back to grade school and learn simple logic.
Is there a way to find out such things? How about for nonprofits?
Well, my example comes from a particularly stupid company (the $40K salary = $200K cost to employ) - they were adding the cost to buy the company onto my cost to employ among other things. Most people won’t be that idiotic.
I also contest your 2-3 times. Are you including executive salaries in there? If so…no. That is cost to employ the executives, not the employee.
Again, if it really is 2-3 times my salary…I have a great deal for you that you would be a fool to not accept! (unless of course the 2-3 times isn’t really…REAL)
[QUOTE=BlinkingDuck]
Well ok then…you should leap at my deal. Pay me twice my salary and I will take on all the expenses I need to do my job.
[/QUOTE]
You’d be a fool to take that deal. Have you ever done private consulting? I have, and while it seems like a lot of money just wait until you have to pay for all your equipment, overhead, and insurance. When I do consulting or 1099 type jobs I generally charge 4-5 times my ‘normal’ salary…and even then it’s not enough sometimes, not unless I’m doing it on the side.
My guess is that, assuming your job is something they really need, they WOULD be willing to pay you that much if you left the company and they hired you as a 1099 consultant. Of course, then they wouldn’t have to pay anything for you, their overhead would be only processing, and they could use you only for the hours they actually need you, so while your hourly rate would be double whatever it is now you’d actually make a lot less…and that’s before you had to pay for your own taxes, social security, and insurance, which totally sucks.
Don’t give up the day job…
-XT
[QUOTE=Anaamika]
Is there a way to find out such things? How about for nonprofits?
[/QUOTE]
You mean for individual companies? I used to know what the cost loading was for companies we were partnering with on RFPs and such, but I don’t know if companies advertise that sort of thing…certainly I wouldn’t expect companies who compete to do that, as it would give away some of their pricing. Non-profits might be a bit more transparent. It’s going to vary a lot between companies though, since companies load their costs differently depending on what they are trying to do.
-XT
Lol, just received a reply from a woman in HR here at the company I work at. She said it varies some per employee but on average it is about 1.6 times salary (salary plus 60%).
My company isn’t warm and fuzzy to work for. Cold and professional is what I would use…but I can never accuse them of being full of shit.
Well, except for once where they said they contributed 12% to retirement but it was really only 6% - had a debate with HR person about that and she could never really understand that when the company pays 50% of my contribution up to 12% of my salary that it is only 6%, not 12%. I finally got her to actually listen when I said why they just don’t pay 10% of 60% and so they could say they make a 60% contribution to retirement. However, that was one particular person having a blonde moment and not the company playing games.
[QUOTE=BlinkingDuck]
I also contest your 2-3 times. Are you including executive salaries in there? If so…no. That is cost to employ the executives, not the employee.
[/QUOTE]
You can contest all you like. I’m flat out telling you that this is normal, so if you don’t want to believe that it’s your affair. Your loaded cost includes everything the company has to pay to have you as an employee. Ask your HR what they are paying for insurance, for instance. If it’s 80/20 then look at what they are taking out for you per pay check for insurance (health insurance that is…they are probably paying for some sort of life insurance on you as part of a blanket policy). Look at what taxes you are paying, especially your social security tax and taxes for unemployment insurance…and figure your company is paying at least that much for you as well. Then look at the pay stub itself…or at your employee handbook…or at the PC you are probably typing your replies to this post on from work (;))…or your office (got power? got lights? is it clean?)…or telephone or cell phone you have. Etc, etc etc. All of those are costs that the company has to pay to employ you. None of that stuff is free. Obviously, as you are employed, your company thinks that the costs to benefits of keeping you on is a favorable ratio (i.e. even after all those costs you are still making them money, or allowing them to be profitable), but the fact of the matter is that your company still has to pay those costs.
-XT
[QUOTE=BlinkingDuck]
Lol, just received a reply from a woman in HR here at the company I work at. She said it varies some per employee but on average is is about 1.6 times salary (salary plus 60%).
[/QUOTE]
Is she talking about the total loaded costs (:dubious:) or the costs to the company of your benefits? Sorry, but 1.6 times salary is pretty meager, though I’ve seen companies that operate that thin (WAG…places like Walmart probably have pretty thin cost loading per employee).
-XT
GAHHH! Ok OK…I have a deal for you! I will pay for all of that…just double my salary! I will pay my own electricity, set up my own office, pay my own health insurance, power and phone. My own SS and unemployment insurance.
A bargain for you..a BARGAIN! You will accept it, right?
Certainly, if you worked for me I’d be more than happy to double your hourly rate and use you like a consultant. I’d make out like a bandit, especially since I would not only cut my overhead on you but I would only pay you for the hours I needed you. I assume you are on salary right now, yes? So, breaking down your yearly salary into an hourly rate and doubling that…yeah, I’d jump on that with both feet. That’s what a lot of companies are actually doing right now…and the reason they are doing it is because it saves them tons of money.
-XT
Our company sends all employees info on the ‘Total Compensation Package’, i.e. the total of what the company was actully spending on us. (salary plus bennies)
In my case, salary was more than half.
But I may just be cheap.
As long as you pay me at least double my salary no matter how little you use me, sure. We ARE talking about my cost to employ me per year after all.
If you don’t need me to work full time, I assume you’d just lay me off because you don’t need me.