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Does is cost less to outsource than hire an employee?

When you have a new or growing business, at some point hiring an employee becomes a natural train of thought.  You struggle with time, you need help, but not sure you can afford it? You start to think, $20 per hour for 20 hours is $400 per week… I think I can do that?

There are a few things to consider before hiring an employee:

  • Are you familiar with the additional employment costs like vacation pay, stat pay, the companies CPP and EI contributions, not realizing that the $20 per hour just became $30 per hour to the business?
  • It takes time to train, and become efficient… The return on the investment of an employee only occurs once the employee is 100% trained and efficient. For the first six months they are learning the business and taking much longer to complete tasks, they may be generalists in areas, but lack the expertise to complete all tasks, do they have the skills necessary.
  • Expecting someone to do it all when you hire for A then add B, C and D to the mix can create added work and costly errors.

I caution hiring without measuring the cost, seek out advice from experienced experts in hiring, systemization and the use of strategic management to plan for growth. Consider outsourcing tasks first, as it takes these experts half the time to complete and in the end cost less than the actual cost of an employee.

When outsourcing, establish efficient standard operating systems and then transition to hiring an employee. It may mean hiring a permanent part time person first and keep the outsource as a back-up, which creates the ability to cross train for coverage and if an employee quits, minimizes the risks. At some point a full-time hire may make sense, but until then, consider a blend of employee and outsourcing to position the company for profitable growth.

At Business Innovation Group, we help businesses with profitable growth. We offer consulting advice, and resources to assist clients with time, team and money! Contact Peter or Leanne for a complementary business meeting and explore options for you to get the best return in your business.

By |2019-02-01T10:45:00-07:00January 17th, 2019|team, Team Building|0 Comments

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