Financial teams struggle with a revolving door of staff, driving up the cost of turnover in accounting. Long hours, repetitive work, and limited opportunities for growth often result in a constant cycle of vacancies and new hires. Not to mention the overall workforce shortage of skilled accountants.
It can be challenging to keep the right qualified talent. But this constant hiring has an impact beyond just the stress it causes to always be seeking to fill a vacancy. Hiring a new finance employee requires a significant investment, one that becomes costly if turnover occurs at a rapid pace. Employee turnover can pose a significant drain on a company's revenue. The more turnover, the less a company sees a return on their investment.
But just how much does a new employee cost the company each time the employee retainment challenges in finance result in another vacancy to fill?
Recruitment & the Cost of Hiring in the Accounting Department
Recruitment and hiring is an investment process. Businesses invest a hiring budget in order to attract, screen, and secure new talent. Each new hire can be calculated to represent a fraction of the total cost of the hiring campaign. If you successfully recruit ten new people, each shares one-tenth of the recruitment cost. However, hiring for just one position generates a greater new employee cost as a result.
Recruitment Marketing & Paid Job Listings
To attract new talent, first you must market open positions. Job marketing requires a certain amount of budget depending on the methods, channels, and exposure you plan for. Some businesses pay only to add their open positions to popular job boards like Indeed and Monster, while other brands go all-out with television advertisements seeking large recruitment waves.
Recruiter Commissions
If you work with professional recruiters or recruitment agencies, you will likely need to consider commissions and fees. Solo recruiters often work on commission, requiring payment for every well-matched resume they bring you. A recruitment or staffing agency may offer more efficient packages or custom-tailored recruiting programs that are typically more cost-efficient. Working with a staffing agency is typically more practical if you need a niche specialist, or are hiring in large numbers. Or require a constant influx of new hires.
Background Checks & Drug Testing
Screening candidates also comes with a cost. Background checks must be done for every potential employee. Background checks protect your business from people with a risky past, documented poor judgment, or who are untruthful about their identity.
Some industries are required to also conduct a hiring drug test. From heavy machinery operation to entrusting new hires with financial matters, the cost of dug screening typically falls upon the company.
Interview Hours for Managers and Team Members
It's also worth remembering that managers and teams who conduct interviews can represent an expense. Every hour spent interviewing is paid at their normal wages while away from work duties. In an already short-staffed financial department, the time of finance managers and department leaders is doubly valuable.
Employment Costs
Once you have recruited one or more candidates, the new employee cost can be calculated by the cost of onboarding and employment itself. Onboarding is the period required for a new hire to learn company policies and the duties of their new role. Employment costs include the pay, benefits, insurance, and taxes associated with filling the role.
Paid Onboarding and Training
According to the labor laws in most states, an employee must be paid for time controlled by the employer. This means that onboarding and new hire training are typically paid at the employee's base salary. A shared onboarding can save money combined with the cost of each new recruit.
Employee Salary and Taxes
Each employee you hire will, of course, generate a cost equal to their salary and associated taxes. The employee's compensation package will include their hourly or monthly pay. Your financial department will determine the appropriate taxes to pay based on their addition to the payroll.
Workers’ perception of their compensation rebounded 2.5 points during the last quarter, a survey showed.
Mandatory Insurance Policies
Most states require employers to take out specific insurance policies on behalf of their employees. This includes Worker's Compensation, Unemployment, and Health insurance as the most common. New employees may be added at the same rate or a new rate depending on local regulations.
Benefits and Employment Perks
The cost of your employee benefits package and employee perks also contribute to the cost of a new employee. Retirement contributions, gym memberships, catering, in-house fitness centers, and other benefits all play a role in the cost of a new hire. Initializing these new benefits likely costs more than maintaining the same benefits for your previous employee. At least initially.
Physical Space and Equipment
Lastly, remember to consider the cost of equipping and facilitating your new employee. Most employees cannot perform their job while floating in thin air. They require a work environment, equipment, and sometimes an expense account to fulfill their role.
Employee's Desk, Office, or Square Footage
An employee working onsite, in the office or work environment, will require their own space. This may equate square footage, a personal office, or a desk in a shared workspace.
Personal Computer and Company Phone
What technological equipment does your new employee require? Many companies provide their employees with a desktop workstation or a personal laptop. Some roles benefit from the provision of a company phone. Others require employees to be equipped with safety attire, uniforms, barcode scanners, or even vehicles.
Office Supplies and Catering
Each employee also consumes a certain amount of in-office supplies when working onsite. Pens, printer paper, coffee, and morning bagels could all be calculated as part of the cost of hosting your employees.
Remote Work Sponsored Services
Of course, employees who work remotely from home may also have some required expenses. Your company might sponsor the installation and subscription to high-speed internet, for example, to ensure remote workers are able to participate in collaborations and online meetings.
In a survey by the CPA journal, 92% of respondents indicated that they make use of both flexible time and remote work arrangements.
Business and Travel Expenses
Even employees who travel must be considered. These may require travel expenses or a business expense card when out working on-site with clients outside the workplace.
Relieve Stress, Stop High Turnover (The Accounting Cost You Don't See)
Often, the source of high turnover in the accounting department is short staff, high-pressure workloads, long hours, repetitive tasks, and a highly competitive market, all of which contribute to significant cost increases. One of the best ways to resolve the constant expense of accountants high turnover is through outsourcing. By delegating some of your team's workload to outside professionals, you can get to the root of your turnover problem, whether it lies in burnout, management, organization, tools, and more.
Your outsourcing team can also provide insights, and support during your quest to stop the turnover trend.
