As the leader of a lean accounting team, you’re likely often on the hunt for human capital in your accounting department. You have a vacant role to fill; your organization is growing and you need to hire a new team member that will help fulfill the ongoing needs in everything from AP, AR, General Accounting – you name it. Sound familiar?
If you’ve been following us here on the Personiv blog, you'll likely have seen our series on which type of Accounting Support is best for you (check out part 1 here). In-house hiring is where most leaders start, and with good reason, but the costs of in-house hiring can add up.
And although you already understand that the cost of bringing on a new team member, what about costs that go beyond just salary and benefits, including factors that may be overlooked during the hiring phase? Employee burden, or the costs outside of salary, can comprise everything from equipment, technology and training to company culture and more. What leaders may not consider is that employees are the biggest expense a company incurs. Read on to understand the hidden costs of human capital in the accounting department.
The Importance of Human Capital
Beyond being your most important resources for growth within your organization, people are often the most expensive of your costs as well.
So, if employees are a company’s biggest expense, it’s logical to assume that there are other costs associated with hiring a new team member aside from the basic salary and benefits. Before we unpack the costs connected with adding a new addition to the team, let’s see what other factors affect employee costs.
Determinants That Will Affect Employee Costs
While the cost of human capital is far-reaching, the specifics of what you will pay in both salary and benefits as well as employee burden varies by location, role, company size and more. What an employer pays an entry-level AP Specialist in San Francisco, California will be vastly different than what an employer pays for the same position in Tulsa, Oklahoma. Variables like state taxes and market demand play a huge role in determining this factor.
The cost of an employee also varies by role, industry company size and more. For example, it’s no secret that larger organizations can afford to pay their employees more than a smaller organization would. In fact, according to Forbes, 44 percent of small business employees are not satisfied with their pay. Some studies even take that a step further by explaining that large companies hire highly skilled workers and in turn, pay them more.
There are a number of factors that can affect employee cost: location, role, and company size. And while this is important to weigh when hiring accountants in-house, it’s the hidden cost of human capital in the accounting department that will sneak up on leaders most often.
Want to See How Costs ShakeOut in Your Area? Get the Full Lean Accounting Teams White Paper for More.
Hidden Cost of Hiring in the Accounting Department: Overhead Costs
While remote work has taken over nearly every corporate office in the country, you would be surprised at the overhead costs that still exist—even when working virtually. You’ll still need to supply your new employee with what they need to do their job effectively and efficiently. This ranges from traditional notepads and pens to office equipment such as a laptops, computer monitors and keyboards. In some cases, employees require their employer to cover costs like internet connectivity, landlines, etc.
And for some companies, these costs tend to double as offices remain open and some employees work from home while others work in the office. Either way, furnishing an employee’s office can be expensive – from desks and chairs to printers and filing cabinets, the costs add up. This hasn’t changed, and likely won’t for many businesses.
These costs don’t include the software costs that come along with each new employee you hire on the accounting team. Not only will they need access to all the basics – Microsoft Excel, Word, Outlook, etc. But you’ll need to introduce them to the ERP they will work in day-in and day-out. In an ideal scenario, your new hire is familiar with the software you use. If not, it’ll be an adjustment for them and an additional training cost for you (more on that below). Not to mention, the actual cost of adding a new user to your software license tallies up as well.
Read: We Ranked The Best ERP Software For Midsize Businesses
Finally, there are the true hidden cost—company culture. Fostering a positive work environment involves time and money. In fact, according to Built In, employees who don’t like their organization’s culture are 24 percent more likely to quit. Team building activities can be costly, especially for smaller companies, and while investing in your employees is a worthwhile expenditure, it’s something leaders often overlook on the balance sheet. Part of the employee experience includes giving back, which is another cost that companies take on and may not consider part of the cost of human capital.
Looking to Build Up Your Company Culture? Here Are 17 Ways to Do It Virtually
Hidden Cost of Hiring in the Accounting Department: Recruiting
Recruiting is costly. Everyone knows that’s the case, but it can become even more so as accountants come in and out of your program with the dreaded revolving door. It starts with advertising the job.
Letting potential applicants know about a vacant position is more than just word of mouth. Managing your hiring process internally can be just as expensive as offloading your recruiting process to an external staffing company. Costs include job board fees, background checks, and even investing in an applicant tracking software such as Workday or Smart Recruiters. Moreover, according to a report from Glassdoor Economic Research, the average hiring process in the U.S. takes 23 days.
Once you hire, you’ll be training your new team member but training is an ongoing process—not a one-time venture. It involves making sure your employees stay up-to-date on the latest trends and technology. Budgeting for training can be minimal or it can be expensive. However, leaders can never go wrong with investing in their employees by offering them career development opportunities that benefit both the employer and employee. So this hidden cost is a truly necessary one that just doesn’t let up.
Read More: How to Effectively Train Your New Accounting Hires So They’re Equipped For Success
Finally: the cost of onboarding must be considered. Onboarding begins before a new hire starts their first day of work and some would argue, never really ends. It not only involves the standard paperwork and meet and greets with other members of the team, but also frequent check-ins with managers throughout their tenure with the company. The process is long, and it can be up to two years before a new employee has learned the ropes.
Go In-Depth About Onboarding: How to Onboard Your Virtual Employee For Long Term Success
Hidden Cost of Hiring in the Accounting Department: Benefits
Benefits may not first appear to be a “hidden” cost but like many on our list, they add up and that total can cause some sticker shock. The most common benefit you can offer your new employee is healthcare (medical, dental, and vision). However, it’s rarely cheap and in most cases, the company pays a hefty part of the premium at no cost to the employee. Yet, this is one of the costs of an in-house team that is not only necessary but must be competitive in order to win the war on talent in accounting.
What about when your employees aren’t working? Offering paid time off (PTO) is definitely the way to prevent burnout and make your team stay, but it impacts the cost of hiring a new employee. For instance, if you hire a full-time entry-level AR Specialist at $20 per hour and they take two weeks of PTO, you’re paying them the same amount of money for fewer hours worked over the course of a year. During that time, you and your team could be scrambling, so there is a loss of time across the team as well.
Lastly, setting up a 401K account for your new hire involves more than just matching their contribution. It involves taking the time to set up an account, provide statements and informational materials, and integrating with your payroll platform – all of which come with a small price tag.
Virtual Accounting Talent: A Different Approach to Valuing Human Capital
Hiring for human capital in the accounting department doesn’t have to be expensive. In fact, there’s an alternative: partnering with a virtual accounting support provider. Outsourcing solves most of the problems that internal recruiting and staffing agencies can’t. One of the sizable advantages is the cost savings you’ll experience, but you’ll also experience the ease of a dedicated team that you don’t have to recruit, train, manage or replace.
At Personiv, we’ve been working with clients for over 35 years to help find, hire, and retain talent. We can help you save a large percentage of your current accounting labor costs by providing you with the number of employees you need to help run your finance department effectively.
You can see how much you would save by partnering with Personiv by using our cost-savings calculator and then get in touch with one of our experts to learn more.