Human Resouces Info

What monetary value does an employee need to add so that the organisation is not losing money by employing them?

As a general rule, an employee needs to generate double their gross salary to make their employment profitable.

When recruiting, there are methods that can offer decisive help in ensuring that potentially good performers will enter the organisation

Managers need to know both the price and the value of their employees. In fact given the huge financial losses or gains that depend upon employee performance, they can't afford not to know.

So what monetary value does an employee need to add so that the organisation is not losing money by employing him or her? The obvious answer appears to be that an employee needs to produce as much as he or she costs in income and benefits. But pay is only one of the many costs that an organisation has to meet. Other costs include equipment, telecommunications, utilities, transport, real estate, etc.

No organisation whose employees produce an average monetary value that equals their gross salaries would be able to survive for long, let alone be profitable.

As a general rule, therefore, an employee needs to generate double their gross salary in income to make their employment profitable – although this can vary greatly across types of businesses.

But what about comparing the cost of employing individuals who under-perform against the value of those who perform well?...more