Return on Employment
For every new employee there is a period of investment when it costs the business more than they generate. How long does it take until that is turned around? In the best businesses; about 6 months. How long does it take in yours? And can you improve it?
Finding people costs money. Costs to recruit include all materials and facilities used to recruit, all time spent by internal staff and the costs of any third party agents. The bigger the costs, the deeper the initial investment.
This captures the costs of training employees to the point of productivity. Costs include the employees salary, materials and facilities used to train and the costs of trainers (internal or external).
This point is reached when an employee is in a position to be productive on the job and MORE than cover their cost to company. An employee's monthly productivity determines how long it takes before a business breaks-even against their employment costs.
How quickly break-even is reached depends on how succesfully the person fits with the business, and the quality of the training. The better the placement and training the sooner the break-even point is reached.
How long does it take to reach break-even in your business? could halve the time to break-even. In the next section you can calculate your ROE and compare with the difference.
To estimate your Return on Employment, and how long it takes for your new hires to start to contribute to the profitability of your business, answer the questions below and compare it on the generated graph.