Originally posted October 2013

Here’s an interesting fact for those running a small business. The current adult minimum wage (£6.31ph) equates to an annual salary of roughly £13125 for a full time employee. When employment “on-costs” are added (National Insurance, Employers Liability Insurance etc.) this takes the figure closer to £15000.

Is there anything else you spend £15000 on in your business?

Whether the answer is yes or no, spending that level of money would normally be classed as a significant capital investment. You would spend time deciding exactly what was needed, compare the market for the best deal, and maybe seek specialist advice. You wouldn’t necessarily expect a return immediately, though you would over the longer term; and you’d spend time and money ensuring your piece of equipment was well maintained. What you almost certainly wouldn’t do is throw it away after 6 months and go and buy another at the same price.

Yet when it comes to staff, too many small organisations do the opposite. They recruit quickly, based on “gut feel”; expect the new employee to hit the ground running and produce the goods from day one; don’t bother with looking after the person (which can be as simple as giving constructive performance feedback); and if the person doesn’t seem to be working out they’ll terminate during the probationary period and go out and recruit someone else.

Is frittering away £15000 good business sense? Is it likely to lead to long term success for your business? And is a reputation for “hiring and firing” going to make you attractive to customers and clients, let alone potential recruits?

So stop thinking of employees as a cost. Start treating them as an investment decision, and you’ll suddenly find that hard headed business decisions and “touchy-feely” people stuff go hand in hand for business success. And if you think you need help doing this, why not check out our services page and get in touch?