Personnel Costs 2

What is the Definition of Personnel Costs? Part 2

Definition Knowing

Important!

In order to be able to determine your personnel costs and your personnel cost indicators precisely, you are of course also dependent on reliable and accurate recording of the working hours of your employees. The recording of working hours only in good faith without fixed documentation is not very helpful here. That’s why you should trust the digital time recording with the app !

What do personnel cost indicators mean for you?

You now know the personnel costs for your employees. But in order to be able to estimate how high the proportion of personnel costs actually is in your company, you also need some personnel cost indicators .

Personnel cost indicator description
Personnel intensity This key figure is used to calculate the proportion of personnel costs in total costs or also in sales. You have to divide the staff costs by the sales and then multiply by 100.
Personnel expense ratio This metric is used to look at your personnel expenses in relation to the overall result of your company. To do this, you have to divide the personnel expenses listed in the income statement by the total output.
Personnel costs per employee This is a key figure that shows you the personnel cost burden your company has. To do this, you divide the total personnel costs by the number of your employees. The personnel costs per employee should in no case not exceed the productivity per employee.
Personnel costs per hour You can find this metric by dividing the total personnel costs by the number of hours worked. For example, you can optimize certain areas and make them more efficient.
Additional personnel expense ratio You determine this key figure by dividing the additional personnel costs by the personnel costs incurred for the work performed. You should always strive to keep this rate as constant as possible.

How can you save personnel costs?

As you now know, staff costs are a significant part of your total costs. That is why it makes perfect sense to think about saving personnel costs. There are a few options for you to do this.

  • Build up reserves for bad times: Things don’t always run equally well throughout the entire financial year. This is especially true for companies that are subject to seasonal fluctuations. In order not to have to lay off employees, you can build up reserves . For example, you can remove free perks. For example, free coffee or other drinks, additional payments for meals in the canteen, the weekly fruit basket, etc.
  • Reduce overtime: Instead of paying employees for their overtime, you can reduce overtime by compensating for time off.
  • Use part-time workers : Part-time workers can share a job. So you not only save costs in recruitment , but also can save a lot in the area of workplace equipment.
  • Minimizing absenteeism: Are your employees often sick? Then try to find out what the reasons are and make improvements.
  • Outsourcing: You can also consider outsourcing . You can save personnel costs, especially in areas that do not require so much know-how. You just have to think of the call center as an example. But you can also outsource areas that you might not think about at first. The outsourcing your accounting also leads to savings in personnel costs.

Why do you need permanent employees?

Young founders in particular are always faced with a very high hurdle when it comes to personnel costs. A permanent position is often not profitable for you because this employee simply costs you too much. There are also other ways to employ an employee, to save personnel costs and still get a good workforce.

  • Employment Agency: Contact the Employment Agency. If you hire an employee who was previously unemployed for a long time, you will receive an integration grant from the Employment Agency.
  • Temporary work: Are you very busy at the moment? But you know that this won’t last forever? Then simply borrow employees through a temporary employment agency. You choose the period from when to when you need them and do not have to hire permanent employees.
  • Working with freelancers: Instead of a permanent employee, you also have the option of working with a freelancer . They take care of their taxes and social security contributions themselves and you only pay them a fee for their services.

In a nutshell: frequently asked questions about personnel costs

What are direct staff costs?

Direct personnel costs are primarily wages or salaries. There are also variable components, such as commissions, etc.

What are incidental personnel costs?

Ancillary personnel costs are all those costs that you as an employer have to pay in addition to the gross wage or gross salary paid. You are legally or collectively obliged to make these payments.

Are personnel costs variable costs?

Personnel costs can be both fixed and variable costs . Variable personnel costs are, for example, remuneration for piece work.

Conclusion

As a responsible employer, your goal must be to offer your employees a job in the long term. Even if your company is not doing so well. That is why it is important for you to keep an eye on and review your personnel costs. However, you should not only look at this for a short period of time, but rather look at the next one to two years.

Personnel Costs 2