Friday, June 09, 2017

HR 101 - Are your Staff Expenses or Investments?

HR 101 - Are your Staff Expenses or Investments?

By Nikki Viljoen – N Viljoen Consulting CC.

Please note that this pertains to South African Labour Relations and Best Practice Requirements.

Often when I listen to what is being said by SMME’s in the market place, I am amazed at some of the responses made to this particular question, and I wonder why it is that they employed staff in the first place.

For me, the only reason that I would employ someone is because of my need of their particular skill or talent in the workplace.  Let me clarify this for a moment.

Here I am working an 18 hour day and suddenly more sustainable work flows in than I can possibly deal with (sound familiar).  So I need to employ someone who can assist me with the mundane things that take up so much of my time in the office.  Clearly I need an assistant that has strong administration skills, who would be able to keep the office administration up to date, who could manage my diary, who would ensure that I can get enough uninterrupted time to do what I need to do in order to service the clients, while he or she get’s on with what they need to get on with.  For me this would be a junior office administration clerk, who I could, over time, train up and who could eventually progress to a mini-me.  Well not quite  a ‘mini-me’ because he or she should have attributes that compliment mine as well as be able to do some of the things that I hate doing. So the bottom line is I would not employ a junior hairdresser, now would I?

Now even though I do not go through a recruitment agency or talent lab type experience, there is still a cost to me employing someone to assist me.  I would obviously have to take into consideration that person’s salary and related costs, like commissions, UIF, SDL, the different types of leave pay, workmen’s comp and any other legislative requirements pertaining to the position.

Then of course, there is the extra office space, equipment (such as computers etc), utilities.  Don’t forget things like medical aid, retirement schemes, training, absenteeism and so on.

What about training and perks such as car allowances, cellphone allowance and even travel allowances?

Suddenly I am beginning to feel overwhelmed with all of the expenses, and this is even before I have actually hired the person.

Having more than a little knowledge of the Labour Act, I would also have to start making provision for things like legal fees, for fighting CCMA and Labour Court cases, as well as costs related to “pay backs” or compensation orders that may be granted!  Whew!

There certainly is a lot to consider, and herein lies much of the challenge.  You see, many people when they take on a staff member, don’t think about these at all.  All they see is this huge pile of work that needs to get done and a person who will do it – but we are not working with machines or robots, we are working with living, breathing, human beings.

So now the question is again – is the money that you spend on your staff, in order to acquire and retain them, for the skills that they need to possess, in order for them to perform the tasks that you need performed – an expense or an investment?

Some say that staff are an expense and that often this expense is among the biggest, if not the biggest in the annual budget.

Others see staff as an investment in their company.

I don’t really think that there is a right or wrong answer in this instance as it is entirely dependant upon whether you see your staff as a ‘necessary evil’ or as an asset.  It would be dependant upon your own perception or mindset.

For me, in my personal capacity they are both!

For me it’s about using proactive measures, it’s about minimizing unnecessary costs and avoiding costly legal battles which would make my employees an asset.  I would do this by having the correct procedures, processes and contracts in place and by being fair.

On the other hand, I am also a realist and I do know that things go wrong and that there are other expenses and costs that would have to go into the pot.  Un-measurable costs that are associated with issues around the need for time to prepare cases for CCMA or Labour Court, not to mention the time that is actually spent at the CCMA or Labour Court.

When you take all of this into account, it’s no wonder that so many individuals try, where possible to stay away from hiring employees.  It’s no wonder that many see hiring employees as a cost only, with very little added benefit received from them and usually an utterly horrid experience.

The bottom line is as always – what do you think?

The point that I am trying to raise with this article is that proper investigation and research needs to be done prior to employing someone!  Don’t look at the huge pile of work that needs to be done, have a major freak out and then hire the first person that comes along – you would be in for a huge amount of expense that you hadn’t bargained on.

Stop for a moment and really think about it – would this person be an asset to your company or would they only be an expense?

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or

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