Most people who work in an office can relate in part to NBC’s show The Office. The show is a mockumentary about the daily lives of office employees and takes place at the office of Dunder Mifflin, a paper distributor in Scranton. We can laugh at the quirky employees, office pranks and relationships, constant meetings about new policies, and office parties, but after all these distractions, how much work do these people actually do in an 8 hour work day? And besides salary or hourly pay, how much is Dunder Mifflin paying for these unproductive employees? Granted The Office example takes these situations to the extreme, but there is much truth in it. 

We’ve looked at some analysis and found that you could be paying 81% more than the “hourly rate” when you calculate all the overhead costs and actual productive hours of work.  Employees don’t do any productive work in about 30% of the hours they work and then you have to add all the benefits and other costs on top.  Another way to look at it is the employee who you thought you were paying $20 per hour (about $42,000 annually) is really costing you $36.47 which is the equivalent of paying almost $77,000 annually..  You can do the math for higher paid and more experienced employees.

Employee Overhead In addition to compensating employees for doing their job, there are other “optional” costs to you. Benefits (medical, dental, vision), domestic partner coverage, life insurance, travel insurance, sick days, vacation, holiday pay, bonuses, gym membership, tuition assistance, and 401(k) with company match. Although these are not required by law, many companies offer most or all of these to attract and retain employees.  Add to this the costs for the office space, furniture, computer, supplies and equipment.

Consultants pay for their own insurance and benefit packages. All you have to do is write a check for their services performed based on the terms decided at the beginning of the project.

Unproductive Time As seen in The Office and real businesses, there is a lot of unproductive time that employees are paid for.  Coffee breaks, birthday celebrations, meetings about new policies, meetings about health plans, meetings about safety procedures, sick time, holidays, vacation, checking their personal emails, personal calls, employee chit chat and drama. Some of these are under your control but on the other hand, you wouldn’t get anything done if you spent all your time looking over your employees’ shoulders to make sure they were on task.

Consultants only work on site as long as you want them or need them and many do most of their work remotely.  They bill their hours worked or are paid by the project. If they are not productive, you don’t need to keep them beyond their contract and you don’t need to worry about terminating them.  Consultants generally have longer and broader experience and are more motivated to provide value than employees as they are looking to get additional contracts or referrals.

Hiring Costs When hiring new employees there are costs associated with advertising the position, recruiting costs, time spent looking over resumes, interviews, and reference checks. After they’ve become a part of your team, there’s all the initial paperwork and training costs. To keep ahead of the game you also need to continue educating your employees with conferences, training courses, and certifications.

 When hiring a consultant there is still some costs associated with the hiring process but they come trained and an expert in the area you are hiring them for. They usually have decades of experience in various industries in the corporate world and have a lot to offer. They are self motivated to continue learning and growing their depth of expertise because then they will be even more valuable and obtain more clients. Their flexibility works to your advantage because you can give them more projects during your busy times and less work during slow times.

In tight times marketing is often one of the first things to get cut because companies think they can survive without it. It will be very difficult for your company to get out of this survival mode and grow if you cut one of key main drivers of revenue and growth. Marketing is actually the key to grow your business and get you back on your feet. Whether your business is in survival mode or not a great way to boost your business is to outsource and hire a consultant instead of another full time employee.

While the following is an attempt at humor, you may not find it so if you actually have employees on your payroll maintaining this schedule!

Office Timetable (For some of your employees?) 
9:00     Starting time
9:15     Arrive at work

9:30     Check Facebook
10:00   Coffee break

10:30   Text friends about lunch
11:00   Check e-mail
11:30   Prepare for lunch
12:00   Lunch

1:30     Check sport scores
2:00     Browse the Internet
3:00     Coffee break
3:30     Check e-mail again
4:00     Prepare to go home

4:15     Post evening plans on Facebook
4:45     Go home
5:00     Finishing Time