There are many benefits to hiring an in-house employee, but cost isn’t typically one of them. For small and midsize businesses, the costs associated with a full-time employee can be a deterrent to hiring, even when the current staff is stretched thin and business is growing.
Unfortunately, it’s even more damaging to a business’s bottom line to lose an employee.
The Cost of Employee Turnover: Experts Weigh In
Christina Merhar of Zane Benefits cites a SHMR study that found replacing a salaried employee costs 6-9 months worth of that employee’s salary on average. She also notes a CAP study that found the average costs of replacing employees are:
“16 percent of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10/hour retail employee would be $3,328.
“20 percent of annual salary for mid-range positions (earning $30,000-50,000 a year). For example, the cost to replace a $40,000 manager would be $8,000.
“Up to 213 percent of annual salary for highly educated executive positions. For example, the cost to replace a $100,000 CEO is $213,000.”
Karlyn Borysenko of Zen Workplace states, “When you consider all of the costs associated with employee turnover – including interviewing, hiring, training, reduced productivity, lost opportunity costs, etc. – here’s what it really costs an organization:
“For entry-level employees, it costs between 30-50 percent of their annual salary to replace them.
“For mid-level employees, it costs upwards of 150 percent of their annual salary to replace them.
“For high-level or highly specialized employees, you’re looking at 400 percent of their annual salary.”
Obviously, it pays to hire well and retain better.
Sales Support: In House vs. Virtual
Consider the costs associated with hiring in-house sales support. If this hire is a mid-level employee, the total cost will be about 150 percent of their salary. Costs for advertising, screening, interviewing, lost productivity (if the new hire is replacing someone), benefits, taxes, IT infrastructure and support, facility costs, work computers, and more are all included in the price you must pay an in-house employee.
Compare that to the cost of hiring a virtual assistant. When you hire a virtual assistant, all of their costs are rolled into one price, which is generally 50-75 percent of the in-house cost. It’s perfectly feasible to hire a virtual assistant who can work remotely to build your sales pipeline for a competitive price. However, most virtual assistants who function in a sales capacity typically do so as remote sales assistants or sales development representatives who can prospect, update your CRM, manage your email inbox, schedule meetings and follow-ups, make and answer calls, and do more in direct support of an account executive (AE).
Some companies hire internal sales development reps (SDRs), but this practice is inherently flawed for a variety of reasons, not the least of which is inefficiency due to competition between the SDR and the AE. The way this practice currently works is also inefficient because outside sales executives spend just 22 percent of their time actively selling due to their ongoing administrative needs. Offloading sales’ administrative work to a virtual assistant allows an account executive to focus on closing deals, which has a dramatic impact on a company’s ROI.
Ain’t Nobody Got Time for That: Oversight vs. the Hands-Off Approach
Another in-house employee cost that often goes overlooked is management. When you hire an in-house employee, an in-house team or individual must be responsible for developing and guiding the processes for that employee, which can add an additional 20 percent to your annual in-house cost. These costs can be offset by hiring a virtual assistant through a managed service provider, which can take the following tasks off an employer’s plate:
- Recruiting: Managed service providers identify, assess, screen, and hire candidates for the role.
- Training: They ensure that their virtual assistants are experienced with the tools and processes needed to support your business.
- Personal Development: They provide feedback, development coaching, and mentorship.
- Turnover: They maintain trained backups and manage transitions.
Bottom Line: Strategic Benefits of Virtual Hires
Using a managed service provider to make a virtual hire gives you a number of strategic benefits, with process improvements providing a significant ROI even on their own:
- Scalability: You can scale more quickly and better match costs to business needs.
- Best Practices: Managed service providers leverage insights from similar clients on processes and technology solutions.
- Process Documentation: Managed service providers focus on process to delegate the work. This ensures that you are documenting and improving processes that are otherwise generally deprioritized.
- Focus: When you focus on core competencies instead of hiring support, your company remains nimble and can execute more efficiently.
The widespread use of virtual assistants has redefined the ecosystem of work and the boundaries of business. Technology is the happy culprit. Advances in tech have allowed members of the workforce to access each other remotely and collaborate using cutting-edge tools like video conferencing, group communication, and cloud-based storage.
The best virtual assistants have clearly defined roles and know what is expected of them. Some argue that there are inherent company culture risks when hiring a virtual assistant, but this really depends on your business needs. When you hire virtual assistants from managed service providers, they are already employees embedded in a company culture. There should be no issue with them feeling like they aren’t a part of a team, because they are already.
Deena Anreise is the marketing manager at Prialto, a Portland-based business that provides managed, dedicated virtual assistants to executives, entrepreneurs, and companies of all sizes.