real TCO of your middle market employees

Do You Know The Real TCO Of Your Middle Market Employees?

In Leadership Resources by Brandt A. HandleyLeave a Comment

When Your Middle Market organization creates your annual budget, you certainly include the cost of employees. But, how deep do you go in your calculations? Do you know all of the areas to include? Why does any of this matter?

Why You Need To Know Your TCO

TCO, or Total Cost of Ownership, goes far beyond your annual salary totals. By calculating an accurate number that reflects all of the costs of finding, training, keeping and maintaining your employee base, you have a much stronger idea of what every employee costs your organization.

If you know the absolute bottom line amount of dollars you spend on every employee in your organization, you can start to look for trends of inefficiency and also where you might be wasting money.

How To Calculate

Your TCO calculations must include far more than just the annual salaries and benefits of your Middle Market staff. You also need to add up:

  • What it costs to recruit, hire and onboard new employees
  • What it costs to train and continue to educate
  • Payroll costs, including time & money spent on compliance, taxes & contributions
  • HR administration – including programs, records storage, and ongoing compliance training
  • Total cost of time management – including man-hours for scheduling and running payroll
  • Benefits program costs, including time & money spent on yearly updates and administration
  • As you can see, there are many areas you should include in your TCO calculations.

    Where To Start

    Very few organizations have a firm grasp on all of these costs or may track these data points within larger groups of budgetary line items. The first step is to get a handle on what you currently track, how and what it is used for.

    Once you know how many of the data points you have numbers for, you’ll next want to focus on what you aren’t tracking. It may take some time and ingenuity to figure out how to track some of this information.

    At the time you are able to get numbers for each of the different areas, you will have your first TCO information.

    What To Do With Your Data

    As with anything you track, there has to be ROI for your Middle Market firm. What can you do with your TCO?

    For starters, you can look for places and ways to reduce your costs. Maybe you find your administrative costs are huge – your internal teams are too focused on crunching numbers or tracking missing timesheets and necessary forms and so you’ve had to hire extra HR members to cover everything. In this instance, you could start looking for ways to reduce the amount of time and payroll dollars spent on running your payroll – perhaps by outsourcing tasks or investing in better technology for HR.

    Or, you might see that your retention rates are very low and you have a large amount of re-spend happening because you are constantly hiring, onboarding and training.  So, you’ll know to focus on your training, continuing education, and employee engagement programs.

    When you know where your Middle Market organization is spending money on employees, you’ll quickly see areas for improvement and overhaul.

    Knowing the TCO of your employees is key for more than just reducing costs for human capital. 

    So what’s in the Mighty Middle Market for me? — get it right now at

    Leave a Comment