“Main Staff Wallet”
Where, after all, is the critical limit for wage costs, which is not recommended to pass? If you do not have a ready answer, do not be discouraged, for you are not alone. I asked this question to many entrepreneurs, economists and “personalities” and, at best, I received the answer that the enterprise’s expenses on the wages of all the staff should not exceed …
I will not voice the answers, because “who is in the forest, who is on firewood.” Firstly, there is no single understanding of which indicator to make a start in calculations. Someone considers “from the proceeds”, someone “from the cost price”, and someone “from the profit”. Secondly, the majority of entrepreneurs take workers and, accordingly, pay wages on the basis of needs (in their opinion), and not business opportunities.
In practice, it looks like this. I have (thinking entrepreneur) so many machines, machine tools and other assets, so you need to hire so many people of such professions. I also need an accountant (lawyer, marketer, advertiser, etc.), because without them, this and that will not be done. Yes, I completely forgot – I need a secretary, but the business will not look solid.
After drawing up a list of necessary people, everyone is assigned a “price”, sometimes by market monitoring, sometimes “from the head”. Think kidding? By no means. Personally observed such processes to determine the need for staff and wages. And not only for start-up entrepreneurs, but also for those who, as they say, already have experience. Moreover, if the former do so through inexperience and ignorance, then the latter, which is more terrible, are sincerely confident that they are taking the very right decision, because they have experience, intuition, and so on.
The rule of “Five wallets” offers us a completely different approach to determining (planning) salary costs and the number of hired personnel. We have already said that any business creates some kind of its own value, which should pay for the cost of all the resources involved for its creation, including the cost of labor resources. Moreover, the “Five wallets” rule divides the workforce into two groups: the main production personnel directly involved in the value creation process, and the personnel who create the conditions and manage the process (administrative and managerial). The tasks of the entrepreneur are “extremely simple” and are as follows:
a) determine the maximum possible size of wallets (payroll) from the value created or planned to create;
b) calculate how many employees the business is able to pay wages, adequate to the requirements and duties imposed on them.
With the solution of the first problem, many of you may have already coped, reflecting on abstract “home” examples. In principle, this is not necessarily an economic education, it is enough to connect logic and common sense. Let’s recall the task published in the last issue. You have created a business in the service sector, let it be digging holes or a hairdresser – it does not matter. It is important that the employee we hired knows the cost of one service – 1000 rubles.
The question is: for what minimum payment will the employee agree to do this work and what maximum are you willing to pay him? The solution is found by the method of selection or iterations, as economists and mathematicians say. Will the employee for 100 rubles to do what costs 1000? In a market economy, in the absence of totalitarian instruments of forced labor, there is definitely no. And for two hundred I do not agree, since there are alternative employment options (labor market).
And you, as an entrepreneur, are unlikely to agree to pay 900 rubles for this work, because you need to reimburse investments invested in this business, pay current business expenses, and I would also like to “leave” something for myself. And 800 rubles is unlikely to pay. Seven hundred is possible, but not for everyone, but only for a very, very, very skilled worker. But in this case, the worker is already becoming for us a “star,” as we said in the last conversation, or the cost of value created.
If the employee is “standard”, replaced by another without prejudice to the case, then you are more likely to “agree” on percentages by 30-35%, i.e about 1/3 of the value created. This indicator is the threshold amount that a business can pay to attract the main productive labor resource. And it doesn’t matter if you have one employee or ten, 33.33% of the value created is the wallet of the main staff! With all taxes, fees and premiums.
Knowing the entire volume of this wallet, you can easily calculate, and how many people you can attract for the money. Let’s say your business creates a value of 300 thousand rubles a month. The maximum amount of expenses that you can send to pay for the main personnel is 100 thousand rubles. We will subtract from this figure payroll (26%), personal income tax (13%) – 69 thousand rubles will remain “on hand”.