Good talent is worth its weight in gold, but what does it really cost you?

Sourcing the right employee or freelancer involves numerous considerations. Firstly, you must decide whether you would prefer to fill the position permanently or flexibly, as well as determine where and on the basis of what contract form the talent can be identified, and of course determine the best approach for finding talent. One other aspect that must be carefully considered is the cost element: what are the actual costs for the different legal forms? The Talent Cost Compass can help you gain an insight into these questions, for the Dutch market.

The Talent Cost Compass

The Talent Cost Compass is a user-friendly tool that allows you to quickly and easily calculate the estimated costs per year for the different contract forms in the Netherlands, based on an 'equal pay' hourly rate. Whether you opt for permanent employees, temporary workers, freelancers, or a secondment construction, the compass provides you clear insight into the financial impact of your choice.

Equal pay based on the collective labour agreement

The compass raises the level of the debate on 'cheap flex' at the bottom of the labour market and 'expensive flex' at the top of the market. This is a discussion that should not be limited to hourly rates; after all, with external employees, you are not required to make any payment if they become sick or when they take their holiday. Every manager has an annual budget for the team and for the work that needs to be done. By not only considering hourly rates but also listing the costs per year, the comparison becomes more complete. You yourself can adjust the standard components in a collective labour agreement in order to reveal a representative picture for your organisation.

In our judgement, everyone who works for a specific organisation should more or less receive equal pay, in other words 'equal pay' for everyone, regardless of the contract form. The average pay in some sectors is lower than in others. Opting to work for an organisation from a lower paid sector should be a conscious choice, based for example on intrinsic or practical motivations. Also for freelancers and seconded staff. To reflect this situation, we employ a 'sector correction factor' to compensate for the differences in collective labour agreements.

The war for talent?

When it comes to the recruitment costs for talent, shortages on the labour market represent a relevant cost component. On the one hand, it is more difficult for recruiters to find good candidates, a situation that often leads to a rise in recruitment costs. On the other hand, for permanent employees, those same shortages can result in a labour market salary bonus while for flexible employees, they could lead to a higher margin for the agency and/or a potentially higher rate for freelancers. We have also built in two labour market shortage correction factors to take account of this situation.

Investing in talent

Although it is not always seen to be the case, deploying any new employee is also a long-term investment. The standard duration of an insourcing contract is often six months, but in practice, the assignment in question is often not concluded within that timeframe. Hiring a permanent employee is definitely a long-term investment made by a manager on behalf of the organisation, that results in an average length of stay in the Netherlands of 9 years. We also provide a transparent picture of the total investment in the different forms of talent.

Try out the Talent Cost Compass now!

Visit our new website and discover how the Talent Cost Compass can help you make the right choices for your staffing challenge.