Marketing Facts Revealed
Real Costs of Hiring Marketing Talent
Revised and Updated
The costs of hiring an experienced Marketing Employee
|Company/Division Size||Annual Sales||Base Salary|
|Small||Up to $10 million||$50,000|
|Medium||Under $50 million||$75,000|
|Major||$100 million +||$150,000|
Of course, the base salary shown in Table 1 does not represent the total cost of the employee to the company. The employer must consider the costs of benefits such as FICA, FUTA, Workmen's Compensation Insurance, Life Insurance, and Medical Insurance. Also, many employers provide Pension Plans and Profit Sharing Plans.
There are many estimates of the cost of benefits and understandably these benefits vary within each company. However, a benefits estimate of 35% of the base salary would be very realistic for most companies. In addition to benefits, the employer usually provides some kind of incentive plan. In many cases, the employer provides a car. These perks and a bonus plan based on performance could easily exceed 50% of an employee's base salary.
Look at the above salary schedule and add the benefits plus a 50% bonus/perk plan. The employer can now calculate a more realistic employee cost [Compensation = Salary + 35% Salary + 50% Salary = 1.85 x Salary]. The elements of the employee cost are as follows in Table 2.
Percentage Breakdown of Total Employee Costs
|Base Salary||Benefits||Bonus Package|
To calculate the actual employee cost per working hour, the employer must also consider two additional items. These are vacation days and holidays. There are, at the very least, ten holidays per year. When these holidays fall on a Tuesday or a Thursday, this means an additional day. Also, two weeks of vacation per year would be a minimal consideration for most companies. So, adjust the total annual compensation package by dividing it by 48 weeks. This represents 52 weeks less 2 weeks vacation and less another 2 weeks for holidays. Then divide the cost per week by 40 and the actual cost per working hour in Table 3 becomes the following [Hour Rate = 1.85 x Salary / 48 / 40].
Total Marketing Executive Costs
|Company Size||Total Annual Compensation||Per Hour Rate|
Of course numbers will vary depending upon each company's specific circumstances. The above numbers do not consider the costs of sick days. They also do not consider the hidden costs of non productive hours as well as the costs of personal time off. On the other hand, the company usually does not pay for the extra overtime hours that an employee might spend on weekends or evenings.
The important point is that once hired, no matter what the employee does, the employer has to pay out dollars. And, the actual costs per hour as shown, are realistic even though salaries, perks and bonuses will vary within different companies.
If company takes the executive recruiter route, the fee is usually 30% of the first year salary. That means for a medium sized company, the company can expect to make a front-end payment of up to $25,000. This figure does not even include the expense of interviewing. As a point of information, if an employer believes that he can beat the recruiter's fee, consider this. A two column by six inch ad (3 1/2 inches by 6 inches) in the recruiting section of the national edition of the Wall Street Journal costs about $15,000 for one time. After examining and filtering many resumes, an employer would expect to interview a minimum of 3 candidates. The minimal expenses incurred per candidate would include his airfare and lodging. This conservatively could cost up to $800 per candidate. And even after many hours of interviewing, there are still no guarantees that the company will find the right person for the job. In addition, if you select a candidate from another city you can expect to incur a large relocation expense. And again, after all of these expenses, there is no guarantee that the company gets the needed talent and the employee works out.
If you think that the cost per hour figures and the cost to hire figures are too high. Just add in the costs to support the new executive once you hire him. Costs such as secretarial support, telephone, computer, and office overhead can be significant. The employer must consider them.
A marketing consultant's fees can vary. A fee of $100 to $150 per hour is typical. The company gets a well seasoned professional with more than fifteen years experience in all the facets of marketing. A well seasoned marketing professional would have extensive sales experience and be familiar with the problems of distribution. The marketing consultant would understand the psychology of the selling process. The desirable consultant would know the inner workings of an advertising agency. Also, the consultant would have a myriad of sources and associates available to tackle any problem. And, the consultant would tackle them in a very cost effective manner. Although a marketing consultant's fee might seem high, the short term benefits can be significant. And, the consultant provides many advantages over hiring a full time employee. Some of the benefits are:
You pay for what you get... The hourly fee for a consultant is comparable to the productive hours of a full time employee. Thus, you pay only for the hours that the consultant performs tasks. Unlike an employee, you can put the consultant on hold when business declines. Unlike an employee, the consultant does not look for a new full time employer.
You do not have any of the hiring costs... Since a consultant is not an employee, you treat the consultants billings as you would an outside vendor. There are no recruiting fees associated with a consultant. The company can end the consulting relationship at any time for any reason. There are no termination clauses or golden parachutes to deal with. Also, the consultant does not usually bill for the initial interview. The consultant considers the initial interview a cost of doing business.
With some marketing consultants you can hire a complete marketing department... When you use a marketing consultant he can bring with him an abundance of talent. You would not normally expect to find this talent hiring an individual employee. The consultant has the specific skills necessary for new product development. Also, the consultant has experience in developing advertising programs, promotions, and more. Marketing research, technical writing skills, and packaging design can now be available from one source. This comes from the many associations set up by the proficient consultant. In effect, when the company hires with the right consultant, the company hires a complete marketing department.
The marketing consultant brings with him a dimension of outside-in thinking... In many cases, the consultant has the ability to see the forest through the trees. The internal politics and the internal bureaucracy that all companies have regardless of their size do not effect or hinder the consultant. Specific assignments are sometimes easier to accomplish outside of the company. The ability to develop marketing driven products often becomes easier once outside the company shell. Special situations are ideal for the use of a consultant.
A company should consider involving a marketing consultant with special situations such as:
The company should also consider a marketing consultant for any situation out of the normal routine of any existing marketing staff.
Through a consultant, the marketing talent often associated with and obtainable only by larger companies becomes affordable to smaller and mid-sized companies. Larger companies can get the professional marketing talent without the long term cost and commitment related to hiring a full time marketing employee.
Mark Goff is a Marketing Consultant. He has held positions which include Vice President of a prominent national advertising and marketing firm. He was President of his own manufacturing and marketing firm. He also held the position of Vice President of a national manufacturer of controls, and Manager of Consumer Products for an international company. He works with all aspects of multi-channel product distribution and manufacturing. He performs his marketing consulting practice on a national basis.
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