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Free Tip #8:  Benchmarking Your Practice's Salaries

One way to keep costs down is to keep track of your employees salaries. The salaries below are based on Connecticut Office workers in late 2008.

 

Few practices know how thier employee salaries compare to regional averages. Payscale and Salary.com both offer easy access to salary information. We thought it better not to summarize the information here, but we do offer customized salary benchmarks (in MS Excel spreadsheets) for a nominal fee.

 

 

Calculating Your Hourly Labor Costs

Time is a significant part of the cost of any activity. It's usefull to keep a rough cost of employee time in your head when you're assigning various tasks. If you employ more than a few people, think in terms of the cost of employee categories.

 

We use this calculation to benchmark labor costs.

We call this number the Actual Hourly Rate or AHR. As of November 2008, we use an AHR of = $24.31 / hour to calculate the cost of time in hour website. The table below shows our calculation. Our methodology is not perfect, but it's easy to teach and apply. We take salary information for our calculations from Payscale.com.

 

We calculate benefits at 20% of annual salary. When you make benefefit calculations, calculate cash benefits only: meidcal insurance, tuitions, etc. Do not calculate vacation, sick or personal time: they're captured in the "productivity factor".

 

 

Hourly Rate Calculation

 

Position	Salary + Benefits	Hourly Rate	Actual Hourly Rate
Office Assistant	$37,436	$17.99	$20.52
Office Manager	$45,685	$21.96	$25.04
Retail Store Manager	$49,890	$23.98	$27.35

Average

$24.31

Productivity Factor = .877

Productivity Factor Calculation

Some people actually work every minute of every work day ... but most don't. People generally take personal time in various flavors - vacation time, etc. Productive hours = the average number of hours employees actually work. We calculate it as follows.

 

Type of Hours	Calculation	Total Hours
Gross Hours	40 hours x 52 weeks	2,080
Paid Holidays	8 hours x 10 days	-80
Vacations	8 hours x 12 days	-96
Sick Time	8 hours x 5 days	-40
Personal Time	8 hours x 5 days	-40

Net Productive Hours	1,824
Productivity Factor	% 87.7
Productivity Factor (1 hour total break time calculated)	% 76.7

*Calculations last updated 11/01/2008

Charts: Real Hourly Rate at Various Salaries

 

Salary + Benefits	Productivity = %87.7	Productivity = %76.7
$ 30,000	$ 16.45	$ 18.80
40,000	21.93	25.07
50,000	27.41	31.34
60,000	32.89	37.61
70,000	38.37	43.88
80,000	43.86	50.15
90,000	49.34	56.41
100,000	54.82	62.68

Salary + Benefits	Productivity = %87.7	Productivity = %76.7
$ 125,000	$ 68.52	$ 78.35
150,000	82.23	94.02
175,000	95.93	109.69
200,000	109.64	125.36
225,000	123.34	141.03
250,000	137.05	156.70
275,000	150.75	172.37
300,000	164.46	188.05