In this presentation, the speaker argues that hiring an employee should be treated as a major capital investment, comparable to purchasing an IT system or property. They outline the extensive costs associated with a staff member over a typical four‑year tenure—salary, on‑costs such as superannuation and payroll tax, facilities, training, mentorship, and the hidden cost of mistakes—totaling roughly $200,000 even at minimum‑wage levels. The speaker stresses that, like any other investment, organizations should assess the expected return on investment (ROI) before hiring, often targeting a minimum 15% annual return. To forecast a candidate’s potential ROI, they introduce the Performia Production Evaluation System, a tool designed to evaluate a prospective employee’s likely productivity and financial contribution, helping decision‑makers differentiate between good and bad hiring outcomes.
Chapters
You know, when an organization goes to buy a new IT system, you know, they set up a whole plan, they bring in 10 or 20 different providers, they spend, you know, literally hundreds of hours evaluating the system. And, you know, the chances are that it might be less than a half a million dollar investment. You know, it might only be a $100,000 investment, and so much time and effort goes into evaluating it, to working out what the return on investment will be, how long it's going to take to integrate into the organization, train the staff, and everything else. So, It's a big deal and a big decision. But every staff member that you hire into your organization is no different. If a staff— let's say on average a staff member stays in an organization 4 years. 4 years. Okay, minimally this person is going to cost $50,000 per year, and that's on minimum wage. Because you have all these expenses. We have their direct wage. Okay, then we have, you know, all the on-costs like super, WorkCover, payroll tax. You know, then they've got to be put somewhere in an office or they've got to be given some sort of facilities. They've got to be given training, so it takes someone's time out. They've also got to be mentored by someone. They're going to go through periods where they make mistakes as they're learning, so that costs money. And this goes on and on and on. And so even on minimum wage over a 4-year period, it's a $200,000 investment. And if you're gonna buy a computer system, if you're gonna go and buy an investment property, it's like, you know, it's no different. I invest in this staff member or my company invests in this staff member, there's gonna be a $200,000 a year invest— a $200,000 investment minimally. Over the 4 years. And so it makes sense to spend some time on assessing, is this $200,000 going to be worth it? What ROI should I get? What should be my return on investment? Most organizations, they want a 15% minimum return on investment. So if we work this out per annum and compound it, it actually becomes quite a return. But how do we know before we hire someone what the potential return on investment is going to be? And that's where, if you look at any other product you purchase, if you're going to purchase an investment property, you look at the area, you look at the house, you look at what rent I can get back off this property, you look at what the capital appreciation could be over the next 5 years. Based on what's happening in the area right now and also based on what the area has done over the past 5 or 10 years. And we need to do the same with the staff member, and that's where you need the Performia Production Evaluation System so that you can start to more accurately estimate what your potential return on investment is. So use the production check, the Production Evaluation System, And know before you put someone in, okay, we're going to invest this much money, what's the potential I get back? And we're going to go over in a minute too exactly sort of the different scenarios of what a good hiring and what a bad hiring can be difference in, in cost.
