What value does an individual add to a business?

For a sole trader, the answer is usually quite simple:  turnover less the cost of doing business – usually the gross profit.
For more complex organizations, it is more difficult to identify.  There are, however some basic principles to help guide us.

First principle.  An individual employee must add at least as much value as they cost to employ.

Value Added > Full Cost of Employment

For some indirect positions, the public sector and other ‘not for profit’ organizations, the formula may be restated as:

Value of the service provided > Full Cost of Employment

But what is The Full Cost of Employment?

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