The phone is ringing off the hook, you have 72 emails in your inbox and your desk looks as though it’s being consumed by paperwork. You have three options; you could take on these tasks yourself, hire an Administrative Assistant, or seek the services of a qualified Virtual Assistant. If you decide to put in some overtime and tackle the job yourself, at least you’ll be saving some money or will you? Let’s examine this option further. Assume that you are more qualified than any Administrative Assistant you could hire. That is to say you have an absolute advantage in running the company and carrying out the required administrative tasks. For example, suppose that you type 15 pages per hour and that your prospective Assistant only types 10 pages per hour. You need to have a 60 page report typed. It would take you 4 hours to complete the job yourself, and your Assistant would take 6 hours. Believe it or not, the cost savings still lies in having your Assistant perform the task. This follows from two simple economic concepts: opportunity cost and comparative advantage. I asked Dr. William Sims a Professor and Chair of the Economics Department at Concordia University in Montréal to explain these two concepts further:
“Comparative advantage is a concept used by economists to explain international trade. It suggests that even if a country has an absolute advantage in the production of all goods, it will maximize its wealth by specializing in those commodities in which it has the greatest advantage and trading for the others. For example, Martha Stewart may have an absolute advantage relative to just about everyone she could hire in cooking and cleaning. Should we then conclude that she should do the cooking and cleaning at home or should she outsource these activities? The answer clearly rests on the opportunity cost of her carrying out these tasks versus the cost of hiring someone else to do them. Her comparative advantage is likely in growing her business. Outsourcing is almost certainly the wealth maximizing strategy for Ms. Stewart.”
In the context of our example, the opportunity cost of you carrying out the Administrative tasks yourself is the value of the time you will lose that you could have spent on other things, such as growing your business or spending time with your family and friends. There are only so many hours in a day. Let’s assume that you can make $150 dollars per hour for every hour you spend growing your business. The opportunity cost of you doing your own typing would be $600.00, whereas the cost of the Assistant doing the work (assuming an effective wage of $43.28 (calculations shown later)) is $259.68. Using the Assistant would result in a savings of over $340.00. Although your prospective Assistant would take 50% longer to complete the task, you would still be wise to maximize your wealth by spending your time growing your business. Despite the fact that you have an absolute advantage at typing, the Assistant has a comparative advantage (i.e. a lower cost) in carrying out administrative tasks. You should therefore, specialize in the task in which you have the greatest advantage.
Perhaps you’ve decided that you would profit by hiring an Administrative Assistant. But what about the other option, the Virtual Assistant? Hiring a VA couldn’t possibly be less expensive than hiring an Administrative Assistant, right? Wrong! According to Monster.ca, the median salary of an Administrative Assistant in Toronto is $42,837 per year. Assuming a 40 hour work week and a 52 week year, this employee would be paid for 2080 hours throughout the year at a rate of $20.60 per hour. This would seem quite reasonable but, according to a new survey by America Online and Salary.com, the average worker admits to wasting 2.09 hours per 8 hour workday on non-work related activities. So, assuming that an Administrative Assistant takes a 0.5 hour lunch and has 0.5 hours in break time, the work year turns into 1276.6 hours. This yields an effective hourly rate of $33.56.
Next we incorporate benefits. According to the Greater Toronto Marketing Alliance, the approximate total benefits paid by the average Ontario employer are 28.97%. This means the average Ontario employer pays $42,837 x 28.97% = $55,247 per year. This is an effective hourly rate of $43.28. This result would be even higher if we included the cost of office space and equipment.
As for the Virtual Assistant option, rates for VAs are usually between $20-45 per hour and can even be as much as $75 per hour for VAs that specializes in a particular field. The downside here is that although a VA is a qualified professional Administrative Assistant, he/she is also an entrepreneur and is therefore not available at your beck and call. Nevertheless, in working with a Virtual Assistant, you would pay only for the time spent on task and you have the added benefits that you don’t need to buy any office furniture and equipment, pay any benefits or allocate any extra space. It would seem likely at an early stage of a business’ lifecycle, if the administrative tasks are not sufficient to warrant hiring a full time employee, the best solution would be a Virtual Assistant. Indeed even if the workload justifies a full time employee the calculations above might suggest the VA route should be considered.
The choice is ultimately yours. If you can’t bring yourself to let go of even the smallest of tasks, you might be more comfortable continuing to do everything yourself. But, if you have decided you need help, your next decision should be whether to hire an Employee or use the services of a qualified Virtual Assistant. Carefully measure the benefits and cost involved with both options. Hopefully this article will allow you to make an informed decision.