Personnel cost to perform the process group "process payroll" per process group FTE

This measure calculates personnel cost per process group full-time equivalent (FTE) employee to perform the process group "process payroll," which consists of the payment of salaries and wages in accordance with organizational policies and government regulations. Activities include maintenance of records; calculations of salaries, wages, and deductions; and distribution of paychecks. Personnel cost refers to employee salaries/wages, bonuses, benefits, etc. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the "process payroll" process.

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Measure Category:
Cost Effectiveness
Measure Id:
104501
Total Sample Size:
843 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
No

Compute this Measure

Units for this measure are dollars.

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((Total cost to perform the process "report time" * Percentage of total cost to perform the process "report time" allocated to internal costs * Percentage of internal costs of the process "report time" allocated to personnel costs * 0.0001) + (Total cost to perform the process "manage pay" * Percentage of total cost of the process "manage pay" allocated to internal costs * Percentage of internal costs of the process "manage pay" allocated to personnel costs * 0.0001) + (Total cost to perform the process "process payroll taxes" * Percentage of total cost to perform the process "process payroll taxes" allocated to internal costs * Percentage of internal costs of the process "process payroll taxes" allocated to personnel costs * 0.0001)) / (Number of FTEs who perform the process "report time" + Number of FTEs who perform the process "manage pay" + Number of FTEs who perform the process "process payroll taxes")

Key Terms

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FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

Personnel Cost

Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.

Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.

Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Measure Scope

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Cross Industry (7.3.0)

  • 9.5.1 - Report time (10753) - Recording the reporting time of employees on-site. Track working days, salary calculations, holidays taken, number of hours spend in the office, billing hours, etc.
    • 9.5.1.1 - Establish policies and procedures (10853) - Developing policies and procedures for the HR function to calculate compensation.
    • 9.5.1.2 - Collect and record employee time worked (10854) - Tracking billing hours of each employee on daily basis.
    • 9.5.1.3 - Analyze and report paid and unpaid leave (10855) - Tracking leaves allowed and taken by employees.
    • 9.5.1.4 - Monitor regular, overtime, and other hours (10856) - Observing the number of hours worked by an employees on daily basis. Track the number of hours worked by an employee, as well as the number of hours worked beyond normal working hour's according to company standards.
    • 9.5.1.5 - Analyze and report employee utilization (10857) - Monitoring the number of productive hours for employees.
  • 9.5.2 - Manage pay (10754) - Managing the total payments made in employees payroll, including bonuses and compensation.
    • 9.5.2.1 - Enter employee time worked into payroll system (10858) - Tracking the number of hours worked for the payroll system. Register the number of hours worked by an employee into the payroll system for the purpose of calculating salaries or wages.
    • 9.5.2.2 - Maintain and administer employee earnings information (10859) - Tracking and oversee salary breakups of employees. This process requires the organization to manage and update information pertaining to the structure of every employee's salary. This would involve the updating any changes to the salary structures of the employees, in a central repository which can be accessed by pertinent departments.
    • 9.5.2.3 - Maintain and administer applicable deductions (10860) - Processing salary deductions for tax purposes. Keep and manage the details of every employee's salary deductions based on their expenses and investments during the year.
    • 9.5.2.4 - Monitor changes in tax status of employees (10861) - Tracking changes in the salary structure of employees for tax deductions.
    • 9.5.2.5 - Process and distribute payments (10862) - Processing and distributing salaries to all employees. Execute the payroll management function through the dispensation of employee salaries. Leverage a centralized database of all payroll expenses.
    • 9.5.2.6 - Process and distribute manual checks (10863) - Handling incorrect/omitted salary payments.
    • 9.5.2.7 - Process period-end adjustments (10864) - Adjusting salary deductions for tax purposes at the end of the year.
    • 9.5.2.8 - Respond to employee payroll inquiries (10865) - Addressing salary-related queries raised by employees.
  • 9.5.3 - Manage and process payroll taxes (10755) - Deducting and paying taxes from employees' salaries.
    • 9.5.3.1 - Develop tax plan (14075) - Devising a method to minimize payroll tax liability by means of allowances, deductions, exclusions or exemptions.
    • 9.5.3.2 - Manage tax plan (14076) - Overseeing maintaining the reduction of payroll taxes [14075].
    • 9.5.3.3 - Calculate and pay applicable payroll taxes (10866) - Paying tax according to appropriate deductions made from salaries. Calculate and pay the tax liabilities according to the salaries and tax regulations of employees with the help of certified chartered accountants.
    • 9.5.3.4 - Produce and distribute employee annual tax statements (10867) - Providing tax deductions statements created by certified chartered accountants to every employee for their reference or refunds.
    • 9.5.3.5 - File regulatory payroll tax forms (10868) - Filling taxes, and highlighting different sources of income and expenditures made.