This measure calculates personnel cost per $1,000 revenue 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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((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 "report payroll taxes" allocated to personnel costs * 0.0001)) / (Total business entity revenue * 0.001)
Total Annual Revenue/Net Revenue
Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns.
For government/non-profit organizations, please use your non-pass-through budget. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support.For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income.
Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.
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 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.
The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.