Total cost to perform the compliance and ethics services function as a percentage of revenue

This measure calculates total cost to perform the compliance and ethics services function as a percentage of revenue. Total cost is the sum of personnel (compensation/benefits), systems (direct and/or allocated), overhead (direct and/or allocated), other internal, and outsourced costs. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the process group "Manage legal and ethical issues".

Benchmark Data


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Measure Category:
Cost Effectiveness
Measure ID:
Total Sample Size:
65 All Companies
Key Performance

Compute this Measure

Units for this measure are percent.

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(Total cost of the compliance and ethics services function /Total business entity revenue) * 100

Key Terms

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Process Cost Components

Total cost for a process, process group, or function consists of the following five components.

Internal/In-house operating cost consists of the first four components (personnel, systems, overhead, and other).

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.

Systems Cost

Systems costs include all expenses, paid or incurred, in conjunction with:
Computer hardware or computer software acquired by the organization or provided to the organization through service contracts.

Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees should not be included in depreciation of new system implementations. Include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should be captured in the separate cost category labeled outsourced cost.

Systems cost should include all salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support.

Overhead Costs

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Other Cost

Other costs are costs associated with the specified process, but not specifically covered in personnel cost, systems cost, overhead cost and outsourced cost in this questionnaire. These other costs include costs for supplies and office equipment, travel, training and seminars. Include the cost of telephones, except for that portion captured in systems cost.

External/Outsourced Cost

In determining outsourced cost, include the total cost of outsourcing all aspects of the specified process to a third-party supplier. Exclude one-time charges for any type of restructuring or reorganization. Outsourced costs should also include costs for intracompany outsourcing (i.e., reliance on a shared services center or other business entity).

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. 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 government/non-profit organizations, please use your non-pass-through budget. 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.

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.


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.

Measure Scope

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Cross Industry (7.3.0)

  • 12.4.1 - Create ethics policies (11044) - Creating a code of ethics that communicate the organization's philosophy to employees, vendors, customers, clients, and the public.
  • 12.4.2 - Manage corporate governance policies (11045) - Administering the system of rules, practices, and processes through which a company is directed and controlled. Balance stakeholder interests including shareholders, management, customers, suppliers, financiers, government, and the community. Outline a strategy for achieving organizational goals, from action plans and internal controls to performance measurement and corporate disclosure.
  • 12.4.3 - Develop and perform preventive law programs (11046) - Creating and applying programs and activities. Encourage the adherence preventive laws, such as environmental law, sex discrimination, computer law, estate planning, corporate compliance, business planning, and property transactions.
  • 12.4.4 - Ensure compliance (11047) - Ensuring the organization's compliance position. Validate compliance with different statutes, regulatory directions, and legal principles (using Establish compliance framework and policies [17468]). Coordinate with compliance and risk management personnel.
    • - Plan and initiate compliance program (11053) - Employing an internal system or process to identify and reduce the risk of breaching the Competition and Consumer Act 2010. Remedy any breach. Create a culture of compliance. Design compliance programs.
    • - Execute compliance program (11054) - Implementing the established compliance program in order to meet the government laws and regulations. Create a compliance team that scrutinizes the rules set out by government bodies such as the Securities and Exchange Commission.
  • 12.4.5 - Manage outside counsel (11048) - Managing professionals, sought externally for assistance over legal and ethical concerns. Administer and oversee assistance from subject matter experts and professionals for sourcing expert opinion and counseling over legal and ethical matters.
    • - Assess problem and determine work requirements (11056) - Examining the problems and deciding the action requirements for engaging outside counsel. This process element calls upon the organization to internally analyze the issues for which assistance from external counsel is needed. Additionally, the organization needs to break-down the issue, identifying the tasks and exercises where outside counsel can help.
    • - Engage/Retain outside counsel if necessary (11057) - Recruiting the assistance of outside counsel for any legal and/or ethical concerns. Engage and/or retain any external counsel sought from subject matter experts and professionals.
    • - Receive strategy/budget (11058) - Making a financial plan. This strategy sets out, using figures, an organization's expected future results. Enlist the finance function to support work generated by other business functions in order to build and secure their support for the budget.
    • - Receive work product and manage/monitor case and work performed (11059) - Receiving deliverables from outside counsel, and monitoring the efforts committed by them. Track the progress of, collect, and validate the required work product from the subject matter experts and professionals engaged as external counsel. Verify the amount of effort dedicated by these counsels to the issue at hand, in order to confirm their fees.
    • - Process payment for legal services (11060) - Making payments to legal advisers for their services. Payments include addressing issues or suits by customers, suppliers, competitors, bankers, government agencies, etc.
    • - Track legal activity/performance (11061) - Keeping track of the legal activities and performance of the organization.
  • 12.4.6 - Protect intellectual property (11049) - Safeguarding the intellectual property of the organization. This process requires the organization to protect a wide variety of intellectual property created by it. It involves creating and managing non-disclosure agreements (NDAs), following up on current developments in the areas where the organization holds patents, tracking the use of the organization's copyrighted material, creating and upholding licensing terms, and administering policies for safeguarding intellectual property.
    • - Manage copyrights, patents, and trademarks (11062) - Managing the patents and copyrights already held or sought by the organization. Administer and oversee applying for, securing, and maintaining intellectual property rights in the form of patents and copyrights. Submit applications for such rights. Handle associated legal issues. Draft and communicate proper attributions. Collect royalties. Monitor any misuse of the intellectual property rights.
    • - Maintain intellectual property rights and restrictions (11063) - Managing the upkeep of intellectual property rights by creating and managing a framework of rules, policies, procedures, and restrictions. Outline a clear policy for any possible scenario of their use by any external agent.
    • - Administer licensing terms (11064) - Administering and overseeing the terms and policies associated with licensing the organization's intellectual property. Create and manage the policies and terms governing the possible granting of a license to any external agent. Demarcate a clear framework that governs the licensing of any patents or copyrights held by the organization.
    • - Administer options (11065) - Managing options regarding licensing agreements. Follow favorable terms and conditions.
  • 12.4.7 - Resolve disputes and litigations (11050) - Resolving disputes or civil lawsuits internally or externally.
  • 12.4.8 - Provide legal advice/counseling (11051) - Providing legal advice concerning the substance or procedure of a law in relation to a particular situation.
  • 12.4.9 - Negotiate and document agreements/contracts (11052) - Negotiating terms to reach a final draft of a contract that is acceptable to all parties.