Total cost to perform the HR function per $1,000 revenue

This measure calculates the total cost per $1,000 revenue to perform the human resources (HR) function, which consists of developing and managing HR strategies, plans and policies; sourcing talent; deploying the workforce; managing employment relationships; planning/delivering employee learning and development; and providing HR information management. It is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "develop and manage human capital."

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure ID:
103555
Total Sample Size:
3,943 All Companies
Performers:
25th Median 75th
- - -
Key Performance Indicator:
Yes

Sample image showing interactive filters for more detailed measure peer group data and an interactive graph.

Compute this Measure

Units for this measure are dollars.

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Total cost to perform the function "develop and manage human capital" / (Total business entity revenue * 0.001)

Key Terms

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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 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 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 (7.3.1)

  • 7.1 - Develop and manage human resources (HR) planning, policies, and strategies (17043)
    • 7.1.1 - Develop human resources strategy (20958)
      • 7.1.1.1 - Identify strategic HR needs (10418)
      • 7.1.1.2 - Define HR and business function roles and accountability (10419)
      • 7.1.1.3 - Determine HR function roles and structure (21430)
      • 7.1.1.4 - Determine HR delivery model (21431)
      • 7.1.1.5 - Determine HR costs (10420)
      • 7.1.1.6 - Establish HR measures (10421)
      • 7.1.1.7 - Communicate HR strategies (10422)
      • 7.1.1.8 - Develop strategy for HR systems/technologies/tools (10432)
      • 7.1.1.9 - Manage employer branding (20606)
      • 7.1.1.10 - Manage job families and positions (21432)
    • 7.1.2 - Develop and implement workforce strategy and policies (17045)
      • 7.1.2.1 - Perform workforce planning (10423)
      • 7.1.2.2 - Perform operational workforce planning (10424)
      • 7.1.2.3 - Develop compensation strategy (10425)
        • 7.1.2.3.1 - Establish incentive strategy (10210)
      • 7.1.2.4 - Develop succession plan (10426)
      • 7.1.2.5 - Develop high performers/leadership programs (16938)
      • 7.1.2.6 - Develop diversity, equity, and inclusion plan (10427)
      • 7.1.2.7 - Implement diversity, equity, and inclusion plan (21433)
      • 7.1.2.8 - Design talent development program (11622)
      • 7.1.2.9 - Design talent acquisition program (11623)
      • 7.1.2.10 - Develop other HR programs (10428)
      • 7.1.2.11 - Develop HR policies (10429)
      • 7.1.2.12 - Administer HR policies (10430)
      • 7.1.2.13 - Plan employee benefits (10431)
      • 7.1.2.14 - Develop workforce strategy models (10433)
      • 7.1.2.15 - Implement workforce strategy models (20122)
    • 7.1.3 - Monitor and update strategy, plans, and policies (10417)
      • 7.1.3.1 - Measure realization of objectives (10434)
      • 7.1.3.2 - Measure contribution to business strategy (10435)
      • 7.1.3.3 - Communicate plans and provide updates to stakeholders (10436)
      • 7.1.3.4 - Review and revise HR plans (10438)
    • 7.1.4 - Develop competency management models (17046)
  • 7.2 - Recruit, source, and select employees (10410)
    • 7.2.1 - Manage employee requisitions (10439)
      • 7.2.1.1 - Align staffing plan to work force plan and business unit strategies/resource needs (10445)
      • 7.2.1.2 - Develop and maintain job descriptions (10447)
      • 7.2.1.3 - Open job requisitions (10446)
      • 7.2.1.4 - Post job requisitions (10448)
      • 7.2.1.5 - Modify job requisitions (10450)
      • 7.2.1.6 - Notify hiring manager (10451)
      • 7.2.1.7 - Manage requisition dates (10452)
    • 7.2.2 - Recruit/Source candidates (10440)
      • 7.2.2.1 - Determine recruitment methods and channels (10453)
      • 7.2.2.2 - Perform recruiting activities/events (10454)
      • 7.2.2.3 - Manage recruitment vendors (10455)
      • 7.2.2.4 - Manage employee referral programs (17047)
      • 7.2.2.5 - Manage recruitment channels (17048)
    • 7.2.3 - Screen and select candidates (20123)
      • 7.2.3.1 - Identify and deploy candidate selection tools (10456)
      • 7.2.3.2 - Interview candidates (10457)
      • 7.2.3.3 - Test candidates (10458)
      • 7.2.3.4 - Select and reject candidates (10459)
    • 7.2.4 - Manage new hire/re-hire (10443)
      • 7.2.4.1 - Draw up and make offer (10463)
      • 7.2.4.2 - Negotiate offer (10464)
      • 7.2.4.3 - Hire candidate (10465)
    • 7.2.5 - Manage applicant information (10444)
      • 7.2.5.1 - Obtain candidate background information (10460)
      • 7.2.5.2 - Create applicant record (10466)
      • 7.2.5.3 - Manage/track applicant data (10467)
        • 7.2.5.3.1 - Complete position classification and level of experience (20124)
      • 7.2.5.4 - Archive and retain records of non-hires (10468)
  • 7.3 - Manage employee onboarding, training, and development (20599)
    • 7.3.1 - Manage employee orientation and deployment (10469)
      • 7.3.1.1 - Create/maintain employee onboarding program (10474)
        • 7.3.1.1.1 - Develop employee induction program (10477)
        • 7.3.1.1.2 - Maintain/Update employee induction program (10478)
      • 7.3.1.2 - Evaluate the effectiveness of the employee onboarding program (11243)
      • 7.3.1.3 - Execute onboarding program (17050)
    • 7.3.2 - Manage employee performance (10470)
      • 7.3.2.1 - Define employee performance objectives (10479)
      • 7.3.2.2 - Review employee performance (21434)
      • 7.3.2.3 - Manage employee performance (21435)
      • 7.3.2.4 - Evaluate and review performance program (10481)
    • 7.3.3 - Manage employee career development (10472)
      • 7.3.3.1 - Define employee development guidelines (10487)
      • 7.3.3.2 - Develop employee career plans and career paths (10488)
      • 7.3.3.3 - Manage employee skill and competency development (17051)
    • 7.3.4 - Develop and train employees (10473)
      • 7.3.4.1 - Align employee with organization development needs (10490)
      • 7.3.4.2 - Define employee competencies and skills (16940)
      • 7.3.4.3 - Align learning programs with competencies and skills (10491)
      • 7.3.4.4 - Establish training needs by analysis of required and available skills (10492)
      • 7.3.4.5 - Develop, conduct, and manage employee and/or management training programs (10493)
      • 7.3.4.6 - Manage examinations and certifications (20125)
        • 7.3.4.6.1 - Liaise with external certification authorities (20126)
        • 7.3.4.6.2 - Administer certification tests (20127)
        • 7.3.4.6.3 - Appraise experience qualifications (20128)
        • 7.3.4.6.4 - Administer certificate issue and maintenance (20129)
      • 7.3.4.7 - Monitor and evaluate learning programs (21436)
  • 7.4 - Manage employee relations (17052)
    • 7.4.1 - Manage labor relations (10483)
    • 7.4.2 - Manage collective bargaining process (10484)
    • 7.4.3 - Manage labor management partnerships (10485)
    • 7.4.4 - Manage employee grievances (10531)
    • 7.4.5 - Understand legal and regulatory environment (21437)
  • 7.5 - Reward and retain employees (10412)
    • 7.5.1 - Develop and manage reward, recognition, and motivation programs (21438)
      • 7.5.1.1 - Develop salary/compensation structure and plan (10498)
      • 7.5.1.2 - Develop benefits and rewards plan (10499)
      • 7.5.1.3 - Perform competitive analysis of benefits and rewards (10500)
      • 7.5.1.4 - Identify compensation requirements based on financial, benefits, and HR policies (10501)
      • 7.5.1.5 - Administer compensation and rewards to employees (10502)
      • 7.5.1.6 - Reward and motivate employees (10503)
      • 7.5.1.7 - Review retention and motivation indicators (10510)
      • 7.5.1.8 - Review compensation plan (10511)
    • 7.5.2 - Manage and administer benefits (10495)
      • 7.5.2.1 - Deliver employee benefits program (10504)
      • 7.5.2.2 - Administer benefit enrollment (10505)
      • 7.5.2.3 - Process claims (10506)
      • 7.5.2.4 - Perform benefit reconciliation (10507)
    • 7.5.3 - Manage employee assistance and retention (21439)
      • 7.5.3.1 - Deliver programs to support work/life balance for employees (10508)
        • 7.5.3.1.1 - Manage flexible working (21440)
      • 7.5.3.2 - Develop family support systems (10509)
    • 7.5.4 - Administer payroll (10497)
  • 7.6 - Redeploy and retire employees (10413)
    • 7.6.1 - Manage promotion and demotion process (10512)
    • 7.6.2 - Manage separation (10513)
    • 7.6.3 - Manage retirement (10514)
    • 7.6.4 - Manage leave of absence (10515)
    • 7.6.5 - Develop and implement employee outplacement (10516)
    • 7.6.6 - Manage workforce scheduling (20132)
      • 7.6.6.1 - Receive required resources/skills and capabilities (20133)
      • 7.6.6.2 - Manage resource deployment (10517)
    • 7.6.7 - Relocate employees and manage assignments (17055)
      • 7.6.7.1 - Manage expatriates (10520)
  • 7.7 - Manage employee information and analytics (17056)
    • 7.7.1 - Manage reporting processes (10522)
    • 7.7.2 - Manage employee inquiry process (10523)
    • 7.7.3 - Manage and maintain employee data (10524)
    • 7.7.4 - Manage human resource information systems HRIS (10525)
    • 7.7.5 - Develop and manage employee measures (10526)
    • 7.7.6 - Develop and manage time and attendance systems (10527)
    • 7.7.7 - Develop workforce analytics (21441)
      • 7.7.7.1 - Determine stakeholder requirements (21442)
      • 7.7.7.2 - Identify research questions (21443)
      • 7.7.7.3 - Select workforce analysis methodology (21444)
      • 7.7.7.4 - Identify workforce data sources (21445)
      • 7.7.7.5 - Gather workforce data (21446)
    • 7.7.8 - Implement workforce analytics (21447)
      • 7.7.8.1 - Transform workforce analysis data (21448)
      • 7.7.8.2 - Develop insights into workforce analytics outcomes (21449)
      • 7.7.8.3 - Communicate workforce analysis outcomes (21450)
    • 7.7.9 - Manage/Collect employee suggestions and perform employee research (10530)
  • 7.8 - Manage employee communication (21451)
    • 7.8.1 - Develop employee communication plan (10529)
    • 7.8.2 - Conduct employee engagement surveys (16944)
    • 7.8.3 - Deliver employee communications (10532)