Total cost to perform the HR function per FTE that performs the process group "develop and counsel employees"

This measure calculates the total cost per "develop and counsel employees" full-time equivalent (FTE) employee to perform the human resources (HR) function. These FTEs focus on activities like learning strategy, training delivery/administration, employee development, employee orientation/performance, talent management, and employee relations. The HR function 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. This measure 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:
103558
Total Sample Size:
1,132 All Companies
Performers:
25th
-
Median
-
75th
-
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are dollars.

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Total cost to perform the function "develop and manage human capital" / (Number of FTEs who perform the processes "manage employee orientation and deployment", "manage employee performance" and "manage employee relations" + Number of FTEs who perform the processes "manage employee development" and "develop and train employees")

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).

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

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.

Median

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.

Full-time Employee, Part-time Employee, and Temporary Employee

Full-time Employee

For the purpose of this survey, a regular full-time employee is hired for an indefinite period of time and is normally scheduled to work forty hours per week. Appointment is continuous, subject to satisfactory performance and availability of funding.

Part-time Employee

For the purpose of this survey, a regular part-time employee is hired for an indefinite period of time and is scheduled to work less than forty hours per week.

Temporary Employee

A temporary employee is employed for a finite period of time, to fulfill a time-limited role, or to fill the role of a permanent employee who is absent from work. The length of time an employee can work for the organization and be considered a temporary employee may be governed by employment legislation.

Measure Scope

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Cross Industry (7.0.4)

  • 7.3.1 - Manage employee orientation and deployment (10469) - Creating and maintaining various employee on-boarding programs typically known as induction programs in order to ensure that the new employees are effectively introduced to the organization and its existing employees. Examine and evaluate the performance of these induction programs. Execute these programs on the ground level.
    • 7.3.1.1 - Create/maintain employee on-boarding program (10474) - Creating and maintaining a mechanism through which new employees acquire the necessary knowledge, skills, and behaviors to become effective organizational members and insiders. Conduct formal meetings, lectures, videos, printed materials, and/or computer-based orientations to introduce newcomers to their new jobs and the organization.
    • 7.3.1.2 - Evaluate the effectiveness of the employee on-boarding program (11243) - Assessing the performance and effectiveness of employee on-boarding program. Examine the performance of on-boarding program through feedback and reviews from the new employees. Create web and written forms. Obtain information through face-to-face discussions.
    • 7.3.1.3 - Execute onboarding program (17050) - Bringing the employee on-boarding program into effect. Implement Create/Maintain employee on-boarding program [10474]. Conduct training sessions and employee engagement programs.
  • 7.3.2 - Manage employee performance (10470) - Defining individual performance objectives. Review performance in order to provide appraisals. Evaluate the efficiency and effectiveness of the current performance program. Update it regularly.
    • 7.3.2.1 - Define employee performance objectives (10479) - Outlining the objectives for employee performance. Establish key performance objectives and measures such as customer-focus objectives, financially focused objectives, and employee growth objectives.
    • 7.3.2.2 - Review, appraise, and manage employee performance (10480) - Refurbishing, appraising, and managing the performance of employees. Create performance reviews for all the employees by qualitatively and quantitatively measuring them. Use the reviews to provide performance appraisals. Monitor under-performing employees.
    • 7.3.2.3 - Evaluate and review performance program (10481) - Assessing and revamping performance programs, including the instruments used to measure employee performance standards. Review and upgrade these performance programs to avoid any deprivations and ensure effectiveness.
  • 7.3.3 - Manage employee development (10472) - Establishing employee development guidelines. Lay out career paths and plans for them. Manage the development of their skills to enhance their skills, ability, and knowledge.
    • 7.3.3.1 - Define employee development guidelines (10487) - Outlining the guidelines for development of employees. Design development policies and procedures to identify areas of growth for employees, either in their current position or in preparation for future roles. Include topics related to knowledge and skill development.
    • 7.3.3.2 - Develop employee career plans and career paths (10488) - Designing a future career path for the employees that encourages them to explore and gather information.
    • 7.3.3.3 - Manage employee skill and competency development (17051) - Administering the development of employee skills. Conduct training, coaching and mentoring, job-rotation and cross training, lateral moves, etc.
  • 7.3.4 - Develop and train employees (10473) - Creating a link between employee and organizational development needs. Conduct and manage employee training programs by considering the need and availability of these programs.
    • 7.3.4.1 - Align employee with organization development needs (10490) - Aligning the needs of the employees to development needs.
    • 7.3.4.2 - Define employee competencies (16940) - Defining the skills, knowledge, abilities, and attributes needed to carry out a specific job.
    • 7.3.4.3 - Align learning programs with competencies (10491) - Aligning the learning programs with the core capabilities and competencies of the organization. Contextualize the training programs so that employees can expand their knowledge base and add new skills in line with the core competencies of the organization.
    • 7.3.4.4 - Establish training needs by analysis of required and available skills (10492) - Determining the training necessitated by business processes, using an examination of skill sets that are needed by the organization and those already possessed. Examine the various skills required by individual employees. Design training in light of the availability of resources to provide specific segments of training.
    • 7.3.4.5 - Develop, conduct, and manage employee and/or management training programs (10493) - Creating, implementing, and managing the programs for training employees. Create and design sessions on the basis of the needs and the availability of the skills. Conduct the sessions on the ground. Manage all aspects related to the training programs. Consider including literacy training, interpersonal skills training, technical training, problem-solving training, diversity or sensitivity training, etc.
    • 7.3.4.6 - Manage examinations and certifications (20125) - Managing identified training programs for employees. Engage with industries to provide certifications, administer certification test, and maintain active certification.
      • 7.3.4.6.1 - Liaise with external certification authorities (20126) - Coordinating with third party certification authorities to provide training and certifications for necessary skills.
      • 7.3.4.6.2 - Administer certification tests (20127) - Providing tests to the workforce that will satisfy completion of certifications.
      • 7.3.4.6.3 - Appraise experience qualifications (20128) - Ascertaining the experience level needed to qualify for a specific job or certification within the organization. Some certificates require practical experience as well as training programs.
      • 7.3.4.6.4 - Administer certificate issue and maintenance (20129) - Administering certificates to all candidates that have successfully met experience qualifications, and passed all tests necessary to obtain the certificate.