This measure calculates the total cost per business entity employee to perform the process group "develop and counsel employees," which consists of learning strategy, employee development, training delivery, and training administration. The total cost is the sum of outsourced, overhead, personnel, system, and other costs. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "develop and counsel employees."
(Total cost to perform the processes "manage employee development" and "develop and train employees" + Total cost to perform the processes "manage employee orientation and deployment", "manage employee performance" and "manage employee relations") / Number of business entity employees
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 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 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.
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 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.
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).
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.
Full-time Employee, Part-time Employee, and Temporary 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.
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.
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.
For survey purposes, a business entity is defined as an entity that:
- performs significant aspects of the processes for the surveys identified, or
- is part of a cost or revenue center within the company.
Within your organization, diverse departments may be geographically co-located, with closely integrated operations that form part of one "business entity" which may be a great distance apart. When trying to determine if related parts of your operation should be considered a single business entity, look for the following characteristics:
- Do they operate closely together?
- Do they serve many of the same customers?
- Do they support the same region or product group?
- Do they share any performance measures?
- Is data meaningful at a consolidated level?
Examples of business entity definition:
- A general ledger accounting unit located in Germany has two groups. One performs general ledger accounting for the corporate headquarters, which has three business units. The other group does general ledger accounting for one of the three business units. In spite of their geographic co-location, their roles are substantially different and consolidating their data into a single response would make it less meaningful. Each group should be treated as a separate business entity.
- Three business units within a corporation use a shared services center for accounts payable and expense reimbursement, but are self-supporting for the other financial processes. The best approach is to make the shared services centre a separate business entity for accounts payable and expense reimbursement, and to retain the three original business units for the other financial processes.
- A global manufacturing company has five plant locations, each manufacturing product and each with its own logistics operations. For purposes of completing a manufacturing and logistics survey, they should be treated as five separate business entities.