HR Formulas- attrition rate, manpower turnover, human capital ROI, value added, capital cost etc

HR Formulas

1. Attrition Rate

Total number of people who left the organization in the period / (Headcount at the start of the period + Heads recruited during the period)

2. Manpower Turnover

Total number of people who left the organization in the period / Average headcount in the period

3. Human Capital ROI

This measures the return on capital invested in pay and benefits. The formula is:

[Revenue - Nonhuman Expenses / Pay and Benefits]

Pay includes all money spent on regular and contingent labor.

4. Human Capital Value Added

This uses a similar formula to Human Capital ROI but divides by the number of full-time equivalent employees (FTEs). The formula is:

[Revenue - Nonhuman Expenses / Full-Time Equivalents]

This yields a profit per FTE. These two measures are views of the profitability attributable to human effort.

5. Human Capital Cost

This is simply the average pay per regular employee. The formula is:

[Pay + Benefits + Contingent Labor Cost / Full-Time Equivalents]

It can be augmented by adding in contingent labor. In that case, we would take total labor expenses, including benefits costs, and divide by FTEs, including contingents.

6. Human Economic Value Added

This is net operating profit after tax, minus the cost of capital divided by FTEs, including contingent labor. The formula is:

[Net operating profit after tax - Cost of capital / FTEs]

7. Human Market Value Added

This divides market capitalization by FTEs, including contingents. The formula is:

[Market Capitalization / FTEs]

Courtesy..

ANIL KUMAR

Senior Associate - Business Resource Group.

TCGIvega Information Technologies Pvt. Ltd.

Global Village,

Mysore Road,

Bangalore 560059

Thank you, Peer Sahab, these HR formulas are very useful for me. I have gained a lot from these HR functions.

Thanks a lot.

Regards,

Riyaz Ahmed Shaikh
Karnataka, HUBLI

Allah Hafiz

Dear Sir,

Kindly provide the formulas for LTA, headcount, turnover, attendance, salary breakup, etc.

Thank you.

Hi,

Good information, but I'm new to the generalist profile. Kindly explain in detail the below-mentioned calculations: PF, Payroll, LTA, Turnover, etc. Could you kindly list out all the formulas and HR metrics?

It would be appreciated if you could also send a copy to my personal email ID: devihr@gmail.com.

Regards,
Devi

Formula for "employee turnover rate calculation" is:

Employee Turnover rate = (Total number of employees left / Average number of employees) * 100

Regards,
Ehtesham

The number of total hours worked divided by the maximum number of compensable hours in a work year, as defined by law. For example, if the work year is defined as 2,080 hours, then one worker occupying a paid full-time job all year would consume one FTE. Two employees working for 1,040 hours each would consume one FTE between the two of them.

For more information, you can visit [Wikipedia - Full-Time Equivalent](http://en.wikipedia.org/wiki/Full-time_equivalent).

Hi peer,

Good piece of information. It would be great if you could email me HR metrics and calculations in Manpower Planning & Recruitment.

Cheers,
Pavana
Human Resource Team

Can somebody tell me what does Full-Time Equivalents stand for? It's appearing in the Human Capital Cost formula. Thanks for your help and happy learning.

FTE stands for the number of billable seats. For example, a 100-seater call center is manned by 100*1.25 = 125 agents. The 25 additional agents will not be paid for by the client but are required for managing breaks, unscheduled leaves, etc. Your revenue calculation is done keeping in mind the revenue generated for 100 seats versus expenses for 125 seats. Hope this helps.

Dear Anil,

Useful information, thanks. Can you also tell me the formula for working out the per capita when it comes to human resources and the formula for man-hours?

Regards,
Kumar :)

All formulas are very useful. But please explain the above, especially Human Economic Value Added, Human Market Value Added, and Human Capital ROI, with a few examples.

Regards,
Arindam Choudhury

Hi Anil / Peer,

What does form 1 & form 2 attrition mean, and how do you calculate these two types of attrition? What will be the end result by calculating form 1 & form 2 attrition?

By the way, this posting is very useful; thanks for sharing the information in the forum.

Thanks & Regards, Charan Kedar.C. +91 98407 18607

Hi Anil Kumar,

It's really very useful information. Could you please help me with a formula to calculate the rate of absenteeism?

Regards,
Ram

Organizational Effectiveness

*Revenue Factor*
Revenue / Total FTE

*Expense Factor*
Operating Expense / Total FTE

*Income Factor*
(Revenue - Operating Expense) / Total FTE

*Human Capital Value Added*
Revenue - (Operating Expense - [Compensation Cost + Benefit Cost]) / Total FTE

*Human Capital ROI*
Revenue - (Operating Expense - [Compensation Cost + Benefit Cost]) / (Compensation Cost + Benefit Cost)

Human Resources Structure

*HR Expense Percentage*
HR Expense / Operating Expense

*HR FTE Ratio*
Total FTE / Total HR FTE

*HR Exempt Percentage*
HR Exempt FTE / Total HR FTE

*HR Investment Factor*
HR Expense / Total FTE

*HR Separation Rate*
HR Separations / HR Head Count

*HR Structure Breakdown*
HR FTE by Category / Total HR FTE

Compensation

*Compensation Revenue Percentage*
Compensation Cost / Revenue

*Total Compensation Revenue Percentage*
(Compensation Cost + Benefit Cost) / Revenue

*Total Labor Cost Revenue Percentage*
(Compensation Cost + Benefit Cost + Other Labor Cost) / Revenue

*Compensation Expense Percentage*
Compensation Cost / Operating Expense

*Total Compensation Expense Percentage*
(Compensation Cost + Benefit Cost) / Operating Expense

*Total Labor Cost Percentage*
(Compensation Cost + Benefit Cost + Other Labor Cost) / Operating Expense

*Compensation Factor*
Compensation Cost / Workforce Head Count

*Supervisor Compensation Factor*
Supervisor Compensation Cost / Supervisor Head Count

*Supervisor Compensation Percentage*
Supervisor Compensation Cost / Compensation Cost

*Executive Compensation Factor*
Executive Compensation Cost / Executive Head Count

*Executive Compensation Percentage*
Executive Compensation Cost / Compensation Cost

Benefits

*Benefits Revenue Percentage*
Benefit Cost / Revenue

*Benefit Expense Percentage*
Benefit Cost / Operating Expense

*Benefit Compensation Percentage*
Benefit Cost / Compensation Cost

*Health Care Factor*
Medical and Medically Related Benefit Cost / Covered Employees

*Workers Compensation Factor*
Workers Compensation Cost / Workforce Head Count

*Benefit Cost Breakdown*
Benefit Cost by Category / Benefit Cost

Separations

*Separation Rate*
(Voluntary Separations + Involuntary Separations) / Head Count

*Voluntary Separation Rate*
Voluntary Separations / Head Count

*Involuntary Separation Rate*
Involuntary Separations / Head Count

*Voluntary Separations by Length of Service*
Voluntary Separations by Length of Service by Category / Voluntary Separations

Staffing

*External Accession Rate*
(External Add Hires + External Replacement Hires) / Head Count

*Internal Accession Rate*
(Internal Add Hires + Internal Replacement Hires) / Head Count

*College Accession Rate*
(College Add Hires + College Replacement Hires) / Head Count

*External Add Rate*
External Add Hires / Head Count

*Internal Add Rate*
Internal Add Hires / Head Count

*College Add Rate*
College Add Hires / Head Count

*External Replacement Rate*
External Replacement Hires / Head Count

*Internal Replacement Rate*
Internal Replacement Hires / Head Count

*College Replacement Rate*
College Replacement Hires / Head Count

*External Cost per Hire*
(External Hiring Cost X 1.1 Factor) / External Hires

*Internal Cost per Hire*
(Internal Hiring Cost X 1.1 Factor) / Internal Hires

*College Cost per Hire*
(College Hiring Cost X 1.1 Factor) / College Hires

*External Cost per Hire Breakdown*
External Hiring Cost by Category / (External Hiring Cost X 1.1 Factor)
*Internal Cost per Hire Breakdown*
Internal Hiring Cost by Category / (Internal Hiring Cost X 1.1 Factor)
*External Time to Fill*
External Days to Fill / External Hires

*Internal Time to Fill*
Internal Days to Fill / Internal Hires

*External Time to Start*
External Days to Start / External Hires

*Internal Time to Start*
Internal Days to Start / Internal Hires

*External Hires Offer Acceptance Rate*
External Offers Accepted / External Offers Extended

*Internal Hires Offer Acceptance Rate*
Internal Offers Accepted / Internal Offers Extended

*College Hires Offer Acceptance Rate*
College Offers Accepted / College Offers Extended

*Sign-on Bonus Percentage*
Total Hires Receiving Sign-on Bonus / Total Hires

*Supervisor Sign-on Bonus Percentage*
Supervisor Hires Receiving Sign-on Bonus / Supervisor Hires

*Executive Sign-on Bonus Percentage*
Executive Hires Receiving Sign-on Bonus / Executive Hires

*Sign-on Bonus Factor*
Sign-on Bonus Cost / Total Hires Receiving Sign-on Bonus

*Supervisor Sign-on Bonus Factor*
Supervisor Sign-on Bonus Cost / Supervisor Hires Receiving Sign-on Bonus

*Executive Sign-on Bonus Factor*
Executive Sign-on Bonus Cost / Executive Hires Receiving Sign-on Bonus

Training and Development

*Employees Trained Percentage*
Employees Trained / Total Head Count

*Training Cost Factor*
Total Training Cost / Employees Trained

*Training Cost Percentage*
Total Training Cost / Operating Expense

*Training Investment Factor*
Total Training Cost / Total Head Count

*Training Staff Ratio*
Total FTE / Training Staff FTE

*Training Cost per Hour*
Total Training Cost / Total Training Hours

*Internal Staff Training Hours Percentage*
Internal Staff Training Hours Provided / Total Training Hours

*External Staff Training Hours Percentage*
External Staff Training Hours Provided / Total Training Hours

Jeswin Jose
MCC, Chennai

Dear Jose ji,

Very informative posting. But copying and pasting such a huge volume is not fair.

Regards,
PBS KUMAR

Very informative... Wonder if you could share with me some of the references.

Jackarea, Sabah, Malaysia

Dear Peer Mohamad,

Thank you for sharing important HR information with us. It's very useful. Keep posting such kind of HR information.

Thank you.

Hi,

So, attrition is not calculated as:

No. of attritions in a month / (Op HC + Cl HC) / 2 * 100?

That way, Cl HC would be Op HC of the previous month + new joinees - attritions. But, your formula's denominator says (Headcount at the start of the period + Heads recruited during the period). That leaves out the attrition submission...

I'm highly confused after reading all the posts on this formula. Please clarify.