Dear All,
I am working for a software firm and would like to know how you calculate the total employee cost and total replacement cost. What components could be included in these calculations?
Looking forward to hearing from you all...
Regards,
Sarita
From India
Acknowledge(0)
Amend(0)
I am working for a software firm and would like to know how you calculate the total employee cost and total replacement cost. What components could be included in these calculations?
Looking forward to hearing from you all...
Regards,
Sarita
From India
Acknowledge(0)Amend(0)
Hi Sarita,
Employee cost includes the total cost incurred by the organization to maintain the particular employee or a group of employees at current rates. It includes salary and the cost of fringe benefits, as well as the cost of training undergone.
Replacement cost is more complex. It involves the following costs:
1. Separation costs:
- the costs incurred for exit interviews;
- administrative functions related to termination;
- separation/severance pay; and
- any increase in unemployment compensation.
2. Vacancy costs:
- include the net cost/savings incurred due to increased overtime or temporary employees needed to complete the tasks of the vacant position.
3. Replacement costs:
- include the cost of attracting applicants (recruitment);
- selection process costs;
- travel/moving expenses;
- pre-employment administrative expenses;
- medical exams; and
- acquisition and dissemination of information.
4. Training costs:
- include both formal and informal training costs. Performance differential recognizes the difference in productivity between those who leave and their replacements.
Typically, separation, replacement, and training are all net costs. However, vacancy costs and the performance differential can result in either a net cost or savings. For example, if overtime and/or temporary employees' costs are less than the employee would have earned while the position is vacant, a vacancy savings occurs. If the new employee's performance exceeds the predecessor's, a net performance benefit can result.
Intangible costs are just as real and often much greater than the costs we can quantify. Examples of intangible costs include: the uncompensated increased workloads other workers assume due to vacancies, the stress and tension turnover causes, declining employee morale, and decreased productivity due to the loss of work group synergy. These costs are very real. However, they are difficult, if not impossible, for most businesses to measure.
Just be aware that calculating the tangible costs will provide you with only a portion of the total cost of employee turnover.
Best wishes,
Rajeev.V
From India
Acknowledge(0)Amend(0)
26Employee cost includes the total cost incurred by the organization to maintain the particular employee or a group of employees at current rates. It includes salary and the cost of fringe benefits, as well as the cost of training undergone.
Replacement cost is more complex. It involves the following costs:
1. Separation costs:
- the costs incurred for exit interviews;
- administrative functions related to termination;
- separation/severance pay; and
- any increase in unemployment compensation.
2. Vacancy costs:
- include the net cost/savings incurred due to increased overtime or temporary employees needed to complete the tasks of the vacant position.
3. Replacement costs:
- include the cost of attracting applicants (recruitment);
- selection process costs;
- travel/moving expenses;
- pre-employment administrative expenses;
- medical exams; and
- acquisition and dissemination of information.
4. Training costs:
- include both formal and informal training costs. Performance differential recognizes the difference in productivity between those who leave and their replacements.
Typically, separation, replacement, and training are all net costs. However, vacancy costs and the performance differential can result in either a net cost or savings. For example, if overtime and/or temporary employees' costs are less than the employee would have earned while the position is vacant, a vacancy savings occurs. If the new employee's performance exceeds the predecessor's, a net performance benefit can result.
Intangible costs are just as real and often much greater than the costs we can quantify. Examples of intangible costs include: the uncompensated increased workloads other workers assume due to vacancies, the stress and tension turnover causes, declining employee morale, and decreased productivity due to the loss of work group synergy. These costs are very real. However, they are difficult, if not impossible, for most businesses to measure.
Just be aware that calculating the tangible costs will provide you with only a portion of the total cost of employee turnover.
Best wishes,
Rajeev.V
From India
Acknowledge(0)Amend(0)
Leaders,
I would like to have your inputs in helping me understand the following calculations for a software development firm:
a) How to calculate cost per employee?
b) How to calculate expenses per employee?
Any theories or templates on the above will be highly appreciated :)
In anticipation...
Thanks & Regards,
Tushar
From India, Mumbai
Acknowledge(0)Amend(0)
I would like to have your inputs in helping me understand the following calculations for a software development firm:
a) How to calculate cost per employee?
b) How to calculate expenses per employee?
Any theories or templates on the above will be highly appreciated :)
In anticipation...
Thanks & Regards,
Tushar
From India, Mumbai
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Google’s Employee Benefit Formula is Cost Plus Values.pdf
Cost Cutting Chair.jpg
Recruitment Cost Analysis.xls