Hello experts, What is the ideal HR cost to the total business revenue ratio? Apart from this, what are other important ratios which an HR should know? Regards
From India, Bhubaneswar
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3From India, Bhubaneswar
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Hi Amar,
Isn't it for academic interests or for a practically oriented application? Moreover, you need to provide more information about the users, the entity, the operations - whether producers/manufacturers or service providers, size, location(s), practices followed (recruited, trained through hired consultants, or carried out in-house), approximate turnover per annum, etc.
Thank you.
From India, Bangalore
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Isn't it for academic interests or for a practically oriented application? Moreover, you need to provide more information about the users, the entity, the operations - whether producers/manufacturers or service providers, size, location(s), practices followed (recruited, trained through hired consultants, or carried out in-house), approximate turnover per annum, etc.
Thank you.
From India, Bangalore
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Dear Amar,
You could have mentioned your industry, nature of your finished product, etc. The HR cost to business ratio will vary from one industry to another and from one company to another. This is because every company has its own business model. Look at HP and Dell. Though both manufacture computers, laptops, printers, servers, etc., their business models are different.
To settle your query, let me suggest the measurement of:
a) HCROI: Earlier I have given a comprehensive reply. You may click here to refer to my reply.
b) Labour Index: The ratio of quality cost to direct labour hours, it has the advantage of being easily computed (from accounting records) and easily understood, but it is not always effective for long-term comparative analysis when technological advances reduce labour usage.
Thanks,
Dinesh Divekar
From India, Bangalore
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You could have mentioned your industry, nature of your finished product, etc. The HR cost to business ratio will vary from one industry to another and from one company to another. This is because every company has its own business model. Look at HP and Dell. Though both manufacture computers, laptops, printers, servers, etc., their business models are different.
To settle your query, let me suggest the measurement of:
a) HCROI: Earlier I have given a comprehensive reply. You may click here to refer to my reply.
b) Labour Index: The ratio of quality cost to direct labour hours, it has the advantage of being easily computed (from accounting records) and easily understood, but it is not always effective for long-term comparative analysis when technological advances reduce labour usage.
Thanks,
Dinesh Divekar
From India, Bangalore
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Mr. Amar,
Thank you for your question. It must be known to every HR person. Understanding this will enhance your Business Acumen. The HR cost varies from 2.5% to 13-14% depending on factors such as the size and volume of the business, the class of business, products and services offered, technology used, and the level of automation, modernization, and digitalization, etc.
Fundamentally, HR is a support activity that provides skill sets/competencies across the organization at all hierarchy levels, fosters work culture/work environment, increases employee engagement, manages boundaries, and builds the organization's image.
In light of the above, HR personnel must be familiar with strategic planning and revenue ratios, such as fixed costs, variable costs, market share of products/services, HR costs, consumption ratios (raw material, energy – power and steam), packaging materials ratio, marketing/sales ratios, product/service mix ratio, and administrative cost ratio, etc., along with their monthly variation ratios compared to the budgeted ratios. HR personnel should also understand EBIDTA, PBDT (Profit Before Taxes), and tax ratios.
Furthermore, they should be aware of department-specific ratios such as employee engagement ratio, employee turnover ratio, training cost ratio, department-wise and level-wise employee cost ratio, absenteeism ratio, and direct and indirect cost ratios.
I believe you now have a clearer understanding of your query. Please feel free to reach out with any queries, questions, or thoughts for further discussion.
Thank you
From India, Delhi
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Thank you for your question. It must be known to every HR person. Understanding this will enhance your Business Acumen. The HR cost varies from 2.5% to 13-14% depending on factors such as the size and volume of the business, the class of business, products and services offered, technology used, and the level of automation, modernization, and digitalization, etc.
Fundamentally, HR is a support activity that provides skill sets/competencies across the organization at all hierarchy levels, fosters work culture/work environment, increases employee engagement, manages boundaries, and builds the organization's image.
In light of the above, HR personnel must be familiar with strategic planning and revenue ratios, such as fixed costs, variable costs, market share of products/services, HR costs, consumption ratios (raw material, energy – power and steam), packaging materials ratio, marketing/sales ratios, product/service mix ratio, and administrative cost ratio, etc., along with their monthly variation ratios compared to the budgeted ratios. HR personnel should also understand EBIDTA, PBDT (Profit Before Taxes), and tax ratios.
Furthermore, they should be aware of department-specific ratios such as employee engagement ratio, employee turnover ratio, training cost ratio, department-wise and level-wise employee cost ratio, absenteeism ratio, and direct and indirect cost ratios.
I believe you now have a clearer understanding of your query. Please feel free to reach out with any queries, questions, or thoughts for further discussion.
Thank you
From India, Delhi
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Gauging business against ROI and expenses or input capital calls for identifying these ratios. However, HR in terms of headcount is countable but in terms of excellence, talent, and competencies, etc., will depend on various other factors where human assets are dealt with. The value of human resource assets cannot be gauged but can definitely be improved to get more productivity and hence higher ROI.
From India, Vadodara
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From India, Vadodara
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Hi Amar, The attached article on HR costs might be of some help to understand HR metrics which are form part of SHRM.
From India, Bangalore
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From India, Bangalore
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Grateful to have stumbled upon this information.
An HR Manager plays a vital role in any organization.
Visit https://technologycounter.com/hr-software for more information.
From India, Pune
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An HR Manager plays a vital role in any organization.
Visit https://technologycounter.com/hr-software for more information.
From India, Pune
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HR Efficiency Ratio
An average HR staff to employee ratio is around 2.57 for all organizations. Small organizations have higher ratios with an average of 3.40. Medium organizations often have ratios around 1.22, while a normal ratio for large organizations is 1.03.
I hope this will help you.
From India, Silvassa
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An average HR staff to employee ratio is around 2.57 for all organizations. Small organizations have higher ratios with an average of 3.40. Medium organizations often have ratios around 1.22, while a normal ratio for large organizations is 1.03.
I hope this will help you.
From India, Silvassa
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