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A company s managers make a number of small, incremental decisions related to employee benefits over time, frequently resulting in a wide array of benefits whose true cost is much higher than expected Frequent use of this measurement tends to result in a much more conservative view of suggested additions to the existing benefits pool Also, knowing the benefit cost per person allows one to make decisions regarding whether it is less expensive to use contractors on a higher perhour basis or hire new employees at a lower hourly rate, but with benefits Benefit costs are best measured on a per-person basis, so the measurement should include all benefit costs in the numerator and the total number of full-time equivalent employees in the denominator Benefit costs should include time taken off for vacations and sick time, all types of medical insurance (such as medical, dental, life, and disability insurance) net of employee deductions, and miscellaneous benefits, such as club memberships, dry cleaning costs, and company cars The measurement is: Total cost of time off + Insurance + Other benefits Employee deductions Number of full-time equivalent employees For example, the Sod Software Company, maker of operating systems for farmers, has assembled a high-powered group of 40 developers who have been attracted by the company and retained in large part by its excellent benefits package Nonetheless, the company is finding that the package is extremely expensive, and must determine if any further additions to its staff should be outside contractors who require no benefits The payroll staff assembles the following annualized benefits information: Benefit Type Medical insurance Dental insurance Long-term disability Short-term disability Vacation time Sick time Company cars Health club memberships Totals Total Cost $238,000 29,000 11,000 27,000 80,000 9,000 40,000 14,000 $448,000 Total Deductions $23,800 2,900 0 0 0 0 0 0 $26,700 Net Total Cost $214,200 26,100 11,000 27,000 80,000 9,000 40,000 14,000 $421,300.



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Download our freeware program JPG to PDF Converter (570 KB, Version 1.01) to convert JPG to PDF and JPEG to PDF in batch. The software works with Microsoft Windows 7 , Windows Vista, and Windows 8. 3. The following Print Wizard appears, and you will be prompted to choose a printer, paper size, and image quality.

Vispoel, W P (1999) Creating computerized adaptive tests of musical aptitude: Problems, solutions, and future directions In F Drasgow & J B Olson-Buchanan (Eds), Innovations in computerized assessment (pp 151 176) Mahwah, NJ: Erlbaum Wainer, H, Bradlow, E T, & Du, Z (2001) Testlet response theory: An analog for the 3PL model useful in testlet-based adaptive testing In W J van der Linden & C A W Glas (Eds), Computerized adaptive testing: Theory and practice (pp 245 269) Dordrecht: Kluwer Wolfe, J H, McBride, J R, & Sympson, J B (1997) Development of the experimental CAT-ASVAB system In W A Sands, B K Waters, & J R McBride (Eds), Computerized adaptive testing: From inquiry to operation (pp 97 101) Washington, DC: American Psychological Association Zenisky, A L, & Sireci, S G (2002) Technological innovations in large-scale assessment Applied Measurement in Education, 15:337 362





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By dividing the net total cost of $421,300 by total headcount of 40 developers, the payroll staff finds that the net benefit cost per employee is $10,53250 This measurement can be modified to show benefits as a percentage of total base pay To continue the last example, if the average developer earned $75,000,

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then the total base pay would be $3,000,000, which would yield a benefits percentage of 14 percent This percentage could then be tracked over time to spot changes, or compared to industry standards to see if a company s benefit costs vary from the norm

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This is one of the most closely watched of all performance measures It is based on the assumption that employees are at the core of a company s profitability, and so, high degrees of efficiency in this area are bound to result in strong profitability It is also a standard benchmark in many industries To calculate this measurement, divide revenue for a full year by the total number of full-time equivalents (FTEs) in the company An FTE is the combination of staffing that equals a 40-hour week For example, two half-time employees would be counted as one FTE The formula is: Annualized revenue Total full-time equivalents A variation on this ratio is to only divide annual revenues by those FTEs who can be categorized as direct labor This measures the productivity of those personnel who are directly connected to the manufacture of a company s products or services This measure should be used with care, since it is not always easy to determine which employees can be categorized as direct labor and which ones fall into the overhead category instead The formula is: Annualized revenue Total direct labor full-time equivalents For example, the operations manager of the Twirling Washing Machine Company wants to determine the sales per person for his company, both for all staff and just the direct labor personnel The company has annual revenues of $4,200,000 Its headcount is: Department Direct labor department Direct labor part-time staff Production supervisors Material handling department Sales, general & administrative Administrative part-time staff Engineering department Headcount 22 6 2 4 10 2 8

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