Human Resource Formulas

Posted by - Akarsh Thakur

1. Attrition Rate
Total number of people left the organization in the period / (Headcount at the start of the period + Heads recruited during the period)

2. Manpower Turnover
Total numbers of 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 added 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