Benefits Administration Expense as a Percentage of Total HR Expense

Benefits Administration Expense as a Percentage of Total HR Expense

KPI Details

Benefits Admin Expense per Employee measures the total cost to manage and maintain the company's benefits programs as a percentage of total company-wide human resources spending over the same period of time. A higher than average value for this metric may be related to cumbersome or manual benefits administration processes, lack of discipline in ensuring accurate enrollment, and/or ineffective communications with the company's workforce in regards to the details and use of their benefits (health insurance, retirement plans, etc.). While a low value for this metric is preferred, this should also be balanced with the level of service being provided to the employees of the company, as the quality of service related to benefits program administration may impact employee satisfaction and turnover rates. In some cases, many aspects of benefits administration may be outsources to a third party vendor.

KPI Definition

The total amount of employee benefits administration and management-related expense incurred by the company over a certain period of time, divided by the total HR department expense incurred over the same period. Benefits administration typically involves the development, implementation and ongoing management of company health plan and retirement program (401k, etc.) benefits.

KPI Best Practices

• Standardize routine procedures to minimize re-work
• Up-to-date capacity planning models to prevent overstaffing
• Utilize employee benefits portals where employees can edit their own personal information

KPI Calculation Instructions Benefits Administration Expense as a Percentage of Total HR Expense?

Two values are used to calculate this KPI: (1) the total cost of administering and managing employee benefits programs, and (2) total Human Resources (HR) Department expense over the same time period. The total cost of administering and managing employee benefits includes the cost of labor (salaries/wages, benefits and commissions or bonuses) and technology used by benefits administration employees to carry out their job functions. Total HR expense should include labor, technology, occupancy and other overhead costs related to HR operations, including recruiting, hiring, training and development, employee relations, payroll and human capital management. The actual cost of benefits (e.g., health insurance premiums, investment management fees, etc.) should not be included in the numerator or denominator for this calculation.

KPI Formula :

(Total Benefits Administration Expense / Total Human Resources Expense) * 100