Non-Salary Compensation per Employee

Non-Salary Compensation per Employee

KPI Details

Non-Salary Compensation Expense per Employee measures the amount of fringe benefit-related cost paid by the company on a per employee basis (i.e., average per employee). While total compensation costs should be controlled, non-salary compensation and the quality of the company's benefits programs should be compared to that of similar organizations to ensure that the organization is offering competitive benefits to its employees (and potential new employees). Benefits packages (i.e., health insurance, retirement benefits, etc.) that are out of line with the marketplace can lead to increased talent acquisition costs (e.g., higher Time to Fill, Cost per Hire, etc.) as well as turnover within key positions. These factors may also have a negative, downstream on impact employee morale, productivity and work quality. Practically speaking, a value near the average or median for this metric (for similar organizations, competitors) should be established, then dialed up/down based on the company's hiring needs and overall human capital strategy.

KPI Definition

The total amount of non-salary compensation paid to company employees divided by the total number of employees working for the organization over the same time period. Non-salary compensation typically includes insurance premiums, retirement program benefits, unemployment benefits, gifts/awards, and other non-monetary fringe benefits paid for by the organization.

KPI Best Practices

• Negotiation of group rates with healthcare payers
• Periodic audit of healthcare costs compared to industry standards
• Seek portfolio managers with low fees for defined benefit and defined contribution plans

KPI Calculation Instructions Non-Salary Compensation per Employee?

Two values are used to calculate this KPI: (1) the total amount of nonsalary compensation expense incurred by the organization, and (2) the average number of company-wide employees (i.e., total employees) working for the organization over the same period of time. Nonsalary compensation expenses should include the cost of insurance premiums (health, disability, etc.), unemployment compensation, retirement benefits, awards or gifts (e.g., tickets to sporting events, gift certificates, etc.), relocation costs, vehicle or housing allowances, and any other nonmonetary compensation (hourly wages, salaries, bonuses, commissions) paid out to the company’s employees. Do not include any amount contributed by employees themselves (e.g., contributions to 401k, etc.) or deducted from gross salaries in the numerator for this calculation.

KPI Formula :

Total Non-Salary Compensation Expense / Total Number of Employees