HR Cost as % of Revenue
Total people costs (salaries, benefits, HR function) expressed as a percentage of total revenue
What is HR Cost as % of Revenue?
HR cost as a percentage of revenue is the share of revenue spent on HR and people costs. It shows how much of income goes on running the people function.
It lets organisations of different sizes be compared and helps judge whether HR is well resourced for the business.
How this KPI is measured
- Function
- Human Resources
- Sub-function
- Workforce Planning
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Quarterly / Annual
- Formula
- (Total HR and people costs / Total revenue) × 100
How to calculate it
Divide total HR and people costs by total revenue, and multiply by 100.
For example, if HR costs were 1,200,000 and revenue was 100,000,000, the share is 1.2%.
Decide consistently what to include, such as HR team salaries, systems, recruitment and training, and compare against your own history and similar organisations.
Where it is used
Benchmarking
Compare with similar companies.
Budgeting HR
Plan resources.
Evaluating efficiency
Track over time.
How to improve it
Tips and common mistakes
- The lowest ratio is not the goal.
- Revenue swings change the ratio.
- Compare with peers that define costs the same way.
More Human Resources kpi library
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