Total Compensation as % of Revenue
Total employee compensation (salaries, bonuses, benefits) as a percentage of total revenue
What is Total Compensation as % of Revenue?
Total compensation as a percentage of revenue is the share of revenue spent on pay and benefits. It shows how much of income goes to people costs.
For most organisations, people are the largest cost, so this ratio is central to financial planning and productivity.
How this KPI is measured
- Function
- Human Resources
- Sub-function
- Compensation & Benefits
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Annual
- Formula
- (Total compensation spend / Total revenue) × 100
How to calculate it
Divide total compensation spend by total revenue, and multiply by 100.
For example, if compensation was 6,000,000 and revenue was 15,000,000, the ratio is 40%.
Include salary, bonus, benefits and employer taxes, and compare with your own history and sector norms.
Where it is used
Planning workforce cost
Set budgets.
Judging productivity
Track people cost against income.
Benchmarking
Compare with peers.
How to improve it
Tips and common mistakes
- A low ratio is not always good if it means underpaying.
- Sector norms vary widely.
- Read with revenue per employee.
More Human Resources kpi library
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