How to Calculate Using Human Resources Formulas

Here are the formulas used by Human Resources professional everyday. These formulas are used to manage business processes.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Pencil
• Calculator

1. Hours Worked:
   
   The formula is:
   
   (FTE) multiplied by (Standard Hours)
2. FTE:
   
   The formula is:
   
   (Actual hours worked) divided by (Standard Hours)
3. Attrition Rate:
   
   (Total number of people who left the organization in the period) divided by (Headcount at the start of the period + Heads recruited during the period)
4. Manpower Turnover:
   
   (Total number left in the organization in the period) divided by (Average headcount in the period)
5. Human Capital ROI:
   
   This measures the return on capital invested in pay and benefits. The formula is:
   (Revenue) - (Non-human Expenses) divided by (Pay and Benefits)
   
   Pay includes all money spent on regular and contingent labor.
6. 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) - (Non-human Expenses) divided by (Full-Time Equivalents)
   
   This yields a profit per FTE. These two measures are views of the profitability attributable to human effort.
7. Human Capital Cost:
   
   This is simply the average pay per regular employee. The formula is:
   
   (Pay) + (Benefits) + (Contingent Labor Cost) divided by (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.
8. 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) divided by (FTEs)
9. Human Market Value Added:
   
   This divides market capitalization by FTEs, including contingents. The formula is:
   
   (Market Capitalization) divided by (FTEs)