1、What is Employee Cost Analysis？
Employee Cost analysis, as the name suggests, is a detailed analysis of the costs associated with personnel. In addition to the most basic salary costs, we can also extend it to many direct employment costs, including but not limited to bonuses, overtime pay, and labor health insurance.
In addition, overhead costs are also worth paying attention to, including recruitment advertising costs, training costs, and severance pay. In practice, when analyzing Employee Costs, it is often necessary to consider the integrity of the data and the feasibility of the analysis, so it is usually necessary to start with the analysis of salary, bonuses and other related data, because such data is relatively complete and easy to obtain.
2、Why do companies need to analyze the cost of employment？
With the advent of the era of mass recruitment and labor shortages, reducing turnover rates and retaining existing employees has become an important issue for many companies. When compared to the top three reasons why employees leave their jobs, salary is often one of them.
However, are companies able to retain talent simply by raising salaries? It’s not certain. While other competitors have slashed salaries to compete for the best talent, companies have been forced to follow suit. Therefore, an accurate analysis of employment costs can help us understand where the expenses are going, whether they are overspending, and whether they have increased compared to last year.
Further, we can gain insight into the reasons for the increased costs, which employees are spending disproportionately to their performance, and which employees are underadjusted. These are all issues worth thinking about for enterprises. However, relying solely on Excel for such multi-dimensional analysis can often be time-consuming. Here’s how to use Power BI, a data tool, to analyze the cost of employment.
3、How Power BI Analyzes Labor Costs
(1)、Compare with the same period last year and budget
When analyzing numbers, the most basic analysis is whether there are anomalies or budgets. For example, from the analysis of each month and the difference from last year, as well as the difference with the budget. If this year’s spending is higher than last year’s, is there a department that has significantly overspending? Is it because of the increase in the number of posts in the department?
Or which one of the salaries has increased dramatically? Is it because of the increase in the number of orders, which has led to a significant increase in overtime pay? In Power BI, you just need to click on the January bar chart in the upper left corner, and the other charts will be filtered accordingly. In the same way, if you point to February, you will see the difference in February. This dashboard can help senior managers if there is an anomaly in the cost of hiring, why?
(2)、Analysis of average employment costs
Because the number of people in each department is different, it will be different from the perspective of total cost. It is also possible to divide the total cost by the number of people in each unit to calculate the cost per person. Can you find out which unit has the higher per capita cost? Is it because of the nature of the position? Or is it because of the difference in grades? Therefore, this dashboard can be used to see in more detail whether there is a single person who is driving up the per capita cost. This dashboard helps managers understand how to better understand the hiring budget when recruiting new employees in the future.
(3)、Individual cost analysis
The first two ways are from the perspective of the department, and if we want to analyze it from the perspective of the individual alone, we will want to know how much money the employee has taken from the company since he arrived? What is the annual salary adjustment? What percentage of annual salary is overtime pay? Do you rely on overtime pay to pay your annual salary? This dashboard helps supervisors to have a more accurate picture of their compensation and use it as a reference for future adjustments.
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