Question 2: How will the cost of the workforce be calculated and reported?

NOTE: This article is part of a six-question series providing a structured process to Meet the business need for insight.

This overall question relates to the reporting scope: Is it sufficient to report costs based on in-situ employees at a point in time, or is it necessary to understand the full potential cost of the organization (including unfilled positions) forecast for future reporting periods? The first requires only people data, the second requires position data (see, The Data Maturity Journey)

Question 2.1: How are Actual People Costs to be calculated?

With Actual People Costs, you can analyse the cost of the in-situ workforce.
People costs are typically formed of multiple reward components (e.g., salary, bonus, benefits) and may need to be calculated in terms of ‘total cost of employment’ taking account of employer taxes and other financial obligations.
Best practice is to include the relevant individual components as separate properties and calculate the required totals.
International organizations with workforces compensated in different currencies typically have a set FX rate which can be applied to local compensation values to generate standardized costs. This can be managed in Orgvue using lookups (see Common calculations).

Question 2.2: How are costs calculated for new positions?

With position costs, you can analyse the full potential cost of the workforce (including unfilled positions). When modelling the ‘to-be’ organization, rate card lookups are often used to generate the cost of positions based on – for example – specified locations and grades (see Rate card lookups for calculating position costs). The planned cost of a position may be different from the actual cost of the employee in the position: Analysing differences between Planned Position Costs and Actual People Costs can reveal the effectiveness of cost planning, and where cost control risks exist in the organization. To ensure comparability, Planned Position Costs should include the same components as Actual People Costs. As seen at Question 1, above, when planned position start and end dates are included, the planned cost of the organization can be forecast over future reporting periods.

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