Definitions for TrueValueMetrics
Element of Cost - People Costs
Employees. Collecting some basic information about people cost is very useful. The basics are the same, though sometimes, indeed frequently, the pay rates are not common knowledge:
Some information is quite sensitive, such as pay rates and benefit packages, and the like. Though they are sensitive, they are also important to understand since the cost of activities is very much a function of the cost of people.
- 1. Who is working?
- 2. How long?
- 3. How much are they being paid?
- 4. Multiply 2 and 3 and the cost amount is known.
Consultants. Consultants are often employed instead of salaried staff. People costs should be adjusted to reflect this where needed.
Salary scales. In many situations the salary scales that apply to different groups of staff are very different. This makes cost analysis difficult ... but it also is an important issue that needs to be considered in planning, developing a strategy for sustainability and the analysis of performance.
International pay scales are very much higher than local pay scales. This may be justified by the idea that international staff are better trained and have more experience ... but this justification may not always be valid.
Labor costs are a critical component of cost. Expatriate staff costs may be 100 or 1,000 times the cost of local labor ... to some extent justified by the knowledge and experience of the expatriate, but the design of programs should include this important economic parameter.
In the IMMC approach, there is a component of capacity building and training. This makes it possible for the organization to be optimized for cost effectiveness and local staff to be training so that they are not only low wage, but also productive and able to do the work that needs to be done.
The Tr-Ac-Net metric for the labor component of cost includes a profile of labor cost by wage rate.
There is a caveat about low wages ... the goal is not low costs, the goal is high cost effectiveness.
Benefits. In most situations the benefits accruing to staff are significant and should therefore be taken into consideration when computing costs
Government staff benefits.