Iso TS 30427-2021
Iso TS 30427-2021
SPECIFICATION 30427
First edition
202 1-03
Reference number
ISO/TS 3042 7:202 1(E)
© ISO 202 1
ISO/TS 30427:2021(E)
Contents Page
Foreword ........................................................................................................................................................................................................................................ iv
lntroduction.................................................................................................................................................................................................................................. v
4 Total workforce costs ........ .... .......... ... .......... ... .......... ..
.......... ... .......... ... .......... ..
.......... ...
.......... ...
.......... ... .......... ............ .... ......... .... ......... ... ..... 1
4.1 General ........................................................................................................................................................................................................... 1
4.2 Purpose .. .. .......... ........... .......... ............. .. ........... .. . . .
........... ............ ............ ............ ........... . ..
........... ..
........... .. .
........... ........... .. ........... .. ........... 2
4.3 Formula . ... . .......... ........... ............ .. ......... . . .. ......... .. . .. ........ .. ........... .. . .. . . .
....... ... ........ ............ .. . .. ........... .. ..
......... . ......... . . .. . ..
........ .. ........ .. . .. ...... 2
4.4 How to use .................................................................................................................................................................................................. 2
4.5 Intended users . .
........ ............ ........... ............. ............. .. .......... .. ........... .. ........... .. . . .
........... ............ ............ ............ ........... . .. ........... .. ......... 2
4.6 Contextual factors ................................................................................................................................................................................. 3
4.7 Predictive factors . ....................... .. ........... .. ........... .. . . .
........... ............ ............ ............ ........... . ..
........... .. ........... .. .
........... ........... .. ........... 3
5 Total external workforce costs ............................................................................................................................................................... 4
5.1 General .. ... ... . . ....... .... ..... ..... .... .... .. ... . .. ..
.... ... . .... ......... .... ... ...
... ... .......... ... ......... .... .. .... . ...
.... ... .... .... .......... ... . ...
..... .... . ...
..... .... .......... ... ..... ... . .... . 4
5.2 Purpose ... ... ....
.. .......... ......... .......... ... .......... .. .......... ...
.......... ... ............. .......... ..
.......... ...
.......... ...
.......... ... ......... .... ......... .... ......... .... ......... ... ..... 4
5.3 Formula ......................................................................................................................................................................................................... 4
5.4 How to use . . .... ............ ........... .. ........... ............. .. .
........... ........... .. ........... .. ........... .. . . .
........... ............ ............ ............ ........... . .. ........... .. ......... 5
5.5 Intended users ......................................................................................................................................................................................... 5
5.6 Contextual factors .. ... . ... .... .. ... . .. ..
.... ... . .... ...... ... .... ... ....
... ... ......... .... ......... ...
..... .. ....
.. ......... .... ......... ........ .. ...
... . ...
..... .... .......... ... ..... .... . ... . 5
5.7 Predictive factors .... ... .......... ... .......... ... .......... ..
.......... ... .......... ... .......... ..
.......... ...
.......... ...
.......... ... .......... ............ .... ......... .... ......... ... ..... 6
6 Ratio of basic salary and remuneration .
.............. ........................................................................................................................ 6
6.1 General . . . .. .. .. .. ..
............ ............ ........... ........... ........... .......... ........... ........... .. . . .
........... ............ ............ ............ ........... . .. ........... .. ........... .. ......... 6
6.2 Purpose .......................................................................................................................................................................................................... 6
6.3 Formula ... ... . . ... . ... . .. .. . .... ... ....
.... .... ..... ..... .... ... ..... .... ... . .... ..... ... ... ... ......... ......... .... ..... ... . .... . ...
.... .... .......... ... ..... .. ...
... . ...
..... .... .......... ... ..... ... . .... . 6
6.4 How to use ... .... ... ...
....... .. ...
......... ... .......... .......... .......... .......... .......... .......... ..
.......... ...
.......... ...
.......... ... .......... ... ......... .... ......... .... ......... ... ..... 7
6.4.1 General. ..................................................................................................................................................................................... 7
6.4.2 Alternative metric for consideration .......... ............. .. .
........... ........... .. ........... .. ........... .. .
........... ............ ......... . 7
6.4.3 Alternate formula ............................................................................................................................................................ 7
6.5 Contextual factors .. ... .. ... . .. .. .. .... .. ..... ....
... .... .... ... . .... ..... .. .... ... ......... ......... ... . .. ....
... . .. ......... .... ......... ........ .. ...
... . ...
..... .... .......... ... ..... ..... . ..
. 7
6.6 Predictive factors .... ... ... .. ... ... ... .......... .......... .......... .......... .......... .......... ..
.......... ...
.......... ...
.......... ... .......... ............ .... ......... .... ......... ... ..... 8
7 Total costs of employment. ......................................................................................................................................................................... 8
7.1 General . . . ............ ............ ........... .. ........... ............. ............ .. ........... .. ........... .. . . .
........... ............ ............ ............ ........... . .. ........... .. ........... .. ......... 8
7.2 Purpose .......................................................................................................................................................................................................... 8
7.3 Formula .. .. ......... ........... ....................... .. ........... .. ........... .. . . .
........... ............ ............ ............ ........... . ..
........... .. ........... .. ............ ........... .. ........... 8
7.4 How to use ... .. .... .......... .
............. ........... .. .
........... ........... .. ........................ .. ......... .. .
........... ......................... .. . ..
........... . ................................ 8
7.5 Contextual factors ........................ ........... . .. . . . . .
..... ..... ......................... ...... ............................... ........... ......................... . .. .
.......... ....... .... . 8
7.6 Predictive factors . . ........... .. ........... ............. .. .
........... ........... .. ........... .. ........... .. . . .
........... ............ ............ ............ ........... . .. ........... .. ......... 9
Bibliography ............................................................................................................................................................................................................................. 10
Foreword
ISO (the International Organization for Standardization) is a worldwide federation of national standards
bodies ( ISO member bodies). The work of preparing International Standards is normally carried out
through ISO technical committees. Each member body interested in a subject for which a technical
committee has been established has the right to be represented on that committee. International
organizations, governmental and non-governmental, in liaison with ISO, also take part in the work.
ISO collaborates closely with the International Electrotechnical Commission ( IEC) on all matters of
electrotechnical standardization.
The procedures used to develop this document and those intended for its further maintenance are
described in the ISO/ IEC Directives, Part 1. In particular, the different approval criteria needed for the
different types of ISO documents should be noted. This document was drafted in accordance with the
editorial rules of the ISO/ IEC Directives, Part 2 (see www.iso.org/directives).
Attention is drawn to the possibility that some of the elements of this document may be the subject of
patent rights. ISO shall not be held responsible for identifying any or all such patent rights. Details of
any patent rights identified during the development of the document will be in the Introduction and/or
on the ISO list of patent declarations received (see www.iso.org/patents).
Any trade name used in this document is information given for the convenience of users and does not
constitute an endorsement.
For an explanation of the voluntary nature of standards, the meaning of ISO specific terms and
expressions related to conformity assessment, as well as information about ISO's adherence to the
World Trade Organization (WTO) principles in the Technical Barriers to Trade ( T B T ) , see www.iso.org/
iso/foreword.html.
This document was prepared by Technical Committee ISO/ TC 260, Human resource management.
Any feedback or questions on this document should be directed to the user's national standards body. A
complete listing of these bodies can be found at www.iso.org/members.html.
Introduction
ISO 30414 highlights guidelines on the following core human capital reporting areas or "clusters":
costs;
diversity;
leadership;
organizational culture;
productivity;
succession planning;
workforce availability.
This document deals specifically with the cluster of metrics in the costs cluster. ISO 30414:2018, 4.7.3,
describes workforce costs and the importance of measuring workforce costs.
recruitment costs;
turnover costs.
NOTE Additional metrics and explanation are included in ISO 30405, ISO/TS 30410 and ISO/TS 3041 1.
Where the outsourced workforce is a significant and material element of the organization's workforce
costs, it can be preferable to report outsourced workforce costs separately.
1 Scope
This document describes the elements of organizational workforce costs. This document provides the
formula for comparable measures for internal and external reporting.
This document also highlights issues for consideration when interpreting the cost data, especially when
deciding on the appropriate intervention internally and when reporting these to external stakeholders
(e.g. regulators, investors).
2 Normative references
For the purposes of this document, the following terms and definitions apply.
ISO and IEC maintain terminological databases for use in standardization at the following addresses:
3.1
full-time equivalent
F TE
number of full-time employees needed to complete the equivalent of the total hours worked by all
employees in a defined period
4.1 General
Workforce costs are one of the most critical factors for organizations, with a direct influence on
the earnings or value proposition of an organization. Investors are interested to see the amount an
organization invests in the workforce, and the return on that investment in terms of profitability,
and also increasingly on non-financial and more intangible measures. The extent of reporting on
total external workforce costs should be determined by the organization itself. However, there are
indications of the future importance of this metric, for example in terms of digitalization. The objective
of this human capital reporting area is to quantify the expenditure of an organization on people. To
report the human capital costs means that human capital can be an investment and that workforce
costs, which are a major influencing factor in human resource management, can be easily calculated.
Total workforce costs, also known as total labour costs, are similar to total cost of workforce and
include total costs of employment, or total employee costs, and external workforce costs. Total costs
of employment include all employee-related costs for the organization for a given time period. Total
external workforce costs are defined as plus contingent (contract and temporary) workers directly
controlled or managed by the organization. Total workforce costs cover salaries and compensation
costs, benefits costs and other employee compensation or remuneration costs. Table 1 gives an example
of the breakdown of total workforce costs.
Percentage
Workforce costs Prior year USD Current year USD
change
Employee salary 464 000 000 5 10 000 000 9,9
Bonus and incentive 70 000 000 75 000 000 7, 1
Benefits 150 000 000 170 000 000 13,3
Other compensation 1000 000 1000 000 0,0
Total costs of employment 685 000 000 756 000 000 10,4
External workforce costs 45 000 000 54 000 000 20
Total workforce costs 1 415 000 000 1 566 000 000 10, 7
NOTE See Clause 5 for external workforce costs formula and Clause 7 for total costs of employment formula.
4.2 Purpose
Internal and external human capital reporting is key to demonstrating how the organization values its
people and the sustainable value proposition it offers to various stakeholders.
This metric is a key indicator of the financial value given by an organization to managing, maintaining
and developing its workforce. Total workforce costs include total costs of employees, i.e. total costs of
employment and total costs related to external workforce costs.
This is a comprehensive metric which includes total compensation and other workforce costs, which
sum to the total workforce costs.
The relative workforce makeup, such as global workforce distribution, education, experience, job
level, pay practices and more, has a profound effect on total workforce costs. Across industries, total
workforce costs or total labour costs can vary dramatically; however, within a given industry, total
workforce costs can be a highly valuable historical and predictive indicator of performance and
therefore an excellent metric for industry-level benchmarking.
4.3 Formula
Total workforce costs = total employee compensation costs + total employee benefits costs + external
workforce costs
Total workforce costs are also calculated as total external workforce costs + total costs of employment.
Total workforce costs are optimized when analysed by relative position impact, performance level,
profitability, productivity, employee engagement, tenure and mobility. When used with such measures,
total workforce costs are a predictor of increasing or decreasing trends in employee performance and
productivity, turnover and engagement, correlated between certain job roles and workforce groups.
Internal users
executive team;
line management;
finance;
legal.
External users
investors;
financial analysts;
media;
Many factors can have a significant impact on the measurement outcome. There can be instances when
results are less than expected or indicate a deteriorating situation; further investigation can find
positive indicators of improvement.
full-time equivalent ( FTE) and headcount at each measurement point, i.e. has the FTE or headcount
grown or shrunk significantly enough to change the perspective and meaning of the metric results?
reorganizations;
generational perspectives;
industry expectation;
economic factors;
downturns;
upturns.
Predictive factors include measuring total workforce costs as a percentage of total revenue or total
operating expenses, i.e. the larger the percentage of total organizational expenses that are represented
by total workforce costs or total cost of workforce, the greater the impact that changes in key employee
and workforce variables have on the organization. For certain industries and organizations with a large
percentage of total expenses cost as workforce costs, there is a correspondingly greater potential value
creation or destruction potential possible in effective talent management.
5.1 General
Because organizations need to respond to changes in the external and economic context in a more
agile and flexible way the traditional workforce structure that features permanent employment is
increasingly challenged, resulting in changes to workforce structure systems and costs. External
workforce costs in relation to internal workforce costs show the dependency of organizations on an
external workforce. External workforce costs are also considered in total costs of employment.
The metric 'external workforce costs' includes, for instance, the expenses for contractors, consultants,
temporary workers and gig workers. It is defined as the sum of external workforce-related expenses, for
example temporary worker invoices, agency fees, independent contractor costs and consultant costs.
Total external workforce costs are the total cost of wages compensation and any benefits offered for
contingent (temporary and contract) workers. The costs are calculated and reported commonly on a
historical basis. When reporting on a regular periodic basis, such as quarterly, costs should be reported
using actual totals, but also it is recommended that these are measured and reported on a full year
annualized basis using current or the most recent actual costs. This metric includes all wages and
remuneration paid to external workers, such as hourly wages, salaries, overtime bonuses, incentives,
shift differential, special and other pay types.
5.2 Purpose
Internal and external human capital reporting is key to demonstrating how the organization values its
people and also to the sustainable value proposition it offers to various stakeholders.
Total external workforce costs are highly recommended for internal and external reporting by large
organizations and SMEs. Subcomponents of external workforce costs, such as total cost of temporary
workforce - temporary workforce cost - and total cost of contractor workforce - contractor workforce
cost - also recommended and indeed necessary in order to calculate and report external workforce costs.
5.3 Formula
External workforce costs =total cost of contingent workforce including temporary workers + total cost
of contract workers
The calculation of total external workforce costs should be consistent over time and can align with the
financial year or the annual budgeting cycle. For example, the point in time for calculation can be at the
end of each measurement period, such as the end of month 1, the end of quarter 2 or end-of-year totals.
Once established, the reporting should include comparisons of previous periods with the current
period and past years with the current year. Three-to-five years is a typical comparison period. This
measurement period will allow for trends to be established and further allow an organization to better
manage expectations and outcomes by establishing targets for future comparison. Table 2 gives an
example of such a comparison.
If for any reason an organization decides on another measurement point, utilization of the preferred
measurement point should be consistent and documented.
Table 2 - Six-month analysis and comparative of a breakdown of total external workforce costs
Table 2 (continued)
6 months to 30- Comparative 2019 Comparative 2018 Comparative 2017
Description 06-2020 as at 30-06-2019 as at 30-06-2018 as at 30-06-2017
000 USD 000 USD 000 USD 000 USD
Temporary workers 420 360 440 300
Outsourced workforce
600 560 500 450
costs
Total external work-
1 920 1 760 1 940 1 350
force costs
Those organizations using total external workforce cost can leverage it as an operational and often
strategic measurement tool to better manage their total cost of workforce, total operating expenses and
workforce productivity while working toward optimizing organizational productivity and flexibility.
Internal users
executive team;
line management;
finance;
legal.
External users
investors;
financial analysts;
unions ( If applicable);
media;
Many factors can have a significant impact on the measurement outcome. There can be instances when
results are less than expected or indicate a deteriorating situation; further investigation can find
positive indicators of improvement.
FTE and headcount at each measurement point, i.e. has the FTE or headcount grown or shrunk
significantly enough to change the perspective and meaning of the metric results?
reorganizations;
generational perspectives;
industry expectation;
economic factors;
downturns;
upturns.
Those organizations measuring and analysing total external workforce cost can uncover a strong
relationship with the mix and types of positions that the organization uses for contingent labour and
the related metric total workforce costs. When included as part of the total workforce costs in time
series and across differing job families or categories, total external workforce costs can be a leading
source of select job roles, talent skills and job types across the organization.
6.1 General
The average salary and remuneration within identified categories of the workforce as defined by the
organization should be reported as a ratio based on FTE.
6.2 Purpose
Internal and external human capital reporting is key to demonstrating how the organization values its
people and to the sustainable value proposition it offers to various stakeholders. This metric helps to
establish if an organization is implementing an equal opportunities policy.
6.3 Formula
The calculation of ratio of average salary and remuneration should be consistent over time and can align
with the financial year or the annual budgeting cycle. For example, the point in time for calculation can
be at the end of each measurement period, such as the end of month 1, the end of quarter 2 or the end
of-year totals.
Once established, the reporting should include comparisons of previous periods with the current
period and past years with the current year. Three-to-five years is a typical comparison period. This
measurement period will allow for trends to be established and further allow an organization to better
manage expectations and outcomes by establishing targets for future comparison. Table 3 gives an
example of such a comparison.
If for any reason an organization decides on another measurement point, utilization of the preferred
measurement point should be consistent and articulated.
Table 3 - Six-month analysis and comparative of a breakdown of ratio of average salary and
remuneration for executive staff
6.4.1 General
Ratio of average salary and remuneration = average annual total compensation of defined category or
individuals/average total compensation of all employees
Many factors can have a significant impact on the measurement outcome. There can be instances when
results are less than expected or indicate a deteriorating situation; further investigation can find
positive indicators of improvement.
FTE and headcount at each measurement point, i.e. has the FTE or headcount grown or shrunk
significantly enough to change the perspective and meaning of the metric results?
reorganizations;
generational perspectives;
industry expectation;
economic factors;
downturns;
upturns.
None.
7.1 General
Total costs of employment are also known as total employee labour costs.
Total costs of employment include total wages and compensation costs in addition to employee benefit
costs and other directly related employment costs for a given time period. Table 4 gives an example of a
breakdown of total cost of employment.
Percentage
Workforce costs Prior year USD Current year USD
change
Employee salary 464 000 000 510 000 000 9,9
Bonus and incentive 70 000 000 75 000 000 7, 1
Benefits 150 000 000 170 000 000 13,3
Other compensation 1 000 000 1 000 000 0,0
Total costs of employment 685 000 000 756 000 000 10,4
7.2 Purpose
Internal and external human capital reporting is key to demonstrating how the organization values its
people and the sustainable value proposition it offers to various stakeholders.
7.3 Formula
Total costs of employment = total employee compensation costs + total employee benefit costs + other
costs of employment
The use of total costs of employment can be optimized by segmenting the workforce and comparing
costs based on those segments such as position, performance level, profitability, productivity, employee
engagement level, tenure and mobility. When used with such measures, total workforce costs can be a
predictor of increasing or decreasing trends in employee performance and productivity, turnover and
engagement when correlated between certain job roles and workforce groups.
This is a comprehensive metric which includes total compensation benefits and other employee-related
costs which sum to the total costs of employment, also known as total employee labour cost.
The relative workforce makeup, such as global distribution, education and experience, has a profound
effect on total costs of employment as a major part of total workforce costs. Across industries, total
workforce costs or total labour costs can vary dramatically. However, within a given industry total
workforce costs are a highly valuable historical and predictive indicator of performance and therefore
an excellent metric for industry-level benchmarking.
Many factors can have a significant impact on the measurement outcome. There can be instances when
results are less than expected or indicate a deteriorating situation; further investigation can find
positive indicators of improvement.
FTE and headcount at each measurement point, i.e. has the FTE or headcount grown or shrunk
significantly enough to change the perspective and meaning of the metric results?
reorganizations;
generational perspectives;
industry expectation;
economic factors;
downturns;
upturns.
Predictive factors include measuring total costs of employment as a percentage of total revenue or total
operating expenses, i.e. the larger the percentage of total organizational expenses that are represented
by total costs of employment the greater the impact that changes in key employee and workforce
variables have on the organization. For certain industries and organizations with a large percentage
of total expenses costs as workforce costs there is a correspondingly greater potential value creation
or destruction potential possible in effective talent management. Total costs of employment or total
cost of workforce can be optimized by segmenting the workforce and comparing costs based on those
segments such as position, performance level, profitability, productivity, employee engagement level,
tenure and mobility. When used with such measures, total costs of employment can be a predictor of
increasing or decreasing trends in employee performance and productivity turnover and engagement
when correlated between certain job roles and workforce groups.
Bibliography
[S] ISO 30414:2018, Human resource management - Guidelines for internal and external human
capital reporting
[6] ISO/ T S 304212), Human Resource Management- Turnover and retention metrics
ICS 03.100.30
Price based on 10 pages