The Definitive Guide to Business Finance: What smart managers do with the numbers, Second Edition

Employee costs

Employee costs are probably the easiest outlays to analyse and project. You have an unmistakably identifiable headcount (if not, go out and count them) and the associated costs are usually clearly defined and probably well documented. Employee costs go far beyond salaries and wages, as indicated in Fig. 12.1. You may also have other categories of expenditure, such as uniforms and – dare I mention it again – rice allowances.

Fig 12.1. Twenty-four categories of employee-related costs

(Read down, prefixing each item with the words ‘employee-related’.)
Direct	Benefits	Other costs
Salaries	Termination benefits	Recruitment
Wages	Pension plan	Relocation
Overtime	Rent allowances	Legal expenses
Shift allowances	Transport allowances	Training
Bonuses	Other ...