Human Capital Benchmarking Study 2011

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011
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Table of Contents
SHRM
About SHRM Forum Pakistan
Introduction ....................................................................................................................................7
The Survey ......................................................................................................................................8
Scope and Limitations......................................................................................................................8
Scope .................................................................................................................................................. 8
Limitations ......................................................................................................................................... 9
The Findings ..................................................................................................................................10

HR employees in companies...12
HR staff to orgnizational staff12
HR cost/employee...13
NIBT/employee...14
Gender diversity..14
Recruitment in organizations..15
Voluntarily staff turnover..15
Involuntarily staff turnover....15
Internal to external.16
Average time to fill vacancy..16
Compensation.....17
Compensation/revenue...17
Compensation/cost.17
Organizational data.....18
Revenue/employee.18
Cost/employee....18
HR expense data.....19
HCROI...19
Training/employee.....19
Conclusion ....................................................................................................................................20
Appendix A ...................................................................................................................................21
References .....................................................................................................................................24
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List of Tables
Table 1: Key area of study vs. percentiles ....................................................................................10
Table 2: Size bracket vs. HR staff to organizational staff ratio ....................................................13
Table 3: Sector vs. HR staff to organizational staff ratio.............................................................13

Table 4: Size bracket vs. HR cost/employee.................................................................................13
Table 5: Sector bracket vs. HR cost/employee .............................................................................13
Table 6: Size bracket vs. NIBT/employee ....................................................................................14
Table 7: Sector bracket vs. NIBT/employee .................................................................................14
Table 8: Size bracket vs. gender diversity ratio ............................................................................14
Table 9: Sector bracket vs. gender diversity ratio .........................................................................14
Table 10: Size bracket vs. voluntary staff turnover ratio ..............................................................15
Table 11: Sector bracket vs. voluntary staff turnover ratio...........................................................15
Table 12: Size bracket vs. involuntary staff turnover ratio ...........................................................15
Table 13: Sector bracket vs. involuntary staff turnover ratio .......................................................15
Table 14: Size bracket vs. internal to external hire ratio ..............................................................16
Table 15: Sector bracket vs. internal to external hire ratio ...........................................................16
Table 16: Size bracket vs. average time to fill vacancy ..............................................................16
Table 17: Sector bracket vs. average time to fill vacancy ..........................................................16
Table 18: Size bracket vs. compensation/revenue ratio ................................................................17
Table 19: Sector bracket vs. compensation/revenue ratio.............................................................17
Table 20: Size bracket vs. compensation/cost ratio ......................................................................17
Table 21: Sector bracket vs. compensation/cost ratio ...................................................................17
Table 22: Size bracket vs. revenue/employee ratio.......................................................................18
Table 23: Sector bracket vs. revenue/employee ratio ...................................................................18
Table 24: Sector bracket vs. cost/employee ratio .........................................................................18
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Table 25: Sector bracket vs. cost/employee ..................................................................................18

Table 26: Size bracket vs. HCROI ratio .......................................................................................19
Table 27: Sector bracket vs. HCROI ratio ....................................................................................19
Table 28: Size bracket vs. training/employee ...............................................................................19
Table 29: Sector bracket vs. training/employee ............................................................................19
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SHRM
The Society for Human Resource Management (SHRM)
is the worlds leading association devoted to human resource management and represents more than a total of
250,000 members in over 140 countries.
Founded in 1948, SHRM has more than 575 associated
chapters within the United States and subsidiary offices
in China and India. SHRM forums exists in 11 countries
including France, Switzerland, Lebanon, Egypt, Ghana,
Cayman Islands, Trinidad and Tobago, Kuwait, Nigeria,
UAE and Pakistan.
SHRM vision is to be a globally recognized authority
whose voice is heard on the most pressing people management issues of the day now and in the future. Its
mission is: to provide a community for human resource
professionals, media, governments, non-governmental
organizations, businesses and academic institutions to
share expertise and create innovative solutions on people
management issues; and to provide thought leadership,
education and research to human resource professionals,
media, governments, non-governmental organizations,
businesses and academic institutions.
The Society for Human Resource Management (SHRM),

formerly called the American
Society for Personnel Administration (ASPA), was founded
in 1948 by a group of just 28
individuals. These founding
members anticipated the need
for a national organization to
represent the personnel profession. Their goal was to
provide professional development opportunities, promote national networking, and
to generally advance the interests of a profession they recognized as being in transition.
In 1989, the organization's
name was changed from ASPA to SHRM to reflect its
broadened scope and influence in business and political
worlds internationally.
Today, SHRM includes global
membership; with a staff of
more than 350, there are more
than 30 specialized departments within SHRM to serve
the needs of HR professionals
by providing the most essential and comprehensive set of
resources available.
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About SHRM Forum Pakistan

SHRM Forum Pakistan is one of the 11 international Forums of SHRM US that recently started
its operations in this country under leadership of Mr. Zahid Mubarik GPHR. This is a platform
for HR professionals to interact, communicate, share professional experiences, and engage in
mutually beneficial learning activities.
The forum will help in promoting and networking across different categories to create robust interaction, serve the HR experts and solidify professional relationship building. SHRM Forum
Pakistan will help in promoting consistency and standardization in HR practices.
Vision
SHRM forum envisions to emerge as a recognized body at national level, whose voice is heard
on the most pressing people management matters.
Mission
SHRM Forum Pakistan exists to: build and sustain partnerships with human resource professionals, media, government, non-governmental organizations, businesses and academic institutions to
address people management challenges that influence the effectiveness and sustainability of
their organizations and communities; and, to serve as an advocate to ensure that policy makers,
law makers and regulators are aware of key people concerns facing organizations and the human
resource profession.
Objectives
The main objectives of this forum are:
1. To act as a platform for HR professionals facilitating interaction, communication, sharing
of professional experiences, and beneficial learning activities.
2. To identify workforce productivity benchmarks so that organizations can aim
for leveraging business performance.
3. To help organizations focus on long range value-added initiatives in HR management and
contribute towards enhancing business productivity.
4. To liaise with global HR credentialing organization and facilitate certification of
HR professionals.
5. To improve linkages between HR academia and practitioners and facilitate new entrants
in mentorship with HR practitioners.
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The Human Capital Survey

Introduction
Numbers are universal language of business;
business managers prefer to take decision on
measurable and verifiable data. They expect
HR to be more precise in its input and output
measurements. Thus, in order to help organisations ensure success, HR experts need to
measure the effectiveness of HR programs at
every level and establish HR metrics for
comparison with other organizations. Comparison, numbers and ratios also help in justifying the contribution of HR to the overall
organizational performance in a quantifiable
way.
HR benchmarking surveys are conducted

throughout the world to facilitate people with
management decision making at organizational level. Examples of these include the
benchmarking survey by SHRM in the US
and WERS survey in UK.
In Pakistan, SHRM Forum Pakistan has taken the initiative to carry out this benchmarking study for the HR practices within the organizations. The main objective of this study
is to measure key metrics in staffing, developing, rewarding and retaining effective
workforce in sample organizations and also
establish workforce productivity benchmarks
in various sub streams of HR. The metrics
calculated in this survey, can also help the
HR professionals to measure the efficacy of
their departments and compare the performance against industry standards. They can
act as vital tools to respond to emerging organizational change initiatives and a point of
leverage to improve the contribution of HR
to the overall business. Being a fact based
decision framework, HR practitioners can
use it as an opportunity to come at the fore
front of business equation.
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The Survey
SHRM Pakistan Human Capital Benchmarking Study 2011 is an initiative of SHRM Forum Pakistan in order to collect and present
human capital metrics information across
various industries in the country.
6.
Staff turnover ratio (Involuntary)
7.
Internal to external ratio
8.
Average time to fill vacancy
9.
Compensation/revenue ratio
The questionnaire for the pilot study was designed by SHRM panel members and was
emailed to 41 members of SHRM Forum Pakistan, who were representing 32 companies.
Out of these, 17 organizations replied, yielding a response rate of 53%. As the survey
was based on individual business units rather
than group of companies, the total number
of questionnaires received were 28.
10.
Compensation/cost ratio
11.
Revenue/employee
12.
Cost/employee
13.
HCROI
14.
Training cost/employee
The survey was based on the previous fiscal

years information and collected data on human resource departments and expenses, hiring trends, compensation, and turnover. In
addition, organizational data, such as revenue, expenses and employee size, was also
obtained.
In short, the key areas of this study were few
selective metrics:
1.
HR staff to organizational staff ratio
2.
HR cost/employee
3.
Net income before tax/employee
4.
Male to female ratio
5.
Staff turnover ratio (Voluntary)
Further details of these metrics have been

provided in the Appendix A.
Scope and Limitations

The scope and limitations of the study are
discussed below:
Scope
The scope of the study is to calculate the HR
metrics mentioned above, in order to help
professionals in quantifying the performance
of HR function. These metrics constitute the
base of Human Capital Benchmarking Study.
This report, illustrating the sector and size
wise findings, has been published for all
SHRM Pakistan members and will serve as a
base for future Pan Pakistan survey.
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Limitations
1.
The pilot study data was obtained for a

small number of companies. Therefore, only size and broad-sector analysis has been performed on the data.
Further, the size brackets defined by
SHRM US proved to be inappropriate
for this pilot study because of the
small sample size. Therefore we have
merged these brackets for more accurate and reasonable results. The table
demonstrates the initial and modified
size brackets used for analysis.
the data received, most of the companies gave cumulative figures i.e. a collective figure for the number of contractual and permanent employees.
Therefore the ratios in the report are
based on "total number of employees"
rather than "Full-time Equivalent
(FTE)", for example cost/employee
has been calculated instead of
cost/FTE.
4.
Figures that were found to be inaccurate, ambiguous, or incomplete were

discarded to maintain credibility of results. For example, a considerable
amount of companies failed to provide
figures of revenue generated in their
organization. So this in return affected
revenue/employee, compensation/revenue and HCROI results, and this is
the reason for varying number of companies in different ratios.
5.
We have exempted the ratios of cost

per hire and average training hours
per employee that were initially part
of the pilot study. This was due to the
fact that more than half of the companies were not able to provide the relevant data.
6.
The report is a pilot study, based on a

small number of companies and not a
large representative sample of organizations. Therefore, the results should
be taken as guidelines rather than absolute standard.
Initial and final company size brackets
2.
3.
Initial
Modified
< 100
< 100
100 - 249
250 - 499
500 - 999
1000 - 2499
2500 - 7499
> 7500
100 - 249
250 - 499
500 - 999
> 1000
Since there are a limited number of

companies in the study, the sectors defined in the questionnaire required regrouping as a small sample size in
each sub-group can provide misleading results. Therefore, this pilot study
uses two broad sectors only manufacturing and service.
The survey was designed to calculate
separate metrics for permanent and
contractual employees. However, in
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Key Findings
The need to measure the performance of

HR functions and to use it for analysis and
strategic decision-making is increasing
every day. By showing the value of assets
or the return on investment, HR metrics
become the key to advancing the HR profession (Cohen 2003).
The SHRM Human Capital Benchmarking

studies, conducted in the US over the last
few years, have used percentiles to report
HR metrics data. Therefore, this report also
uses percentiles to show the deviation and
spread of data. In the following tables, P25
indicates 25th percentile, P50 the 50th percentile or median, while P75 presents the value of 75th percentile. The column n is
showing the number of questionnaires received from the SHRM Pakistan members.
All figures are rounded till three decimal
places.
Table 1 illustrates the overall ratios, irrespective of organizational size and sector. This
table presents a generalized picture of Pakistani market and compares the data with that
of US market, where comparable figures are
available.
Table 1: Key study areas vs. percentiles

Ratios
P25
P50
P75
Pakistani market
P25
P50
P75
US market*
HR to organizational staff
28
0.62
1.59
6.226
2,332
0.71
1.12
HR cost/employee
24
70,056
247,642
Net income before tax/employee

Male to female ratio
22
18,083
24
Staff turnover ratio (voluntary)
1.85
377,236
142,933
556,030
37
74
28
3%
6%
9%
1,634
5%
10%
19%
Staff turnover ratio (involuntary) 28

24
Internal to external hire ratio
28
0%
3%
5%
1,635
1%
4%
8%
0.000
30
0.000
45
0.111
45
2,057
20
30
45
Compensation/revenue ratio
22
0.049
0.153
0.4
Compensation/cost ratio
22
0.047
0.181
0.322
Revenue/employee
Cost/employee
22
357,143
960,750
2,015,949
22
475,367
881,092
2,904,348
HCROI
22
1.482
2.625
6.188
Training cost/employee
19
1,087
2,488
11,842
* Most of the US based data is not comparable with this pilot study as the bases of the ratios calculated in both the studies are different.
* Source: SHRM Human Capital Benchmarking Study: 2009 Executive Summary, SHRM customized Human Capital Benchmarking report.
Note: The formulae used for the calculation of these HR metrics are attached in Appendix A.
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Overall, the HR to organisational staff ration is higher in Pakistan than in the US. This ratio is lower in Pakistan than the US in the lowest quartile and significantly higher in the
highest quartile.
Almost half of the companies in Pakistan have the HR cost per employee higher than
PKR. 247,642. This shows that the HR budget has significance portion in the overall cost
of the firm and can play a vital role in the strategic and the operational policies of the
company.
The gender diversity ratio depicts that the hiring of female employees relative to male hiring is extremely low. Although companies do employ the female staff, the gender ratio at
50th percentile is 37.
The voluntary turnover ratio is relatively higher than the involuntary one. Comparing with
the US data, the turnover rate in the US is higher than the Pakistani market.
The figures show that Pakistani companies prefer external hiring system and rarely use internal hiring to fill a vacant position.
On average, companies in Pakistan take almost 30-45 days to fill a vacant position. In
comparison, 75% of US based companies take less than a months time to hire a new employee.
Overall, companies in Pakistan allocate a small portion of total revenue and operational
cost to compensate their employees.
The Human Capital Return on Investment (HCROI) ratio is an indicator of revenue generation and cost control within an organization. Higher the ROI means better output of
workforce (high revenue) while being efficient in terms of cost (particularly HR cost).
Majority of companies in Pakistan are maximizing the revenue generation despite cautious
spending on the workforce.
That amount allocated for the training of the employees is fairly low in majority of the
companies. If we see the training cost per employee in relation to HR cost per employee or
overall cost per employee, then it seems that organizations spend more on salary and benefits and spend a little percentage on personal growth and development of employees.
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Figure 1 and 2 exhibit size and sector wise

division of the data received from 28 companies dispersed all over Pakistan. Of our sample, 43% of the companies fall into manufacturing group and 57% into service one. On
the basis of size, largest number of company
lies in the 100 to 249 and the 1000 and above
brackets, which is 25% each. Preceding that

are 18% in 500 to 999 and 250 to 499 ranges;
and the remaining lie in fewer than 100
bracket with 16% of the companies.
HR employees in companies
Tables 2 and 3 report HR staff to organizational staff ratios. Discussing the size wise
distribution, smaller companies i.e. those
with fewer than 100 employees, have a larger
proportion of HR staff in their organization.
Results for the manufacturing companies in
Pakistan illustrate that they have fewer HR
employees compared to service ones.
Comparing results with the US market,

smaller companies in the US also have a
larger proportion of HR staff than larger US
companies in the US. However, small US
companies have lesser HR employees per
organizational staff compared to Pakistani
market.
12 | Page
Table 2: Size bracket vs. HR staff to organizational staff ratio

Size brackets
P25
P50
P75
P25
Pakistani market
P50
P75
US market*
Fewer than 100
3.846
6.818
8.333
267
1.67
3.03
6.67
100 to 249
0.541
0.820
1.587
203
0.91
1.36
1.92
250 to 499
500 to 999
0.217
0.546
0.8
115
0.7
1.01
1.33
0.780
1.894
2.232
78
0.71
0.98
1.31
1000 or more
0.8
1.0
6.226
*The last 3 brackets of SHRM Human Capital Benchmarking Study US has been merged for this pilot study, therefore that data is not comparable
* Source: SHRM Human Capital Benchmarking Study: 2009 Executive Summary, page 7
Table 3: Sector vs. HR staff to organizational staff ratio

Sector brackets
P25
P50
P75
Manufacturing
12
0.622
1.0
1.894
Service
16
0.832
2.233
6.226
HR cost/employee
The HR cost per employee is listed in Table

4 and 5. The HR cost per employee is lower
in larger organizations as compared to smaller ones (Table 4).
Table 4: Size bracket vs. HR cost/employee
Also, service oriented companies have lower

HR cost per employee compared to the manufacturing ones (Table 5), with the median
spending for service based companies reported at PKR 286,041 versus PKR 347,357
for manufacturing.
Size brackets
P25
P50
P75
Fewer than 100
363,889
377,236
607,909
100 to 249
106,808
216,071
451,351
250 to 499
70,056
236,133
474,319
Table 5: Sector bracket vs. HR cost/employee
500 to 999
222,613
347,357
797,448
Sector brackets
P25
P50
P75
1000 or more
19,694
44,444
318,378
Manufacturing
Service
11
13
145,043
38,373
347,357
286,041
451,351
377,236
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Net income before tax (NIBT)/employee

Table 6 demonstrates profit generated per
employee by size no specific trends have
emerged from this table and the overall sample size is too small to comment on individual figures.
Table 7 represents the net profit before tax

per employee for manufacturing and service
oriented organizations. The ratio is significantly higher for service based companies
with the reported median values of the former being eight times that of the latter.
Table 6 Size bracket vs. NIBT/employee

Size brackets
P25
P50
P75
Fewer than 100
(147,705)
18,083
100 to 249
684,649
1,095,238 6,359,649
250 to 499
(122,951)
456,522
585,323
500 to 999
(1,236,045)
38,986
556,030
1000 or more
17,462
51,741
142,933
Table 7: Sector bracket vs. NIBT/employee

Sector brackets
P25
P50
P75
Manufacturing
11
51,741
456,522
Service
11
17,462
411,504
6,359,649
Gender diversity
Table 8 and 9 represent gender diversity ratios. Overall, larger organizations have poorer male to female ratios i.e. proportional to
the total number of employees in an organization, there are fewer women working in
larger organizations. For example, the 75th
percentile ratio for the fewer than 100 and the
1000 or more category are 14 and 249 respectively.
The data for manufacturing and service companies is listed in Table 9. The trends show
that in Pakistan per female there are more
men employed in manufacturing companies
compared to the service ones.
Table 8: Size bracket vs. gender diversity ratio

Size Brackets
P25
P50
P75
Fewer than 100
14
Sector brackets
100 to 249
37
40
61
Manufacturing
11
41
79
267
250 to 499
15
21
43
Service
13
15
59
500 to 999
74
84
267
1000 or more
41
249
Table 9: Sector bracket vs. gender diversity ratio

P25
P50
14 | Page
P75
Recruitment in organization
Staff turnover ratio (Voluntary and Involuntary)
Tables 10-13 represent voluntary and involuntary turnover rate. Overall, it was noted in
Table 1 that voluntary turnover is higher than
involuntary turnover in Pakistan and US. No
patterns emerge regarding organizational size
and turnover in Pakistan. However referring
to Table 1 the US data gives similar results to
our findings, but not to forget, our sample
size is very minute compared to more than
1600 US companies, and therefore their figures tend to be more reliable than our results.
Table 10: Size bracket vs. voluntary staff turnover ratio
Sector wise results show lesser turnover for

manufacturing companies, particularly in
case of voluntary turnover.
Table 12: Size bracket vs. involuntary staff

turnover ratio
Size brackets
P25
P50
P75
Fewer than 100
0%
0%
0%
100 to 249
3%
5%
16%
250 to 499
1%
4%
5%
500 to 999
1000 or more
5
7
1%
2%
2%
4%
5%
5%
Size brackets
P25
P50
P75
Fewer than 100

100 to 249
4
7
0%
3%
6%
8%
8%
11%
250 to 499
5%
6%
8%
500 to 999
4%
8%
22%
Table 13: Sector bracket vs. involuntary staff turnover ratio
1000 or more
1%
6%
8%
Sector brackets
P25
P50
P75
Manufacturing
12
0%
4%
6%
Service
16
2%
4%
6%
Table 11: Sector bracket vs. voluntary staff turnover ratio

Sector brackets
P25
P50
P75
Manufacturing
12
3%
6%
25%
Service
16
6%
8%
11%
15 | Page
Internal to external hire ratio
Tables 14 and 15 exhibit internal to external

hire ratio for size and sector wise division.
The figure of 0.000 indicates that internal
hiring wasnt practiced at all. Many organizations, irrespective of the organizational size,
do not practice internal hiring, as reflected by
the P25 column in Table 14 and 15. Results of
the top quartile of manufacturing companies
indicate that they use internal hiring more
than external.
Table 14: Size bracket vs. internal to external
hire ratio
Size brackets
P25
P50
P75
Fewer than 100 3

7
100 to 249
3
250 to 499
0.000
0.000
0.000
0.000
1.333
0.750
0.000
0.000
0.052
500 to 999
0.000
0.000
0.094
1000 or more
0.000
0.111
0.546
Tables 16 and 17 present figures in days, which

indicate average time to fill a vacant position.
No patterns emerge from our sample of 28
companies at this pilot study stage.
This could be an anomaly in the findings because of small sample size, or a reflection of
greater use of internal labor markets in manufacturing organizations in Pakistan.
Table 15: Sector bracket vs. internal to external

hire ratio
Sector brackets
P25
P50
P75
Manufacturing
12
0.000
0.111
3.132
Service
12
0.000
0.000
0.750
Table 16: Size bracket vs. average time to fill vacancy

Size brackets
P25
P50
P75
Fewer than 100
30
30
45
100 to 249
45
60
90
250 to 499
20
22
30
500 to 999
24
30
45
1000 or more
30
45
90
Table 17: Sector bracket vs. average time to fill vacancy

Sector brackets
P25
P50
P75
Manufacturing
12
30
45
45
Service
16
26
45
73
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Compensation
Compensation / revenue ratio and Compensation /cost ratio
Tables 18 and 20 display compensation to

revenue ratio and compensation to cost ratio
with regard to organizational size. Overall,
based on Table 18, it can be summarized that
smaller organizations are spending more on
compensation as compared to larger organizations. However, the final bracket of 1000
or more employees does not follow this pattern, perhaps because of the particular nature
of organizations in our pilot study sample.
No patterns emerge from Table 20.
Table 18: Size bracket vs. compensation/revenue ratio

Size brackets
P25
P50
P75
Fewer than 100
0.317
0.400
0.633
100 to 249
0.112
0.161
1.642
250 to 499
0.036
0.065
0.625
500 to 999
0.037
0.049
0.259
1000 or more
0.147
0.252
0.409
In Tables 19 and 21, it is noted that manufacturing companies are spending less on compensation than service sector. This can be a
reflection of the labor intensive work in
many service industries compared to manufacturing where automated production may
decrease this compensation ratio.
Table 20: Size bracket vs. compensation/cost ratio

Size brackets
P25
P50
P75
Fewer than 100
0.005
0.322
2.497
100 to 249
0.067
0.181
0.390
250 to 499
500 to 999
3
5
0.039
0.047
0.075
0.067
0.657
0.322
1000 or more
0.213
0.286
0.586
Table 21: Sector bracket vs. compensation/cost ratio

Sector brackets
P25
P50
P75
Table 19: Sector bracket vs. compensation/revenue ratio
Manufacturing
11
0.047
0.075 0.308
Sector brackets
P25
P50
P75
Service
11
0.181
0.322 0.586
Manufacturing
11
0.037
0.065
0.301
Service
11
0.161
0.400
0.625
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Organizational data
Revenue/employee and Cost/employee
Tables 22 and 23 present results for revenue

per employee, and Tables 24 and 25 present
results for cost per employee. As in the previous section, no patterns emerge based on
organizational size. However, manufacturing
companies make more money per employee
than service one, with the median revenue
per employee in the manufacturing sector
more than twice that of service (Table 23).
Table 22: Size bracket vs. revenue/employee ratio
Table 24: Sector bracket vs. cost/employee ratio
Size brackets
Fewer than 100
357,143
960,750
1,113,889
100 to 249
951,327
1,539,683
2,559,786
250 to 499
631,917
1,926,230
3,356,522
500 to 999
1,292,962
2,015,949
9,354,267
1000 or more
75,815
134,252
848,554
P25
Comparing this with the cost per employee,

this cost is two to three times higher in manufacturing costly assembly lines and highly
expensive operations in manufacturing can be
a key reason for this difference.
P50
P75
Size brackets
Fewer than 100

100 to 249
P25
P50
P75
3 243,477
1,095,806
80,661,426
250 to 499
6 588,496
3 607,757
634,921
1,811,475
6,798,246
2,904,348
500 to 999
5 961,290
1,626,794
8,798,237
1000 or more
105,255
745,622
11,273
Table 23: Sector bracket vs. revenue/employee ratio
Table 25: Sector bracket vs. cost/employee
Sector brackets
P25
Sector brackets
P25
P50
P75
Manufacturing
11
960,750 1,959,016 6,125,687
Manufacturing
11
881,092
1,918,033
4,655,870
Service
11
134,252 848,554
Service
11
475,367
634,921
1,626,794
P50
P75
1,539,683
18 | Page
HR expense data
HCROI
Tables 26 and 27 represent the human capital
return on investment ratio is the marker of effi- Table 26: Size bracket vs. HCROI ratio
n
P25
P50
ciency of workforce in terms of dollar invest- Size brackets
3
1.051
1.069
ment and return on investment. If the ratio is Fewer than 100
6
1.162
4.397
one, then the company just balances the overall 100 to 249
3
1.078
2.638
cost and revenue (break even). Beyond 1, it is 250 to 499
5
1.457
1.744
income. Higher the HCROI, higher is the reve- 500 to 999
nue generation capability or effective cost con- 1000 or more
5
1.736
2.472
tainment strategy of the company. Overall, the
manufacturing sector has higher HCROI compared to the service oriented companies.
Table 27: Sector bracket vs. HCROI ratio
Workforce in manufacturing concerns is labor
oriented and are paid conservatively, hence
their cost is efficient, due to which ROI is better. The service oriented industry requires less
labor and more technology/knowledge
oriented workforce. Despite being less in
number, they are better paid, hence cost is
high therefore ROI is lower.
Sector brackets
Manufacturing
Service
P25
P75
2.180
4.654
3.067
2.625
7.823
P50
P75
11 2.625
3.067
7.677
11 1.482
1.744
4.397
Training/employee
Table 28: Size bracket vs. training/employee
Tables 28 and 29 list the training/employee ratio by size and sector respectively. With a little
deviation, the data illustrates that size of the
companies is somewhat directly proportional
to amount allocated for training per employee.
The median value for investment in training
for fewer than 100 and 1000 or more brackets
are PKR 1,136 and 19,598 respectively. Table
29 indicates that that service oriented companies are investing more in training as compared to manufacturing ones, with median
values of PKR 8,140 and 1,087 respectively.
Size brackets
P25
P50
P75
Fewer than 100
1,136
11,111
100 to 249
1,639
11,842
250 to 499
1,087
1,124
8,140
500 to 999
2,488
17,302
28,708
1000 or more
5,085
19,598
33,333
Table 29: Sector bracket vs. training/employee

Sector brackets
P25
P50
P75
Manufacturing
1,087
1,136
2,703
Service
10
5,085
8,140
28,708
19 | Page
Conclusion
The objective of this benchmarking study is
to highlight the importance of quantifying the
HR functions in order to make quality decisions. The pilot study is the first step towards
achieving this goal and to help in formalizing
the HR system of Pakistan.
Due to small sample size, the organizational
size and sector brackets have been merged
and the reliability of the data has also been
decreased. Moreover, the trends shown
through the ratios can partially depict the
overall picture of HR system in Pakistan. The
extent to which these results are representative of the entire population and can be generalized is questionable but, they serve as a
first step to fill an enormous gap in the availability of data in HR in Pakistan.
All the stated issues will be covered in the

next phase of the study and the Pan Pakistan
survey will minimize the error while maximizing the accuracy rate. The experience
gained through this pilot study will be of
immense importance while designing the
next questionnaire and preparing future reports.
To conclude, we hope that many of the trends
outlined in this document and the planned
Pan Pakistan study will help the members of
SHRM Forum Pakistan to make constructive
decisions in future.
20 | Page
Appendix A
Percentile
The percentile is the percentage of responses that have values less than or equal to that particular
value. For example, when data are arranged from lowest to highest, the 25th percentile is the
point at which 75% of the data are above it and 25% are below it. Conversely, the 75th percentile
is the point at which 25% of the data are above it and 75% are below it.
Median (50th percentile)

The median is the midpoint of the set of numbers or values arranged in ascending order. It is recommended that the median is used as a basis for all interpretations of the data when the average
and median are discrepant.
Total HR Staff
Total HR staff is the actual number of employees supporting the HR function for an organizational level.
HR to organizational staff ratio

The HR to organizational staff ratio provides a more manageable way to compare HR staffing
levels between organizations. It represents the number of HR staff per 100 employees supported
by HR in the organization. The number is calculated by dividing the number of HR FTEs by the
total number of FTEs in the organization and multiplying the outcome by 100:
HR to organizational staff ratio =
HR cost per employee =
Total number of HR employees

Total number of employees in an organization
x 100
HR cost
Net income before tax

Net income before tax is the amount of revenue received during the fiscal year minus the operating expenses during the fiscal year.
21 | Page
Net income before tax per employee

Net income before tax (NIBT) per employee is the net income before tax divided by the total
number of employees in an organization.
NIBT per employee =

NIBT
Male to female ratio =
Total number of male employees in an organization

Total number of female employees in an organization
Annual Voluntary Turnover Rate

Annual voluntary turnover rate is the rate at which employees enter and voluntarily leave a company in a given fiscal year. To calculate annual voluntary turnover, first calculate the voluntary
turnover for each month by dividing the number of voluntary separations during the month by
the average number of employees during the month and multiplying by 100. The annual voluntary turnover rate is then calculated by adding the 12 months worth of voluntary turnover percentages together.
Annual voluntary turnover rate =
Voluntary turnover
x 100
Average number of employees during the month
Annual Involuntary Turnover Rate

Annual involuntary turnover rate is the rate at which employees enter and involuntarily leave a
company in a given fiscal year. An involuntary termination occurs, for example, when the organization asks the employee to leave the company. Such terminations usually occur as a result of
poor performance, layoffs or other reasons. To calculate annual involuntary turnover rate, first
calculate involuntary turnover for each month by dividing the number of involuntary separations
during the month by the average number of employees during the month and multiplying it by
100. The annual involuntary turnover rate is then calculated by adding the 12 months worth of
turnover percentages together.
Annual Involuntary turnover rate =
Involuntary turnover
x 100
Average number of employees during the month
22 | Page
Internal to external hire =
Number of Internal hire

Number of External hire
Time-to-fill
Time-to-fill represents the number of days from when the job requisition was opened until the
offer was accepted by the candidate. This number is calculated using calendar days, including
weekends and holidays.
Compensation to revenue ratio =
Compensation to cost ratio =
Total compensation
Revenue
Total compensation
Operating cost (HR + Non HR)
Revenue per employee

Revenue per employee is the total amount of revenue received during an organizations fiscal
year divided by the total number of employees in an organization.
Revenue per employee =

Revenue
Total no of employees in an organization (Permanent+ Contractual)
Cost per employee =
Total Operating cost (HR + Non HR)

Human capital return on investment (HCROI)
HCROI =
Revenue (operating cost compensation)

Compensation
Training cost per employee =
Training cost
23 | Page
References
Boudreau, John W., Ramstad, Peter M. (1998), Human Resource Metrics: Can Measures Be
Strategic?, WP 10/1998, CAHRS Working Paper Series, Cornell University ILR School and
Personnel Decisions International.
Boudreau, John W. (1998), Strategic Human Resource Management Measures: Key Linkages
and the PeopleVantage Model, WP 28/1998, CAHRS Working Paper Series, Cornell University
ILR School.
Boudreau, John W. and Ramstad, Peter M. (2001), "Beyond Cost-per-Hire and Time to Fill:
Supply-Chain Measurement for Staffing", WP 16/2001, CAHRS Working Paper Series, Cornell
University ILR School and Personnel Decisions International.
Cohen, Debra J. (2003), HR metrics: a must - Future Focus, HR Magazine, Vol. 48, No. 2, [online] Available from http://findarticles.com/p/articles/mi_m3495/is_2_48/ai_97873187/, [Accessed 21st July 2011]
Dooney, John, Blackmon, Olivia, Williams, Steve (2009), SHRM Human Capital Benchmarking Study - 2009 Executive Summary, SHRM Research Department USA
Scribd
(2011),
Flyer-SHRM-Forum-Pakistan,
[online]
Available
from
http://www.scribd.com/doc/62256847/SHRM-Forum-Pakistan, [Accessed 24th July 2011]
SHRM, About SHRM, [online] Available from http://www.shrm.org/about/, [Accessed 24th July
2011]
24 | Page
Project Team Members:
Supervisors:
Durria Anjum, Student, FAST School of

Business, NUCES, Islamabad
Dr Sadia Nadeem MCIPD, Head/ Associate

Professor, FAST School of Business, NUCES,
Islamabad
Misbah Ul Ain, Student, FAST School of

Business, NUCES, Islamabad
Mr. Zahid Mubarak, Leader, SHRM Forum Pakistan
25 | Page

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SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

The Findings ..................................................................................................................................10

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

Table 2: Size bracket vs. HR staff to organizational staff ratio ....................................................13

Table 3: Sector vs. HR staff to organizational staff ratio.............................................................13

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

Table 25: Sector bracket vs. cost/employee ..................................................................................18

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

The Society for Human Resource Management (SHRM),

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

About SHRM Forum Pakistan

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

The Human Capital Survey

HR benchmarking surveys are conducted

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

Staff turnover ratio (Involuntary)

Internal to external ratio

Average time to fill vacancy

The survey was based on the previous fiscal

HR staff to organizational staff ratio

Net income before tax/employee

Male to female ratio

Staff turnover ratio (Voluntary)

Further details of these metrics have been

Scope and Limitations

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

The pilot study data was obtained for a

Figures that were found to be inaccurate, ambiguous, or incomplete were

We have exempted the ratios of cost

The report is a pilot study, based on a

Initial and final company size brackets

Since there are a limited number of

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

The need to measure the performance of

The SHRM Human Capital Benchmarking

Table 1: Key study areas vs. percentiles

Net income before tax/employee

Staff turnover ratio (voluntary)

Staff turnover ratio (involuntary) 28

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

Figure 1 and 2 exhibit size and sector wise

brackets, which is 25% each. Preceding that

Comparing results with the US market,

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

Table 2: Size bracket vs. HR staff to organizational staff ratio

Fewer than 100

Table 3: Sector vs. HR staff to organizational staff ratio

The HR cost per employee is listed in Table

Also, service oriented companies have lower

Fewer than 100

Table 5: Sector bracket vs. HR cost/employee

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011

Net income before tax (NIBT)/employee

Table 7 represents the net profit before tax

Table 6 Size bracket vs. NIBT/employee

Fewer than 100

Table 7: Sector bracket vs. NIBT/employee

Table 8: Size bracket vs. gender diversity ratio

Fewer than 100

Table 9: Sector bracket vs. gender diversity ratio

SHRM Forum Pakistan - Human Capital Benchmarking Study: 2011