What is cost planning
The cost planning feature in the Workforce Planning app helps you understand personnel costs during headcount planning. This feature supports HR administrators and finance leaders in making informed resource allocation decisions, helping to avoid issues like overstaffing, understaffing, hiring freezes, or layoffs.When you set up a planning cycle, you can incorporate cost assumptions as a plan administrator. This provides forecasts for the costs of both filled and unfilled positions, with target costs visible throughout the planning process.
Set up position cost assumptions during cycle creation
During cycle creation, you can set up position cost assumptions under the Cost assumptions step. You need the following metrics:
| Metric | Explanation |
| Main currency | Determines which currency displays costs. |
| Exchange rates | Determines the exchange rates for your organization's currencies. |
| Position cost | The system calculates the position cost automatically based on the following:
|
| Salary multiplier | The salary multiplier accounts for additional personnel costs like social contributions. It helps factor in expenses such as taxes, insurance, and benefits.
|
| Monthly fixed cost |
Monthly fixed costs are benefits independent of salary. For annual costs, divide by 12. Example: If a gym membership is €30 monthly and public transit is €40 monthly, the monthly fixed cost is €70. |
| Existing positions | The number of positions in your Active Positions list. The system adds it automatically. |
| Estimated cost of existing positions | Applies cost assumptions (salary multiplier and fixed monthly costs) to all existing positions to estimate their total cost. The system adds it automatically. |
Consider cost assumptions during the planning cycle
In a planning cycle, the system initially estimates position costs using target costs. The system then updates these estimates with actual costs once you hire employees. The position details drawer within the planning cycle, under Target position costs, provides a view of this information for each position.
| Metric | Explanation |
| Annual salary | The target annual salary for the position. If not set, it defaults to the salary band mid-point of the target job. |
| Pro-rata salary |
The target pro-rata salary for the position, based on target FTE. Formula: Pro-rata salary = Annual Salary x Target FTE |
| Salary multiplier | Set during cycle creation. |
| Fixed monthly cost | |
| Total loaded cost |
The annual loaded cost for a position. Formula: Total loaded cost = Pro-rata salary x (1 + Salary multiplier) + (Fixed monthly costs x 12) |
| Months worked in fiscal period | The duration in months that a position is filled, calculated from the start date within the defined fiscal period.Example: Start date = Jan 1, 2025. Fiscal period = 2025 |
| Total loaded costs in fiscal period |
Calculates the total loaded cost for a position, considering only the months worked within the fiscal period. Formula: Total loaded costs in fiscal period = Total loaded costs (for a full year) x (Months worked in fiscal period / 12) |
Once you select an employee, the system automatically fills the Actual position costs based on the added data.
Example calculation
The following example illustrates the target and actual position costs for a filled position.
Target position costs
| Metric | Example | Explanation |
|
Salary band min Salary band mid Salary band max |
90,000€ 110,000€ 130,000€ |
Salary band data is based on the target job. |
| Target salary | 120,000€ | The target salary can be different from the salary band. |
| Target FTE | 1.00 | - |
| Target Pro-rata salary | 120,000€ |
Formula: Target Pro-rata salary = Target Salary x Target FTE (for a full year, based on FTE)
|
| Salary multiplier | 20% | Shown as a percentage that the system adds to the salary when computing costs. |
| Fixed monthly costs | 100€ | - |
| Target Total loaded costs | 145,200€ | Formula: Target Total loaded costs = Target Pro-rata salary x (1 + Salary multiplier) + (Fixed monthly costs x 12) |
| Months worked in fiscal period | 12 | Number in months, calculated based on the start date and the fiscal period. In this example: Start date = Jan 1, 2025. Fiscal period = 2025 |
| Target Total loaded costs in fiscal period | 145,200€ | Formula: Target Total loaded costs in fiscal period = Total loaded costs (for a full year) x (Months worked in fiscal period / 12) |
Actual position costs
| Metric | Example | Explanation |
| Actual salary | 125,000€ | - |
| Actual FTE | 0.80 | - |
| Actual Pro-rata salary | 100,000€ | Formula: Actual Pro-rata salary = Actual Salary x Actual FTE (for a full year, based on FTE) |
| Actual start date | April 1st, 2025 | - |
| Salary multiplier | 20% | Shown as a percentage that the system adds to the salary when computing costs. |
| Fixed monthly costs | 100€ | - |
| Total loaded costs (for a full year) | 121,200€ | Formula: Total loaded costs (for a full year) = Pro-rata salary x (1+% multiplier) + Fixed costs |
| Months worked in fiscal period | 9 | Number in months, calculated based on the start date and the fiscal period. In this example: Start date = Apr 1, 2025. Fiscal period = 2025 |
| Total loaded costs in fiscal period | 90,900€ | Formula: Total loaded costs in fiscal period = Total loaded costs (for a full year) x (Months worked in fiscal period / 12) |