As organizations pay close attention to expenses in these uncertain economic times, they're seeking to quantify the total cost of human capital to meet financial targets instead of missing them. Hewitt Associates, a global outsourcing and consulting firm, has developed a proprietary HR activity-based analysis to collect and analyze all costs of delivering human resources to employees.

Hewitt's HR activity-based cost assessment includes an analysis and inventory of HR operating costs (such as labor, materials, and vendors), and capital costs (such as real estate and investments in HR technology or allocations for the HR component of ERP systems). In addition, it provides a distribution of costs across HR activities and within an activity, and identifies the type of work being performed for each activity.

"Companies rarely have a comprehensive or accurate view of their HR costs and few, if any, can quantify their total investment in people management practices," said Kirt Davis, Hewitt HR Effectiveness consultant. "Decision makers understand that their ability to make a wise, informed choice depends on the quality of the facts used to make the decision. To reduce costs, employers need to know their current costs. To show a greater return on investment, they need to have a complete picture of their current HR investment."

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