Benefit to compensation ratio calculations

As an essential building block of the compensation formula, benefits ratios will differ among Engineering,
supervisors/staff and hourly wage earners such as production personnel. The basic formula for all three is:

(Averaged benefits + “perks” + bonuses) divided by (Averaged hourly wages for one year)

Getting started: First thing! Make a copy of the original spreadsheet in case you need to restore a deleted
formula.

Enter data in the gray cells only. Left-clink on cell E4 (on Line 1) and enter management personnel's average
yearly salary. Then enter the average yearly insurance costs in cell E5 (Line 2); enter average yearly
incentive and performance pay in Line 3 (cell E6); In Line 4, (cell E7) enter average yearly cost for retirement
plans, including company contributions and maintenance fees the company pays.

Repeat this process for supervisory/staff personnel, and other non-management personnel on yearly salary,
entering figures in Lines 6 - 9 (cells E10 - E13). Repeat the process again for hourly wage earners, entering
the average hourly wage in Line 11 (cell E16) and non-wage compensation costs in Lines 12 - 14
(cells E17 - E19).

Use the "BR" benefit ratio in Line 16 for worksheets computing absenteeism, employee turnover and
productivity costs. The peach colored results cells will automatically calculate and display the ratios. The
blue colored results cells in Lines 19, 22 and 25 will automatically calculate total compensation costs for
these groups. These figures can be used in Worksheet 2: Costs of safety and ROI.

Line
1 MS Average manager's salary, annual $ -
2 Insurance costs: Life, medical, dental, disability per year $ -
3 Bonuses, stock options, other incentives value per year $ -
4 Retirement plan: maintenance and contributions costs per year $ -
5 MB Management benefits ratio #DIV/0!

6 SS Average staff/supervisor salary, per year $ -

7 Insurance costs: Life, medical, dental, disability per year $ -
8 Bonuses, stock options, other incentives value per year $ -
9 Retirement plan: maintenance and contributions costs $ -
10 SB Staff/supervisor benefits ratio #DIV/0!

11 PS Average production personnel wage, per hour $ -

12 Insurance costs: Life, medical, dental, disability per year $ -
13 Bonuses, stock options, other incentives value per year $ -
14 Retirement plan: maintenance and contributions costs $ -
15 PB Production personnel benefits ratio #DIV/0!

16 BR Benefit ratio, averaged organization-wide #DIV/0!

Compensation cost calculations

Salaries, wages, benefits ratios and compensation costs per hour have been automatically entered into
lines 17-25 and calculated to hourly figures, using figures entered into lines 1-16.

Use the compensation costs EC, SC and PC (automatically calculated and shown in the yellow cells) when
calculating the cost of poor quality and its effects on profits in Worksheet 2.
17 MS Average manager's salary, hourly $ -
18 MB Manager's benefits ratio, from line 5 #DIV/0!
19 MC Management compensation cost per hour, averaged #DIV/0!

20 SS Average staff member/supervisor salary, hourly $ -

21 SB Supervisor benefits ratio, from line 10 #DIV/0!
22 SC Supervisor compensation cost per hour, averaged #DIV/0!

23 PS Average production personnel wage, per hour $ -

24 PB Production personnel benefits ratio, from line 15 #DIV/0!
25 PC Production personnel compensation cost per hour, averaged #DIV/0!
 Charting costs of safety problems and improvements

This series of tables tracks time costs as they were defined in Worksheet 1, and adds them to the cost of
planning a new program, fixing problems, replacing items, retraining and various related costs.

Getting started:
First thing! Make a copy of the original spreadsheet in case you need to restore a deleted formula.

1. Print a copy of pages 1 and 2 to plan your approach and jot down figures for entering in the spreadsheet.

2. Keep your methods for recording numbers of hours etc. consistent! This helps ensure the results
convincingly represent the effects of strategic change.

3. Up to six sets of measurements are recorded in the Step 2 Table. Be consistent! Trends--gradual change--
are more valuable than short term measurements as they more accurately represent change. Five or six of
these trend measurements should be taken for assessment. The graphs will automatically visualize data as
you enter it.

4. If you want to track the cost savings on solving one recurring problem, you can use the totals to assess
Return on Investment (ROI) on row 90 (below Line 40.)

Worksheet 2, Step 1
Costs of safety problems
Line Personnel time Code Cost
1 Management compensation per hr. MC $ -

2 Supervisor / staff comp. per hour SC $ -

3 Personnel compensation per hour PC $ -

Monthly/cycle sales-to-profit ratio Value

4 Sales, per month or cycle $ -

5 Profit, per month or cycle $ - Instructions:

Property and materials lost Cost
Only enter data in the pastel colored cells
6 Vehicle damage $ - (not the dark red title or white cells)! The
Total and Cost cells automatically calculate data as
7 Fire losses $ - you enter it. These results cells then send the
calculated data to tables for automatically
8 Name $ - generating charts and graphs. Follow the
instructions in this yellow block to enter, line by
9 Name $ -
line, the data needed to assess results.
10 Name $ -
Line 1: In the blue cell, enter the figure from
11 Name $ - the blue cell MC on Line 19 in Worksheet 1.

12 Name $ - Line 2: In the blue cell, enter the figure from

the blue cell SC on Line 22 in Worksheet 1.
13 Name $ -
Line 3: In the blue cell, enter the figure from
the blue cell EC on Line 25 in Worksheet 1.

Line 4: In the light green cell, enter your

 Line 2: In the blue cell, enter the figure from
the blue cell SC on Line 22 in Worksheet 1.

Line 3: In the blue cell, enter the figure from

14 Total property & material costs $ - the blue cell EC on Line 25 in Worksheet 1.
Time costs from incidents Hours Cost Line 4: In the light green cell, enter your
organization's sales for the time period.
15 Management personnel time lost 0 $ -
Line 5: In the light green cell, enter your
16 Supervisor personnel time lost 0 $ -
organization's profit for the time period.
17 Hourly wage personnel time lost 0 $ -
Lines 6-13: In the light pink cells, enter the
18 Total time costs $ - names and costs for material, equipment
and/or items that were repaired or replaced
Other costs of safety incidents Cost after incidents.

19 Fines $ - Line 15: In the light gray cells, enter the time,
in decimals, that hourly wage personnel lost
20 Insurance rates increases $ - through incidents, including time for reporting
and other associated administrative tasks.
21 Name $ -
Line 16: In the light gray cells, enter the time,
22 Name $ - in decimals, that management personnel lost
through incidents, including time for reporting
23 Name $ - and other associated administrative tasks.
24 Total (other) incident costs $ -
Line 17: In the light gray cells, enter the time,
Return on Investment (ROI) in decimals, that supervisory personnel and
staff lost through incidents, including time
Time for prevention - improvements Hours Cost for reporting.

25 Management personnel 0 $ - Lines 19-23: In the light brown cells, enter the
names and costs of other consequences of
26 Production personnel 0 $ - incidents, such as fines, insurance rate
increases, etc.
27 Supervisors / staff 0 $ -
Line 25: In the light lavender cells, enter the
28 Total time costs: correction $ - time used by management personnel for
prevention activities, including program
Other costs: prevention - improvements Cost development, planning, training, auditing etc.
29 Outside services $ -
Line 26: In the light lavender cells, enter the
30 Consultants $ - time used by supervisors and staff for
prevention activities, including planning,
31 Machine guards $ - training, auditing and others.

32 Protective equipment $ - Line 27: In the light lavender cells, enter the
time that hourly wage / production personnel
33 Replacement chemicals $ - used for prevention activities, including
planning, training, auditing and others.
34 Name $ -
Line 29-39: In the peach colored cells, name
35 Name $ - and enter costs for equipment, materials and
other costs for preventions and safety
36 Name $ -
improvements, including personal protective
37 Name $ - devices.

38 Name $ -

39 Name $ -

40 Total (other) correction cost $ -

 Worksheet 2. Step 2

Enter data in the colored cells within this table at the end of each month or cycle. Begin by naming the month
or cycle in the top row. Then enter the totals from the corresponding lines from the worksheet above: the left
column lines numbers match. Graphs and charts will automatically express the data as it is being entered.

NOTE: It is not necessary to enter all the individual data in the pink and gray cells unless you want to track
monthly itemized quality costs. For non-itemized ratios, enter data in this table's Lines 4, 5, 14, 18, 24, 28
and 40 only.
Line Factors Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6
4 Sales $ - $ - $ - $ - $ - $ -

5 Profit $ - $ - $ - $ - $ - $ -
Sales-to-profit ratio #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
6 Vehicle damage
7 Fire losses
8 Name
9 Name
10 Name
11 Name
12 Name
13 Name
14 Total property & material costs $ - $ - $ - $ - $ - $ -

18 Total time costs $ - $ - $ - $ - $ - $ -

19 Fines
20 Insurance rates increases
21 Name
22 Name
23 Name
24 Total (other) incident costs $ - $ - $ - $ - $ - $ -
Total cost of safety incidents $ - $ - $ - $ - $ - $ -

28 Time spent correcting causes $ - $ - $ - $ - $ - $ -

30 Consultants
31 Machine guards
32 Protective equipment
33 Replacement chemicals
34 Name
35 Name
36 Name
37 Name
38 Name
39 Name
40 Total (other) correction cost $ - $ - $ - $ - $ - $ -
Total cost of safety corrections $ - $ - $ - $ - $ - $ -

Return on investment: #DIV/0! to 1 Days to return investment:

Do not enter data in these cells! They automatically calculate, and send to the chart below,
data that has been entered in the table above.
Cost of
Month/cycle safety problems Sales Profit
Cycle 1 $ - $ - $ -
Cycle 2 $ - $ - $ -
Cycle 3 $ - $ - $ -
Cycle 4 $ - $ - $ -
Cycle 5 $ - $ - $ -
Cycle 6 $ - $ - $ -
Total property & Total (other)
Month/cycle material costs Total time costs incident costs
Cycle 1 $ - $ - $ -
Cycle 2 $ - $ - $ -
Cycle 3 $ - $ - $ -
Cycle 4 $ - $ - $ -
Cycle 5 $ - $ - $ -
Cycle 6 $ - $ - $ -

Cost of safety and profit on ____(time frame)_____

$1

Cost of
safety prob-
lems
$1

Profit

$-
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6

Cost of safety and profit as percent of sales

$1

Total prop-
ercent of sales

erty & ma-

terial costs
$1

Profit
ratio
 Total prop-

Percent of sales
erty & ma-
terial costs
$1

Profit
ratio

$-
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6

Itemized property and material costs of incidents

$12

Vehicle damage
$10
Fire losses

$8 Name

Name
$6
Name

$4 Name

Name
$2
Name
$-
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6

Costs of safety problems for __(time frame)__

$1

Total prop-
erty & ma-
terial costs

Total time
$1
costs

Total (other)
incident
costs

$-
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6
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Cost of
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Total prop-
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 Total prop-
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Total prop-
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Total (other)
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