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Compensation Analytical Procedures

This template computes a variety of ratios for analyzing compensation expense, including a comparison of expected salary expense to the actual salary expense.

Entering Data

On the Salaries worksheet, there are several input rows to enter salary data at a disaggregated level (that is, by employee group rather than the company as a whole). That might be appropriate if, for example, (a) different merit pools apply to different employee groups (for example, differing grade levels) or (b) fluctuations in wages or headcount are significantly different from group to group. For each employee group (row), salary information may be entered for the most recent one to three year period. Only the current year could be input, but the majority of the analytics will not calculate without the data from the previous years. Also, for some of the analytics to calculate, the merit increase percentage must be input for each merit pool. There is also a section at the bottom of the worksheet to enter benefits information at an aggregated level for the same three year period.
The Headcount worksheet is used to compute average headcount for the period. On this worksheet, select the level of detail based on the significance and frequency of headcount changes during the period and your level of precision. Entering data monthly or quarterly increases the precision of the calculation. For example, if there was a significant change in headcount during the year due to one major event (high significance and low frequency), entering data monthly or quarterly provides greater precision. If variability in headcount is low due to smaller changes or frequent, ratable changes throughout the period, selecting a "Semi-annual" or "Annual" input frequency may provide adequate precision. Once the level of detail has been selected from the dropdown arrow, enter the headcount for the end of each month in the appropriate non-shaded cells. Do not enter any data in the lightly-shaded cells.
No data should be entered on the Analysis worksheet. This worksheet calculates the ratios and analytics based on the data input on the other two worksheets.

Inserting and Deleting Line Items

Input rows may not be added or deleted. Such changes in the number of rows may compromise the integrity workbook’s calculations.