I want to calculate how much an individual employee in a Business Unit (BU) of a company contributed to the overall total expense (salary) of that BU.
I have the company wide calculated Average Salary for each experience levels (such as associate, manager). I also have the total expense of any given BU, along with employee headcount, and their individual experience levels.
Suppose the BU total salary and the count of employees of that BU is as follows:
| Company | ABC Inc. |
|---|---|
| Average Salary of associate | 10 |
| Average Salary of manager | 40 |
| BU | HR |
|---|---|
| Total BU Expense | 80 |
| No of Employees in BU | 4 |
| Headcount of associates | 2 |
| Headcount of manager | 2 |
It is obvious that the company wide average cannot be substituted directly as it would total to 100 instead of 80:
(2 associates * 10)+(2 managers * 40) = 100
So, I want to calculate how much % did each employee contribute to this BU total of 80.
Is there a way to calculate the individual's contribution percentages to the BU cost?
Freehand calculation:
Associate average in this specific BU:
6.25% of 80 = 5
Manager Average in this specific BU:
43.75% of 80 = 35
(2 associates * 5)+(2 managers * 35) = 80
I think this is closely related to the question: Percentage of contribution to the average
If you have the number of associates, number of managers, and total cost, and an additional assumption of the pay disparity between managers and associates, you can solve for the average pay of managers/associates in this business unit.
$A$ = # of associates
$M$ = # of managers
$F$ = pay disparity factor (how many times the associates pay is the manager's pay)
$T$ = total cost
$X$ = average salary of one associate
$T = AX + MFX$
$X = T/(A+MF)$
Without an estimate of the pay disparity factor, you can't do much - the total cost will be divided differently if managers make the same amount as associates, or much more, or much less.