Saturday, July 4, 2009

Calculate Average Employee Compensation

How do you calculate the average employee compensation of a company?

Average employee compensation is calculated and shows a comparison to be made between executive salaries and  general worker yearly salaries. An accountant could estimate average annual income for a certain category of employees based on knowledge of their base rate and an assumption about average annual hours of work (find the average amount in the industry).

The company could list its average employee compensation in a note to its financial statements.

Indirectly the company’s average compensation can be calculated if they break out total labor costs on the income statement  and report average total employment.

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