CHRP - Certified Human Resources Professional HR Metrics and Financials Questions and Answers 1 — Questions and Answers
Question 1: An HR department invested $40,000 in a new sales training program. As a result, the sales team's revenue increased by $160,000, and the cost of goods sold associated with that revenue was $90,000. What is the Return on Investment (ROI) for this training program?
- 125%
- 75% (Correct answer)
- 300%
- 400%
Correct answer: 75%
The formula for ROI is ([Financial Gain - Cost of Investment] / Cost of Investment) x 100. The financial gain is the increase in revenue minus the associated costs ($160,000 - $90,000 = $70,000). The ROI is therefore ([$70,000 - $40,000] / $40,000) x 100, which equals ($30,000 / $40,000) x 100 = 75%.
Question 2: A company with 200 employees has an annual turnover rate of 12%. The average salary of departing employees is $55,000. If the cost to replace an employee is estimated to be 75% of their annual salary, what is the company's total annual cost of turnover?
- $1,320,000
- $495,000
- $990,000 (Correct answer)
- $1,650,000
Correct answer: $990,000
First, calculate the number of employees who left: 200 employees * 12% = 24 employees. Next, calculate the cost to replace one employee: $55,000 * 75% = $41,250. Finally, multiply the number of departed employees by the replacement cost: 24 * $41,250 = $990,000.
Question 3: Which of the following metrics is considered a measure of an organization's overall productivity and efficiency by calculating how much revenue is generated for each person on the payroll?
- Profit per Employee
- Human Capital Value Added (HCVA)
- Cost per Hire
- Revenue per Employee (Correct answer)
Correct answer: Revenue per Employee
Revenue per Employee (Total Revenue / Total Number of Employees) is a fundamental HR and financial metric used to gauge the efficiency and productivity of the workforce in generating revenue.
Question 4: A company's recruitment effort for the last quarter involved the following costs: $20,000 in advertising fees, $15,000 in recruitment agency fees, and $35,000 for the prorated salaries of the internal recruiting team. If 10 employees were hired during this period, what was the Cost Per Hire?
- $3,500
- $7,000 (Correct answer)
- $5,500
- $2,000
Correct answer: $7,000
The Cost Per Hire is calculated by summing all internal and external recruiting costs and dividing by the number of hires. Total costs are $20,000 + $15,000 + $35,000 = $70,000. Divided by 10 hires, the Cost Per Hire is $7,000.
Question 5: In the context of a Balanced Scorecard, an HR metric such as 'Time to Fill Critical Roles' would most directly inform which of the four perspectives?
- Internal Business Process (Correct answer)
- Financial
- Customer
- Learning and Growth
Correct answer: Internal Business Process
The 'Internal Business Process' perspective focuses on the efficiency and effectiveness of an organization's internal operations. 'Time to Fill' is a key metric that measures the efficiency of the recruitment process, which is a critical internal HR function.
Question 6: Which of the following best defines the Human Capital Value Added (HCVA) metric?
- The total revenue of a company divided by the total number of full-time employees.
- A measure of an organization's profit per employee after accounting for all operating expenses except for employee compensation and benefits. (Correct answer)
- The total cost of employee compensation and benefits as a percentage of total company revenue.
- The average time it takes for a new employee to reach full productivity.
Correct answer: A measure of an organization's profit per employee after accounting for all operating expenses except for employee compensation and benefits.
Human Capital Value Added (HCVA) is a sophisticated metric that isolates the value added by the workforce. The formula is (Revenue - [Operating Expense - All Compensation & Benefit Costs]) / Total Full-Time Employees. It essentially shows the profit generated per employee.
CHRP - Certified Human Resources Professional HR Metrics and Financials Questions and Answers 1
An HR department invested $40,000 in a new sales training program.
As a result, the sales team's revenue increased by $160,000, and the cost of goods sold associated with that revenue was $90,000.
What is the Return on Investment (ROI) for this training program?