Implementing ABC as Cost Management Model for the Human Resources Department: Evidence From a Romanian Entity

Nicoleta Valentina Florea, Constantin Aurelian Ionescu, Marinela Daniela Manea, Dan Ioan Topor, Sorinel Capusneanu, Dan Marius Coman, Sorina Geanina Stanescu and Mihaela Denisa Coman

SAGE Open, 2023, vol. 13, issue 2, 21582440231177228

Abstract: The study proposes a cost management model for recruitment, selection, employment, and integration (RSEI), for the human resources (HR) department in order to identify the possibilities of cost optimization. The proposed model consisted of applying the activity-based costing (ABC) method, as a novelty in the HR field, by developing an algorithm for calculating the cost per employee. To observe the evolution of the analyzed RSEI process costs, the Pareto Chart and the Markov chain model were used. To verify the viability of the model, it was applied within an industrial company. The research results indicated that: in the recruitment process, the most consuming resource is the use of recruitment agencies (89.50% of the recruitment cost); in the selection process, the protocol consumes 66.80%; in the employment and payment processes, salaries consume 52.20%, and insurance taxes 34.80%; in the integration processes, the most consuming resources are tutors with overtime pay (63.30%). After identifying and quantifying the high costs, a plan of measures is drawn up to minimize costs. The study contributes to the RSEI cost literature and has practical implications for human resources practices and organizational performance. The analysis is limited to a few processes of HR, but these are the most consuming resources and the most important in recruitment. The model could be implemented as a future direction for other improvements of the HR processes (performance evaluation, dysfunctional social analysis, motivation, reward and compensation), career management analysis, or other company’s processes.

Keywords: cost management model; cost of recruitment; selection; employment and integration; activity-based costing method; management accounting; recruitment (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:13:y:2023:i:2:p:21582440231177228

DOI: 10.1177/21582440231177228

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