Personnel cost variance: HC volume, mix, pay rates and currency
Personnel costs can move while headcount stays constant. The useful question is which part came from workforce composition, pay assumptions, timing or currency.
Calculate from explicit source assumptions
Use country, worker type, grade, position FTE, effective month, pay components and applicable exchange rates. Missing approved cost rules should be visible rather than replaced with guessed averages.
Distinguish structural and rate drivers
A shift to higher grades changes grade mix; a negotiated salary adjustment changes rates. Two scenarios can have identical ending HC but different full-year costs because starts occur in different months.
Avoid double attribution
Define decomposition order and reconcile the calculated driver sum to the overall variance. Treat unexplained residuals separately rather than allocating them to invented business causes.
Recalculate weighted cost correctly
A Group cost per FTE is total governed cost divided by total governed FTE, not an unweighted average of country averages. Report the relevant currency and FX set.