Direct HR costs are expenses that can be clearly linked to specific HR activities, such as salaries, benefits, and training. Conclusion: These costs are often the most significant part of an HR budget, but they are also the most straightforward to calculate and manage.

HR costs are reflected in finance. A closer look at these costs can give insights into HR activity. Some of the tools that help better understand the connection between HR and finance are the cost benefit analysis, optimizing budgets. Also strategic planning for effectiveness is a major step to ensure efficiency of the HR costs and investments.

Indirect HR costs are expenses that are not directly tied to specific HR activities, but still impact the overall HR budget, such as recruitment, turnover, and absenteeism.