Glossary
HR and payroll glossary
Plain-language definitions of the HR and payroll terms teams actually search for, each answered in one clear sentence and linked to the Capstan tool, guide or module that puts it to work. No jargon, no sign-up.
HR systems and software
HRIS An HRIS, a Human Resource Information System, is the software that holds your organisation's employee records and runs the core processes around them: people and org data, time off, documents, onboarding and reporting. HRMS An HRMS, a Human Resource Management System, is HR software that covers the core employee record and the wider set of modules built around it, from attendance and performance to recruitment and payroll preparation. HCM HCM, human capital management, is the broad category of software and practice for managing people across the whole employee lifecycle, from hiring through development and pay to exit, usually aimed at larger organisations. Applicant tracking system (ATS) An applicant tracking system, or ATS, is the software that runs a hiring process end to end: opening a role, collecting and sorting candidates, moving them through interview stages with scorecards, and making an offer. Employee self-service (ESS) Employee self-service, or ESS, is the part of an HR system where employees view and manage their own records, request leave, submit expenses and read their own documents and payslips directly, rather than emailing HR for each one. Employee onboarding Employee onboarding is the process of taking a new hire from a signed offer to a productive team member: collecting documents, setting up access and equipment, and working through a checklist of first-day and first-weeks tasks so nothing is missed.
Pay and payroll
Payroll Payroll is the process of working out what each employee is paid for a period, applying the statutory deductions and contributions that apply, paying the net amount, and filing the returns and forms that follow the pay run. CTC (cost to company) CTC, or cost to company, is the total annual amount an employer spends on an employee in India, taking in base pay, allowances, bonuses and the employer's own statutory contributions, which is why CTC is larger than take-home pay. Gratuity Gratuity is a lump sum an employer in India pays an employee who leaves after a qualifying period of continuous service, governed by the Payment of Gratuity Act, 1972, and calculated from the person's last drawn wages and years of service. Full and final settlement (FnF) Full and final settlement, or FnF, is the process of closing out everything owed between an employer and an employee who is leaving: final salary, payment for unused leave, recoveries and deductions, and any gratuity or other end-of-service amount. Gross pay Gross pay is what an employee earns before any deductions are taken out: the headline figure on an offer or a contract, from which tax, social contributions and other withholdings are subtracted to arrive at the net pay that actually reaches the bank. House Rent Allowance (HRA) House Rent Allowance, or HRA, is a component of salary in India paid towards rented accommodation, part of which can be exempt from income tax when certain conditions are met, with the exempt amount set by the least of three defined limits. Pay period A pay period is the span of time a single payroll run covers, such as a calendar month or a fortnight, while the payroll cycle is the repeating schedule of cut-off dates, processing and pay dates that produces each run.
Equity and compensation
Compa-ratio A compa-ratio is a salary expressed against the midpoint of its pay band: the salary divided by the band midpoint, usually read as a percentage, so 100 percent means the person is paid exactly at the middle of the range for their role. ESOP (employee stock options) An ESOP is a plan that gives employees a stake in the company they work for, most commonly, in startups, a pool of stock options that vest over time and can later be exercised into shares, so the team shares in the value it helps build. Vesting and the cliff Vesting is the mechanism by which a grant of equity is earned over time rather than all at once, and the cliff is an initial period, often a year, before which none of it vests and after which the first portion vests in a single step.
Leave and time
Full-time equivalent (FTE) A full-time equivalent, or FTE, is a way of expressing the size of a workforce as the number of full-time positions it adds up to, where a part-time person counts as a fraction of one according to the hours they work. PTO accrual PTO accrual is the method by which paid time off builds up gradually over the year, with an employee earning a small amount of leave each pay period or month rather than receiving the whole annual allowance in one grant. Bradford Factor The Bradford Factor is an absence-measurement score that weights many short, separate absences more heavily than a single long one, on the theory that frequent unplanned absences are more disruptive than one continuous period off. Absenteeism rate The absenteeism rate is the share of available working time lost to unplanned absence, worked out as the number of absence days divided by the total available workdays across a headcount for a period, read as a percentage.
People metrics
Employee turnover rate The employee turnover rate is the share of a workforce that leaves over a period, worked out as the number of leavers divided by the average headcount for that period and read as a percentage, often split into voluntary and involuntary departures. Employee Net Promoter Score (eNPS) Employee Net Promoter Score, or eNPS, is a single-number read on how likely employees are to recommend their workplace, calculated by subtracting the percentage of detractors from the percentage of promoters on a zero-to-ten recommendation question. Cost per hire Cost per hire is the total cost of recruiting over a period divided by the number of hires it produced, adding up both external spend, such as job ads and agency fees, and internal costs, such as recruiter time, to show what a hire really costs to make. Time to hire Time to hire counts the days from a candidate first entering your process to that candidate accepting an offer, while time to fill counts from the day the role opened, so the two measure the speed of a candidate and the speed of the whole search. Span of control Span of control is the number of people who report directly to a single manager, used as a measure of how flat or how layered an organisation is: a wide span means few layers and many reports per manager, a narrow span the reverse.
Global employment
Employer of record (EOR) An employer of record, or EOR, is a company that becomes the legal employer of your workers in a country where you hold no legal entity of your own, taking on the local contract, payroll and statutory obligations so that you can hire there. PEO (professional employer organization) A PEO, or professional employer organization, is a firm that co-employs a company's staff in the United States under a shared arrangement, so that it can run payroll, file payroll taxes under its own number and pool benefits across many small employers. Worker misclassification Worker misclassification is engaging someone as an independent contractor when the working relationship actually meets the legal test for employment, which can leave the company liable for back taxes, unpaid benefits, penalties and reclassification.
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