Businesses that fully understand their costs, right down to cost per employee, have a competitive edge over those that don't. In the mid-sized company arena, more than half of companies that participated in a study have only a modest understanding of where their investments in personnel truly stand.

The study was commissioned by ADP with findings delivered via a Harris poll of more than 1,000 mid-sized (50 to 999 employees) firms. Participants were specifically asked about their understanding of their total cost of operation, a measure of the true investment a company makes in its business. TCO includes measures that, according to the study, many businesses do not factor in.

The major conclusion drawn by the researchers: 73 percent do not calculate TCO correctly. That's because they're not considering one or more of the five following "pillars of TCO:"

1. Payroll
2. Employee benefits administration
3. Talent management
4. Human resources administration
5. Time and labor management

"While about six in 10 respondents indicated they have a good familiarity with the TCO concept, only 25 percent could provide an estimate of their human capital management TCO across [the five pillars]," the report said. "One of the key findings the study revealed is that it appears midsized businesses tend to underestimate the all-in costs of managing a workforce."