How to measure the ROI of your staffing approach?
Agathe Placet
Content manager
September 18, 2023
4 min
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To increase the profitability of your business, An approach of Staffing Effective is essential. For a consulting firm, the allocation of consultants to the various projects is at the heart of turnover.
In order to optimize your Staffing, costs and ROI (Return On Investment, Return on Investment) should be taken into account. Objective: limit staff costs, in particular inter-contracts, and maximize productivity (active time dedicated to remunerative missions for the firm, employee performance, etc.).
So let's explore 4 essential indicators to measure the ROI of your management Staffing :
The TACE (also called the rate of Staffing) is the most important indicator to measure your KING.
It's about Percentage of an employee's working time spent on billable tasks, excluding vacation periods. In other words, you calculate the time spent by employees on missions that generate turnover for your business.
In the case of an IT services company or a consulting firm, the objective is therefore to Maximize consultants' working time on projects, and to minimize downtime and so-called non-productive tasks. It also means controlling the time that your consultants devote to possible projects carried out internally.
Optimizing the TACE therefore directly improves the profitability of your business, which makes it a fundamental metric for measuring the ROI of your Staffing. Even a slight increase in this rate can lead to significant gains in terms of profitability.
In the medium/long term, these efficiency gains add up and can even give you a competitive advantage, by offering more competitive rates while maintaining your margin from your consulting firm or ESN for example.
Even though it doesn't have as direct an impact on ROI measurement as TACE, the CIAT (Rate of Activity Leave Included) is also important. It allows you to calculate the activity rate of employees by including Holidays, vacations and holidays.
Therefore, this indicator is not used to measure effectiveness and Performance of Staffing, but to have a more global vision of the activity. For example, TACI makes it possible to identify periods when activity is naturally low due to holidays.
You can then re-allocate or reduce resources for the given time and thus improve your ROI by limiting costs additional functions of your ESN or consulting firm.
The TACI also helps you to measuring work-life balance. A high rate may indicate that your employees are not taking enough rest time.
This results in poor performance and a negative impact on the quality of deliverables. In the event of a drop in customer satisfaction, your firm may lose customers and see its turnover decrease.
The consequence: a lower ROI.
You will have understood it: even if the causal link between the TACI and the calculation of the ROI of your approach to Staffing is not as obvious as with the TACE, this rate remains a relevant indicator.
The Turnover (turnover rate) refers to the Percentage of employees who leave the company over a given period of time (often annually).
This is an even more important indicator for measure the ROI of Staffing for NSEs. Projects require specialized skills, which are sometimes rare. A high turnover of consultants can force your firm to refuse or put projects on hold., which obviously has an impact on profitability.
And that's not all: you are confronted with several hidden costs every time an employee leaves. Recruiting, training, loss of productivity during the transition period, etc. are all costs that degrade your ROI.
And that's not to mention the consequences for the rest of the team in place. The departure of an employee may affect the morale of the remaining collaborators, which impacts their productivity and, therefore, the ROI.
Let's take the example of a consulting firm with a rate of 20%. Let's now estimate the total cost to replace an outgoing employee at €25,000. With 100 employees, the firm spends €500,000 annually to cover its Turnover. This is a significant sum that could otherwise contribute to a higher ROI.
The margin per employee is a key performance indicator for calculating the difference between the turnover generated and the direct costs associated with each employee. In other words, it is the net income generated by each employee after deduction of salary and bonuses, benefits of various kinds, operating expenses, etc.
The margin per employee must be taken into account when calculating your ROI. Naturally, a high margin means that each employee contributes more to the turnover compared to the costs they generate. This results in a higher ROI.
You also benefit from a relevant metric for deciding to reduce costs or increase productivity. For example, if you find that the margin per collaborator for a given project is too low, you can change the staff allocation in order to increase your ROI for the project in question.
Obviously, therefore, it is impossible to measure the ROI of your staffing without a clear vision of the performance indicator that is the margin per employee.
For your IT or consulting firm, the good management of projects is essential for the success of your business. And the most essential resource in this regard is the Staffing (your consultants). Maximizing productive time, limiting costs and maintaining (or even increasing) your margin are all good reasons to measure the ROI of your approach to Staffing.
The TACE is certainly the most important. It identifies profitable times for the company, for example when a consultant is working on a client project. Its duration with holidays and holidays included, the CIAT, helps you identify off-peak periods and optimize the allocation of your resources.
You should also take into account the Turnover. The departure of an employee can put ongoing projects in difficulty, but it is also synonymous with additional costs for the consulting firm, which must recruit again.
La Margin by Finally, collaborator allows you to measure the profitability of each employee, between the turnover generated and the costs generated. So you can work at increase the performance of employees with low margins to maximize the ROI of your Staffing.
See you soon at Napta! 👋
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