Unlocking Productivity: Turning Staff Data into Strategic Insight

The challenge

• No unified view from staff plan → P&L.
• Pockets of over/under-capacity across business units.
• Discounts/write-downs eroded margin without an early signal.
• Finance reported accurately after month-end; managers needed forward insight.

Executive objectives

• Protect margin during growth: Staff at the right time, in the right units.
• Make discounts visible: Convert “silent write-downs” into transparent realisation decisions.
• Enable managers: Put the levers (utilisation, rates, mix) in the hands of BU leaders.
• Shorten the cycle: Move decisions in period via a rolling forecast not post-month-end.

Our approach

1. Workforce model tied to P&L: headcount, start dates, ramp-up and leave phasing; role-based utilisation targets (e.g., producers 75—80%, managers 35—50%¹).
2. Surface the levers: KPIs (Utilisation, Realisation, Rev/FTE, GM%, EBITDA%), and instant what-ifs (rate ±2%, utilisation ±3pp). Rolling forecasts enable faster, continuous decisions²³.
3. Pricing governance: realisation checkpoints at quote/approval; clear guardrails on discounts. Realisation = share of standard billable value actually billed/collected⁴.
4. Enable managers: capacity-vs-demand view by BU with alerts.

Methodology & model design (how it actually works)

1) Staffing engine

• Inputs: Planned FTEs by role, start dates, vacancy lead-times, ramp-up curves (e.g., 60% → 80% → 100% over first three months), and leave phasing (annualised days distributed by month).
• Calendarisation: 52-week calendar rolling forward 12—18 months; public-holiday overlay by region.
• Outputs: Available hours and billable capacity by role/BU/month.

2) Utilisation & realisation layer

• Utilisation targets by role (e.g., Consultant 78%, Senior 76%, Manager 45%). Targets can vary by BU seasonality.
• Realisation (recovery): Standard rate × hours → standard value → apply discount/write‑down policy to project billed value, then collections to get collected value.

3) P&L integration

• Revenue: Collected = Hours × Rate × Realisation × Collection%
• Direct cost: Fully loaded salaries (incl. super/benefits), contractors, overtime, bonus accruals.
• Gross margin: GM% = (Revenue − Direct Cost) ÷ Revenue
• EBITDA: EBITDA = GM − Overheads (non‑people overheads phased to known run‑rates).

4) Data sources

• HRIS for positions/FTE and start dates; PSA/timekeeping for hours; ERP/GL for costs; CRM for pipeline. (Automate later CSV import works on day one.)

KPI formulas & plain‑English examples

• Utilisation (billable) = Billable hours / Available hours. Example: 30 ÷ 40 = 75%.
• Realisation (recovery) = Billed value / Standard value. Example: $92k ÷ $100k = 92%.
• Revenue per FTE = Revenue / FTEs. Example: $5.0m ÷ 25 = $200k/FTE.
• Gross Margin % = (Revenue − Direct cost) ÷ Revenue.
• EBITDA % = EBITDA ÷ Revenue.

Figure 1 Utilisation vs Gross Margin % (illustrative)

Figure notes: Assumptions for a single FTE: 1,800 hours/year, $220/hr standard, 90% realisation, $140k fully loaded salary. Purpose: small utilisation lifts can materially increase GM% when people costs are semi-fixed in-period.

Figure 2 Revenue Flow: Standard → Billed → Collected (illustrative)

Figure notes: Shows how realisation and collections shape final revenue. Definitions per AccountingTools⁴.

Figure 3 Scenario Comparison (EBITDA %; illustrative)

Figure notes: Illustrates impact of (+3pp utilisation) and (+2% rate). Quantify with your live model by BU.

Pricing & realisation playbook (what managers actually do)

1. Quote discipline: Surface a floor rate per role (cost + target GM%). If a quote goes below floor, approval is required.
2. Scope hygiene: Lock scope statements in the PSA; changes create visible deltas not silent write-downs.
3. Mid-sprint WIP review: For projects at ‰¤85% realisation by mid-month, require a recovery action (scope adjust, price change, or timeline).
4. Close-out checklist: Confirm write-downs by reason code to drive coaching (estimation, client change, internal rework).

Capacity rebalancing framework

• Traffic lights per BU: Under-utilised < 72% (green for growth), 72—78% (amber), >78% (red: watch burnout). Targets vary by role tune to your context.
• Actions: Shift pipeline, cross-staff, accelerate starts, or pause recruitment. Tie to rolling forecast so moves update the P&L instantly.

Scenario catalogue (start with five)

• S1 Demand shock (−5% hours) → watch utilisation & staffing lag.
• S2 Price update (+2% rate) → expected uplift to GM% & EBITDA%.
• S3 Mix shift (more senior time) → higher rates but potential realisation risk.
• S4 Cost inflation (+3% salaries) → wage drag; test price pass‑through.
• S5 Hiring lag (+1 month starts) → near‑term margin support vs growth delay.

Operating rhythm (who meets when, about what)

• Weekly (Managers + Finance partner): Capacity vs demand, at-risk projects (realisation), upcoming quotes vs rate floors.
• Monthly (ELT): Scenario deltas, hiring plan updates, rate/discount policy changes, overhead runway.
• Quarterly (Board/Owners): Strategic bets, BU performance distribution, benchmark gaps, client concentration.

Change management & adoption

• Enablement: 45-minute live demo + quick-reference guide for each role.
• Guardrails: One-page discount policy with 3 examples (allowed / exception / no-go).
• Coaching: Monthly review of write-down reasons; celebrate turnarounds publicly.
• Incentives: Align variable comp to balanced KPIs (realisation + client satisfaction), not just billable hours.

Results deep-dive

Lessons for different audiences

• Executives: Treat utilisation/realisation as strategic levers small moves matter.
• Commercial managers: Your day-to-day actions (quotes, staffing, scope) drive the P&L.
• Analysts / early-career FP&A: Focus on bridge stories (what moved and why), not just variance tables.

FAQ (for non‑finance readers)

• Why do small utilisation changes matter so much? People costs are mostly fixed in the short term; tiny shifts change revenue without changing cost.
• Is realisation just “discounting”? It includes discounts and write‑downs from scope creep, rework, or billing policy.
• Why a rolling forecast? Because demand, pricing and hiring move faster than an annual budget-rolling updates keep decisions current.

Glossary (plain English)

• FP&A: Financial Planning & Analysis: planning, forecasting and decision support.
• FTE: Full-Time Equivalent: 1.0 = one full-time person.
• Utilisation (billable): Share of time spent on client-billable work. Typical role targets vary¹.
• Realisation (Recovery): Share of standard billable value actually billed & collected⁴.
• KPI: Key Performance Indicator, a core metric to track performance.
• EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation, a proxy for operating profit.
• Rolling forecast: A continuously updated forecast horizon (e.g., always 12—18 months ahead)².

Sources & further reading

See it in action
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