Ask the Accounting Community

Good morning, 

We are looking for potential metric/ratio to measure administrative headcount by department/region/division. One thought that we had may be useful would be comparing admin headcounts to something like a revenue metric like, number of units to really understand where we may be admin heavy against revenue and/or revenue growth. A couple of the answers/monitoring that we are attempting to do is manage administrative staffing levels to match company revenue/growth areas. What others has anyone used? We also want to drive departments to quantifying the need for additional headcount by demonstrating where the perceived/anticipated value will be for the particular role. 

Good morning, 

We are looking for potential metric/ratio to measure administrative headcount by department/region/division. One thought that we had may be useful would be comparing admin headcounts to something like a revenue metric like, number of units to really understand where we may be admin heavy against revenue and/or revenue growth. A couple of the answers/monitoring that we are attempting to do is manage administrative staffing levels to match company revenue/growth areas. What others has anyone used? We also want to drive departments to quantifying the need for additional headcount by demonstrating where the perceived/anticipated value will be for the particular role. 

Matthew,

I am looking at this from another perspective. I have been with a few fast growing midsize companies and justifying headcount on the administrative side is difficult. This is especially difficult when you need to upgrade a position to a higher skillset or add a higher level contributor/manager as the company outgrows the existing administrative infrastructure.  Merely looking at headcount is insufficient; it should also include an evaluation of cost per work center.

I run historical costs per department plus future period projections. Where I am at now, administrative headcount hadn't changed in about 13 years.  But revenue has quadrupled in that time. Plus we have layered in a number of other compliance requirements over this time.  Admin costs were at 0.89% of revenue 6 years ago; 1.50% of revenue 10 years ago. When I walked in, I immediately added another person and was still at 0.42% of revenue. This was just a stop-gap to get some things done.  We still need to add another person or two to be stable today. And I expect to add 3 more headcount, at various levels and departments, in the next few years as we double revenue again.  When using percent of revenue to evaluate administrative costs, it should not be a one to one measure. You should be able to gain economies of scale and take advantage of automation to offset headcount adds.  This will allow you to keep reducing the administrative cost as a percentage of revenue as you keep growing but you still have to add headcount to just get the basics done. Using percentage of revenue gives a metric for evaluation and benchmarking.  I also use this working with production and sales (sales per man hour & sales per man hour cost).

As this is one of my current pain points, I am happy to participate in any other discussions of evaluation options.

Good morning, 

We are looking for potential metric/ratio to measure administrative headcount by department/region/division. One thought that we had may be useful would be comparing admin headcounts to something like a revenue metric like, number of units to really understand where we may be admin heavy against revenue and/or revenue growth. A couple of the answers/monitoring that we are attempting to do is manage administrative staffing levels to match company revenue/growth areas. What others has anyone used? We also want to drive departments to quantifying the need for additional headcount by demonstrating where the perceived/anticipated value will be for the particular role. 

Good morning, 

We are looking for potential metric/ratio to measure administrative headcount by department/region/division. One thought that we had may be useful would be comparing admin headcounts to something like a revenue metric like, number of units to really understand where we may be admin heavy against revenue and/or revenue growth. A couple of the answers/monitoring that we are attempting to do is manage administrative staffing levels to match company revenue/growth areas. What others has anyone used? We also want to drive departments to quantifying the need for additional headcount by demonstrating where the perceived/anticipated value will be for the particular role. 

Hi Matthew - Have you tried breaking the admin group into its functional teams? So maybe you could look at human resources staff relative to total staff, or relative to production staff. For your sales team, if they are principally customer service, maybe you could look at them relative to number of customer accounts. For your quality control team, maybe you could look at them relative to SKU's that are active. I think you might get more bang for your buck if you try to break the entire admin group into functional teams and then look at aspects of the business that may affect staffing levels.

Is this helpful?

Good luck!

Ron

Good morning, 

We are looking for potential metric/ratio to measure administrative headcount by department/region/division. One thought that we had may be useful would be comparing admin headcounts to something like a revenue metric like, number of units to really understand where we may be admin heavy against revenue and/or revenue growth. A couple of the answers/monitoring that we are attempting to do is manage administrative staffing levels to match company revenue/growth areas. What others has anyone used? We also want to drive departments to quantifying the need for additional headcount by demonstrating where the perceived/anticipated value will be for the particular role.