Q6. Staff-cost-to-revenue is a key performance measure for the Group. How do you propose to manage this down towards the target rate of 65%?

Question

Staff-cost-to-revenue is a key performance measure for the Group. How do you propose to manage this down towards the target rate of 6.5%?

Answer

The staff-cost-to-revenue ratio is probably one of the key metrics that we measure on a monthly basis in the Group. Currently we are achieving 67%, which is 2% below our long-term target. We do have a 3 stage plan to improve this down to the target level. Obviously the first stage of any process is to measure what you’re currently doing. Now we have pretty good staff timesheet recording in most of our businesses, some of them not as good as the others, but in most cases the tools are not very dynamic and that’s the bit we need to improve. So the second stage is to put into the businesses a much better planning and resource-management tool. So we have started to implement a product called Epicor into our major markets. What this does is it combines with the online HR recording system. Tells us what our people, where their key skillsets are, obviously we can plan their availability against the client needs. And more importantly than that, we can also measure on a live basis how we are performing against those targets, in terms of how many hours we’re using to deliver the client workload. I think that once we’ve got those in the majority of our businesses we’ll see some really good improvements. But the probably most critical part of any process like this is to change the behaviour of individuals in the teams. We’ve got to get them away from seeing the time recording as a Big Brother tool, and more one that’s a business improvement tool. So we’re asking them to come on a journey with us, which shows, what our clients are paying for, how many hours we’re working, which clients are paying for the extra work they’re performing. And maybe if they can see the link between the work they’re doing and the client revenue, then they’ll see that we can improve our profitability, and some that increased profitability will flow down to them. And just as a metric, just to leave you with, for every 1% improvement in staff-cost-revenue metric, it adds £650,000 to the bottom line, so that’s a prize worth going for.