How can you measure the ROI of your assignment initiative?
September 18, 2023
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4 min
To increase the profitability of your business, an efficient assignment approach is essential. For a consulting firm, the allocation of consultants to different projects is at the heart of sales.
To optimize your assignmentIn order to optimize your business, costs and ROI(Return On Investment) must be taken into account. The aim is to limit staff costs, especially those between contracts, and maximize productivity (time spent on assignments that generate income for the company, staff performance, etc.).
So let's explore 4 essential indicators for measuring the ROI of your management of the assignment :
TACE (also known as the assignment) is the most important indicator for measuring your ROI.
This is the percentage of an employee's working time devoted to billable tasks, excluding vacation periods. In other words, you calculate the time spent by employees on assignments that generate sales for your business.
In the case of IT services companies or a consulting firm, the aim is to maximize consultants' working time on projects, and minimize downtime and so-called non-productive tasks. This also means controlling the time your consultants devote to any in-house projects.
Optimizing TACE therefore directly improves the profitability of your business, making it a fundamental metric for measuring your ROI. assignment. Even a small increase in this rate can translate into significant gains in profitability.
Over the medium/long term, these efficiency gains add up and can even give you a competitive edge, by offering more competitive rates while maintaining your consultancy's margin or IT services companies , for example.
Although it doesn't have as direct an impact on ROI measurement as TACE, TACI (Taux d'Activités Congés Inclus) is also important. It enables you to calculate the activity rate of your employees, including days off, vacations and public holidays.
This indicator is therefore not used to measure the efficiency and performance of assignment, but to gain a more global view of activity. For example, the TACI can be used to identify periods when activity is naturally low due to vacations.
You can then reallocate or reduce resources for the given time and thus improve your ROI by limiting the additional operating costs of your IT services companies or consultancy firm.
TACI also helps you measure work-life balance. A high rate may indicate that your employees are not taking enough time off.
This translates into sluggish 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 sales decline.
The result: a lower ROI.
As you can see, even if the cause-and-effect relationship between TACI and the ROI calculation for your assignment is not as obvious as with TACE, this rate remains a relevant indicator.
Turnover refers to the percentage of employees who leave the company over a given period (often annually).
This indicator is all the more important for measuring the ROI of assignment for IT services companies. Projects require specialized, and sometimes scarce, skills. A high turnover of consultants can force your firm to turn down or put projects on hold, which obviously has an impact on profitability.
And that's not all: every time an employee leaves, you're faced with a number of hidden costs. Recruitment, training, loss of productivity during the transition period, etc., are all costs that degrade your ROI.
And that's without counting the consequences for the rest of the team in place. The departure of one employee can affect the morale of the remaining ones, impacting on their productivity and, consequently, ROI.
Let's take the example of a consulting firm with a 20% turnover rate. Let's estimate the total cost of replacing an outgoing employee at €25,000. With 100 employees, the firm spends €500,000 a year on turnover. This is a significant sum which could otherwise contribute to a higher ROI.
Margin per employee is a key performance indicator for calculating the difference between sales generated and the direct costs associated with each employee. In other words, it's the net income generated by each employee after deduction of salary and bonuses, benefits of various kinds, operating costs, 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 sales than the costs he or she generates. This translates into a higher ROI.
You also benefit from a relevant metric for deciding whether to reduce costs or increase productivity. For example, if you find that the margin per employee for a given project is too low, you can change the staff allocation to increase your ROI for the project in question.
Clearly then, it's impossible to measure the ROI of your assignment without a clear view of the performance indicator that is margin per employee.
For your IT services companies or consulting firm, good project management is essential to the success of your business. And the most essential resource in this respect is the assignment (your consultants). Maximizing productive time, limiting costs and maintaining (or even increasing) your margins are all good reasons to measure the ROI of your project management approach. assignment.
TACE is certainly the most important. It identifies profitable times for the company, for example when a consultant is working on a customer project. Its counterpart with vacations included, TACI, helps you identify off-peak periods and optimize the allocation of your resources.
You must also take into account turnover. The departure of a member of staff can jeopardize ongoing projects, but it also means additional costs for the consultancy, which has to recruit again.
Finally, the margin per employee allows you to measure the profitability of each employee, between sales generated and costs incurred. In this way, you can work to increase the performance of employees with low margins to maximize the ROI of your assignment.
See you soon at Napta! 👋
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