The Net Fees per Staff being generated by the firm is a clear indication of how efficiently the firm is deploying its entire labor force. It may also be referred to as Net Revenue per Staff.
The Simple Math
First, we must calculate the average full-time equivalent (FTE) employees we had for the period for which we want to calculate this indicator. This will include all staff, including all admin, marketing, IT, and other non-billable staff. Include part-time staff as a decimal equivalent (i.e, a half-time person would be 0.5).
Now, we merely divide our total Net Fees (Revenues) for the period by this average FTE count.
The Big Idea
The Net Fees per Staff metric tells us just that—how much are we earning in Net Fees for each and every employee? This does not suggest that each employee is individually producing such revenue; it merely indicates the amount the firm is generating staff-wide, on average, per person.
Decreases in this indicator can indicate overstaffing, or a dropping workload. Increases would suggest more efficiency, or improved project fee pricing, but we must also keep an eye out for an overworked staff.
This indicator can also give us an idea of the value of adding additional staff. Compare our Net Fees per Staff calculation with the total cost of employing someone (salary, bonus, benefits, etc.), for the same period.
Taking Control
Improving the net fees per staff will require ensuring the most effective and efficient use of personnel.
As with all Key Indicators, it is very helpful to track the firm’s history for this metric, to see the long-term trend. This metric should go up over time, as inflation reduces the value of the dollar, and we really need to see increases in our productivity.