Consulting firms: Explore the Leading KPIs to Measure Business, Talent and Project Success

Consulting firms may specialize in helping their clients solve business challenges through actionable guidance and advice. Still, they have their own challenges to address, too.

In our 4th Annual EMEA and APAC Deltek Clarity Study, we surveyed hundreds of consulting firms to learn more about their goals and challenges.

Above all, respondents were concerned about winning profitable projects, attracting and retaining talent, and managing resources to meet client expectations. Many firms have yet to implement the necessary key performance indicators (KPIs) to track their progress towards achieving these goals.

To help consulting firms accurately measure success and ensure accountability in the right parts of the business, we’ve created the ultimate guide to KPIs.

Read on for a sample of the leading KPIs – and learn why it pays to centralize KPI management on a single platform.

KPIs to Measure Business Growth and Profitability

Despite the challenges identified in the Deltek Clarity Study, 67% of consulting firms expected their profits to increase in 2023. To monitor your business growth and profitability and keep track of progress towards your objectives, we recommend measuring the following KPIs:

Net revenue growth

The finance director should calculate and monitor net revenue growth, while the business development team should manage forecasting. This includes analyzing profit and loss (P&L), days sales outstanding (DSO) and project schedule variance.

Client profitability

Work with your finance department, business development and project management teams to identify the most – and least – profitable clients in your portfolio. This means calculating revenues earned from a customer in a given period and deducting the cost to serve them in the same period.

Employee billable utilization

The CFO, finance team and project manager can help you calculate how much of your employee’s available time is used for productive, billable work. By dividing labor costs by the total hours worked and multiplying it by 100, you can use the percentage to inform forecasting and optimize resources and rate setting.

KPIs to Monitor Successful Project Delivery

Meeting client expectations on time and within budget and scope is critical to retaining a competitive reputation and healthy cash flow. To calculate accurate project timelines and minimize inefficient planning, be sure to measure the following KPIs:

Projects on budget

Your project managers must closely monitor each project to assess how well your firm is costing its projects and managing resources and budgets. To calculate if a project has overrun its budget, divide the budgeted delivery cost by the actual delivery cost. 

Projects on schedule

As important as sticking to budget is, so is sticking to an agreed delivery timeframe. Overrun time, and you risk impeding cash flow and inflating the cost of delivery. While there is no set formula to measure this KPI, project managers must regularly reassess their systems and processes to secure optimal project planning and time management.

Effective bill rate

Effective bill rate is one of the most important KPIs you can measure. It can tell you how profitable a project is, and it can help you optimize future project proposals for cost efficiency and predictability. To calculate this, divide the total project revenue by the total number of hours worked by your employees.

KPIs for Talent Acquisition and Retention

The rising need to attract digital-native talent and upskill existing employees can be felt across all industries, and failing to do so is costing many firms their competitive advantage. According to the most recent Deltek Clarity Study, many firms struggle to engage employees and provide a healthy work/life balance, leading to excessive employee churn.

To help identify gaps in your talent management strategy and track progress towards your staffing and resourcing goals, measure these KPIs:

Employee turnover rate

Ensure your HR department regularly calculates employee churn by dividing the total number of leavers over a specific period by the average number of employees (over the same period) and multiplying this by 100. This is a valuable opportunity to benchmark your firm against industry peers and identify trends contributing to low or high turnover.

Staff growth and decline

Likewise, HR can calculate your firm’s growth rate by comparing your current number of employees from the number at a previous point in time and dividing that number by the number of employees in a later period. The resulting percentage tracks your progress towards a larger or leaner business. It can help you optimize resource and capacity planning.

Employee satisfaction

Another KPI for HR – employee satisfaction was listed as a talent management challenge for 31% of firms we surveyed. There is no set method for measuring this KPI. Still, you can regularly survey your employees anonymously and conduct retention talks with staff to understand better how they feel about the organization. Employee satisfaction is a crucial KPI for any firm that wants to create a positive and productive workplace.

Discover Project-Based Enterprise Resource Planning (ERP)

To learn about actioning these KPIs and reveal additional growth and project delivery indicators, read the ultimate guide to KPIs for consulting firms. You’ll also see how a cloud-based ERP can centralize KPI management to improve accountability and deliver more accurate and effective measurements.