Corporate Services Benchmarking Tool

Many public sector leaders are in a bind. As demand for government services increases, so does pressure on budgets. In this context it is prudent to carefully manage corporate services costs.

But reviewing these costs is difficult. How does a public sector leader know if they are operating leanly, have fat to cut or are somewhere in the middle? If they are operating leanly, how can they demonstrate this objectively to their minister or other stakeholders? And if they do have fat to cut, just where is it and how can it most effectively be trimmed?

These are the questions we heard from many of our public sector clients, so we decided to do something about it. The result is our Corporate Services Benchmarking Tool, which allows public sector organisations to compare their performance with similar-scale organisations across a range of corporate services functions, including those using shared services arrangements. It is not just for government – universities and not-for-profit organisations can use it as well.

To compare organisations, the tool includes a large and expanding database with information about staff and funding levels across 10 functional areas, namely: communications; finance; human resources; information technology; legal; ministerial; procurement; property; risk, audit and compliance; and strategy and planning. Drilling down deeper, the tool covers nearly 50 service areas.

The benchmarking tool uses a detailed taxonomy to compare corporate services, while recognising that each organisation has its own structures, arrangements and characteristics. This has allowed us to develop a detailed picture of each corporate service. It can be adjusted to reflect the structures of each organisation, allowing for a more insightful comparison.

The benchmarking tool draws on data from 20 organisations, including federal and state government agencies and not-for-profit organisations. The database expands as more organisations use the tool.

The information has several practical applications

Once public sector leaders have gained insights from the Corporate Services Benchmarking Tool, there are several ways they can put these insights into practice:

  • For leaders of organisations that find they have areas to improve, this can help them identify where. They can learn which parts of their corporate services are performing inefficiently, right down to the specific service area. They can also discover whether that inefficiency is in the form of operating expenditure, staffing level, or a combination of the two.
  • For organisations considering entering a shared services agreement, this information will be valuable in leading to an informed discussion, allowing them to better understand their own costs and those common in the market. Given the challenges of building support for changes among staff, it can be helpful to use an objective benchmark of performance as evidence for the need for change.
  • For leaders of organisations that find they are performing strongly, this can offer valuable evidence to stakeholders who are urging greater efficiency. There are sometimes differences between perceptions of an organisation’s efficiency and the true circumstances, so the benchmarking tool can provide a useful reality check.
  • For organisations that find they have a blend of highly efficient and less efficient functions, there is scope to leverage the expertise of high-performers to improve the rest of the organisation. Leaders may find there are useful lessons that can be learned from those who have successfully managed operating expenses and staffing levels.

We are confident every public agency can benefit from using the Corporate Services Benchmarking Tool.

Benchmarking tool helps federal agency zero in on efficiencies

Recently we used the benchmarking tool to help a large Commonwealth Government policy agency better understand how it was performing on costs. The agency was benchmarked against a smaller number of similar agencies, followed by a larger number of other agencies and organisations.

Corporate Services Benchmarking Tool

In order to benchmark the agency’s corporate services against comparable federal and state agencies, we analysed its corporate services to group its corporate sub-branches by functional area. We found the agency had seven functional areas, including finance, legal and communications.

For each of these functional areas, we calculated the average staffing level: in raw numbers, as a proportion of the total corporate function and as a proportion of the entire agency. We performed the same calculations for operating expenditure.

The next step was to drill down further into each functional area to gather data for specific service area. For example, under the finance functional area sat the service areas of executive, budget, finance, shared services and financial business support. For each of these, we gathered information on the average staffing level and the operating expenditure, using them to calculate the proportion of each within their respective functional area.

From this information, we were able to give the executive of the agency insights into how it performed against its peers. At a glance the agency could understand where it sat on a simple bar graph, and then probing the detail could reveal specific areas for improvement. Similar information on average staffing level and operating expenditure was available for each of the seven functional areas.

CSBT - HR average staffing level

CSBT - HR OpEx

The information derived from the tool could help the agency make vital strategic decisions about its resourcing. It helped the agency understand specific corporate functions where it was operating more efficiently or less efficiently compared to its peers, and whether that performance relates to staffing levels or expenditure.

Get in touch to find out more about how your organisation can use the Corporate Services Benchmarking Tool.