5 Important Employee KPIs to Measure

Carl Coe
Posted by Carl Coe on Apr 25, 2022 7:46:45 AM

Now that remote working is becoming increasingly more common among accounting firms, many owners and managers may feel like it’s even more difficult to get a handle on employee performance. How can you tell whether or not your team is as productive as they need to be, or determine whether there are any roadblocks affecting their work?

The answer is data. By tracking certain employee metrics – also known as key performance indicators (KPIs) – you can understand how your employees are performing relative to expectations.

Although some might associate the idea of tracking employee metrics with harsh micromanagement, when done properly the evaluation of an employee’s numbers doesn’t have to be invasive. In fact, tracking your team’s KPIs might help reveal blocks preventing them from working efficiently. In that sense, it’s important for both employers and employees to have a handle on the key metrics defining team performance.

Here are five of the most important accounting firm KPIs to track.


1. Utilization rate

An employee’s utilization rate is a measure of how much of their overall working time is spent on billable projects. There is a simple formula to determine an employee’s utilization rate:

  • Find the total number of hours an employee works per week
  • Calculate the number of billable hours an employee works per week
  • Divide the hours spent on client work by the total number of hours worked in a week

For example, if an employee works 40 hours in a week and spends 28 of those on client work, they have a utilization rate of 70%. Utilization rate is a great way to evaluate whether or not your team is spending excessive time on administrative tasks or other items not directly tied to generating revenue for the firm. Many of the best software platforms for accounting firms have built-in time and billing features that track utilization rates automatically.

2. Revenue per employee

How efficient is your practice? Calculating your revenue per employee is one way to get an immediate handle on this question. While it won’t give you any detailed answers about the way your practice is operating, calculating revenue per employee gives you a rough look at how well your firm is managing its human resources. The higher the number, the more efficient your business, which is generally a good sign. However, if your revenue per employee is too high, it could be placing undue stress on your team.

3. Number of contacts

Contact frequency can be measured in a few ways. It’s most commonly expressed as the number of times an employee has to reach out to a client via phone or email during a given length of time, sometimes the duration of a client engagement. If you know the average number of times a client needs to be contacted in that same timeframe, an employee’s contact frequency can help you determine if there is an issue with either a particular client or a particular team member.

An excessively high amount of contacts indicates that either there may be an issue with an employee not fully grasping a specific process or a client who isn’t accessible enough or provides confusing information. Both situations are problems that need to be addressed to ensure clients stay happy and your employees are not frustrated.

4. Accounts per employee

Another straightforward KPI that can be calculated relatively quickly, accounts per employee is a helpful way to get a quick look into how busy your team is. You probably have an idea of how many team members are required for each type of client account and in what capacity they need to be deployed. If you have too few employees for the number of clients you’re working with, you’ll be well over these benchmarks.

You may be able to keep up this arrangement for the short term to get you through a busy patch, but eventually, you’ll need to solve this problem by hiring more staff or scaling down your engagements. Otherwise, your team will become stressed and burned out, which can lead to health issues and mistakes that begin to eat into productivity.

5. Expenses

Expenses can be calculated in a variety of ways depending on the nature of the work you do and the responsibilities of your employees. Some employees may even have their own discretion to use a company credit card or vehicle, especially if they work in a client-facing role.

While these expenses can fluctuate up and down to a degree, it’s easy to notice if they far exceed the normal employee expense range. This could be a sign of an unexpected situation involving a client, or it could simply mean that the cost of performing a particular role has become more expensive than it was previously.

Final thoughts on employee KPIs

Tracking the metrics of your team’s performance isn’t meant to create a strict environment where everyone is constantly stressing about meeting their numbers. In fact, when used the right way, employee performance data can actually make work easier for your team. Keeping a close eye on metrics will identify sticking points that are giving your team trouble, difficult clients who might be more of a challenge than they are worth or areas where further training may be needed.

And in an era when we are all less physically connected with our coworkers, tracking metrics is a great way to stay connected as a team and gain a better understanding of how the firm is performing as a whole. If you track the right metrics and act on them appropriately, you can increase profits while keeping your employees happy and productive. With quality accounting practice management software set up to run your firm, tracking and evaluating employee analytics is much easier than you might think.

Topics: Practice Management


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