Finance leaders are currently facing challenges amid the shifting labour market, as recruiting skilled talent is taking longer, and many organisations are holding steady on headcount.
It is necessary then for CFOs and the finance function to fully understand and manage personnel costs, posing it as a critical lever for improving cost effectiveness.
According to APQC, one of the most practical ways to do this is to benchmark finance function personnel costs per finance full-time equivalent (FTE) employee and use that metric as a management tool. This way, organisations can understand how their spending compares with peers and where there may be opportunities to work more efficiently.
APQC enumerates ways so that CFOs can make this possible:
Establish a baseline. Finance function personnel cost per finance FTE varies across industries and regions, and these differences must be considered when benchmarking. But identifying where the organisation falls on that spectrum can reveal where to focus improvement efforts.
Understand cost drivers. High personnel costs per FTE can stem from many factors: compensation levels, experience mix, staffing models, or the amount of time finance employees spend on manual or lower-value work. APQC says one can start by breaking down personnel costs by function and role, identifying which activities require advanced skills and where highly compensated staff may be spending time on transactional tasks that could be automated or reassigned.
Match the work to the right structure. In many organisations, transactional work consumes the largest share of the finance team’s time. One way to control personnel costs is to shift that work to shared service centers or external partners. Finance teams can also opt to broaden the skill sets of finance employees so that they can support multiple functions. This must be done carefully to avoid overloading staff, but in some cases, it allows organisations to operate more efficiently without reducing quality.
Use technology to ease cost pressure. APQC says organisations are in need for clear governance. AI introduces new costs, including model development, infrastructure, and maintenance. Finance leaders should track and manage those costs with the same rigor they apply to personnel spending, ensuring that investments in tech truly deliver efficiency gains.
Build measurement and accountability into operations. To use the personnel costs metric effectively, APQC says it should be tracked regularly and tied to functional goals. Establishing a personnel cost per FTE baseline for each finance subfunction allows leaders to see where spending is concentrated and whether those costs are trending up or down over time. Any significant changes should trigger a review to identify the drivers, whether compensation shifts, changes in staffing mix, process inefficiencies, or new system costs.
This kind of transparency helps CFOs and finance leaders address cost issues proactively instead of reactively. It also enables better decisions about resource allocation and process improvements.
Prepare for what comes next. APQC anticipates the labour market to shift again, but finance functions that focus on managing personnel costs now will be better positioned to adapt. By combining benchmarking with process improvement, thoughtful role design, and disciplined use of automation and AI, they can make cost management a steady practice rather than a crisis response.
The organisations that succeed in the next several years will not necessarily be the ones with the biggest finance teams. They will be the ones that consistently get more value from the resources they have and keep their personnel costs under control, even as conditions change.
