Workforce Benchmarking: The CompanySights Advantage at the Big 4

Introduction

Over the years, the Big 4 have transformed from traditional accounting firms into providers of a wide range of services. In their management consulting divisions, they often use workforce benchmarking data to help clients attain operational excellence and create value.

In this case study, we will illustrate how the Big 4 leverage CompanySights, a specialist headcount benchmarking data provider, on the following projects:

• Carveout due diligence
• Integration synergies
• Value creation

Then we wrap up the case study with a short conclusion. Let's get started with how the Big 4 use headcount benchmarks on a carveout due diligence project.

Carveout Due Diligence

Background

‍A large FMCG corporate decided to divest one of its non-core business units to streamline operations and focus on its core business. A Big 4 team was engaged to perform buy-side carveout due diligence to validate the standalone company perimeter and cost base.

Approach

The Big 4 team leveraged functional headcount benchmarking data from CompanySights to validate the total and functional headcount required for the standalone company. The benchmarking data allowed them to:

• Assess the Current State: Review the headcount by function prepared by the sell-side to determine whether there were enough heads to continue operating the business ‘as is’ during the transition period.
• Develop the Target State: Identify headcount opportunities within the standalone company, considering factors such as operational efficiency, market conditions, and future growth projections.

Outcome

The team identified that the standalone company had excess headcount in multiple functions when compared to external benchmarks. By recommending a headcount reduction in these areas, they helped the client establish a leaner, more efficient standalone entity. This added transaction value to the client in what was a highly competitive sale process.

Integration Synergies

Background

One mid-sized technology company was bolted on to another by a Private Equity client to enhance their market presence and benefit from cross-sell opportunities. A Big 4 team was brought in to identify and validate the people cost synergies as part of the investment hypothesis.

Approach

The Big 4 team used CompanySights functional headcount benchmarking data to analyze the combined entity's workforce and identify areas for consolidation and optimization. The steps included:

• Baseline Analysis: Confirmed the headcount by function for each business then mapped them together by function, such as IT, HR, Finance, and Sales.
• Benchmark Comparison: Benchmarked the combined headcount against a company-specific sample set to identify functions with excess staff.
• Synergy Identification: Used the benchmarks to size up the initial cost synergies and then highlighted specific roles that could be de-duplicated.

Outcome

The analysis revealed a large opportunity in the IT and HR functions, where the combined headcount was +30% higher than the benchmarks. By recommending targeted reductions, the Big 4 team enabled their client to realize substantial levels of people cost synergies.

Value Creation

Background

A UK manufacturing company sought Big 4 expertise to identify opportunities for operational improvement and cost reduction, with a particular focus on optimizing its workforce in support functions.

Approach

The Big 4 team used functional headcount benchmarking data from CompanySights to assess the company's current headcount levels and identify potential areas for improvement. The process involved:

• Baseline Review: Evaluated current headcount levels across all functions within the business.
• Functional Benchmarking: Compared the company’s headcount data with workforce benchmarks to identify functions that were overstaffed or underperforming.
• Turnover Analysis: Examined the turnover rate to comparable benchmarks to identify an issue with high attrition that required significant improvement.

Outcome

The team discovered that the company's marketing and support functions had materially higher headcount than industry norms, while the turnover rate across the business was also high relative to benchmarks. The team recommended restructuring these functions, implementing better retention strategies, and investing in training programs to enhance efficiency and reduce turnover. As a result, the company achieved a more balanced and productive workforce, leading to cost savings and improved operational performance.

Conclusion

With access to CompanySights headcount benchmarking data, the Big 4 continue to successfully assist clients in validating workforce hypotheses across many projects. These initiatives not only result in cost savings and operational efficiencies but also enhance the overall competitiveness and sustainability of many client businesses. The Big 4’s expertise in leveraging data-driven insights continues to provide clients with a significant advantage when navigating change.

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