Disability Service Provider Back-of-House Services...Disability service providers spent a median total of $12,248 per FTE on back-of-house services, which represented 15.5% of total

Disability Service Provider Back-Of-House ServicesNDS Productivity Tool: Inaugural Benchmarking Report 2011 - 2012

Disability Service Provider Back-of-House Services 2013: Public Report NDS Productivity Tool: Inaugural Benchmarking Report 2011 - 2012

Minister’s Message As we progress towards establishing a person centred service environment, where people with disability will have choice and control over the supports they need to live the lives they want, organisations providing services will need to be increasingly responsive.

The quality and cost of a disability service provider’s back-of-house services will directly affect their capacity to deliver services that meet the needs of people with disability.

The NSW Government in partnership with National Disability Services has developed an on-line Productivity Tool that assists non-government organisations to identify and monitor cost drivers and strategies for reducing business input costs.

The impetus for productivity improvement will come from an increased focus on transparency of costs and value for money that will be driven by people with disability and their representatives as they exert control over the services they choose to receive.

The Productivity Tool Benchmarking Report establishes a benchmark against which disability non-government organisations can compare their back-of-office costs against other disability organisations in the sector. This will help organisations to identify the key back-of-office functions to improve productivity, service provision and client outcomes.

I commend this report and encourage you to use the Productivity Tool and Benchmarking Report as part of your on-going operational and performance improvement process. It is resources like these that will best prepare and enable disability organisations to prepare for and respond to the current reforms in the disability service sector.

The Hon. John Ajaka MLC

Minister for Ageing Minister for Disability Services

Disability sector back-of-house benchmarks 2013: Public Report 2011 - 2012

Table of Contents 1 Executive summary ..................................................................................................................................................................................................... 1

2 About the NDS Productivity Tool ................................................................................................................................................................................ 3

2.1 Benefits of back-of-house benchmarking 3

2.2 How the NDS Productivity Tool came about 3

2.3 About the online tool 4

2.4 How benchmarks are calculated and presented 5

3 Profile of participating organisations ......................................................................................................................................................................... 6

4 Benchmark results ...................................................................................................................................................................................................... 8

4.1 Overall benchmark results 8

4.2 Facilities 11

4.3 General administration 14

4.4 Fleet 17

4.5 Finance 21

4.6 Human Resources 24

4.7 Information and Communications Technology 28

4.8 Payroll 32

5 Important qualifiers and limitations about the information in this report .............................................................................................................. 35


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1 Executive summary National Disability Services NSW (“NDS”), in conjunction with the NSW Department of Family and Community Services, Ageing, Disability and Home Care (“ADHC”), commissioned the development of a suite of tools to enable disability service providers to identify opportunities to improve back-of-house productivity. The NDS Productivity Tool combines an online resource to assess a disability service provider’s back-of-house services, benchmark these with similar organisations and share appropriate good practice ideas to improve productivity. The NDS Productivity Tool was developed in partnership with representatives from the NSW disability services sector between November 2012 and August 2013. This report provides the results of benchmarking based on data provided by 24 disability service providers who participated in the inaugural round of benchmarking and the pilot of the tool. It establishes a baseline using information from the 2012 financial year. Disability service providers spent a median total of $12,248 per FTE on back-of-house services, which represented 15.5% of total turnover. Overall, service providers where generally “slightly satisfied” or “satisfied” with the quality of their back-of-house services. A breakdown of this median total cost and satisfaction across the seven back-of-house functions is provided below, in Figure 1 and Figure 2 respectively.

Figure 1: Median investment in each back-of-house function per FTE

Figure 2: Median satisfaction with back-of-house functions

Note: the diamonds on the above figures represent the median across all organisations which provided data for that functional area. The dashed bar shows the spread between the highest and lowest sub-sample medians of those organisations grouped by size. A longer dashed bar indicates greater variability between organisations of different sizes.

$3,484

$1,970

$2,802

$1,415 $1,496

$720

$361$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Facilities Generaladministration

Fleet Finance HR ICT Payroll

Inve

stm

ent i

n ba

ck-o

f-hou

se fu

nctio

ns p

er F

TE p

er a

nnum

4

5

6

7

Facilities Generaladministration

Fleet Finance HR ICT Payroll

Satis

fact

ion

with

bac

k-of

-hou

se fu

nctio

ns

Highly satisfied

Satisfied

Slightly satisfied

Neutral


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Analysis of the benchmarking data and associated context information showed that:

Overall

Economies of scale are possible, particularly in transactional areas such as payroll Medium-sized organisations were benchmarked as the most cost-effective in several areas, suggesting that they could be doing ‘more with the same’ back-of-house as

smaller organisations. Investment in back-of-house may increase as organisation reach a ‘tipping point’ as they increase in size between medium and large Small organisations faced a much larger administrative burden than their medium or large counterparts

Facilities

Investment in facilities services represents 4.19% of turnover and $3,484 per FTE and is the largest area of investment in back-of-house services Large organisations achieve the lowest expenditure at $119 per square metre compared with $292 for medium and $243 for small organisations Depreciation is the largest area of investment in facilities representing 46% of facilities expenses for small, 27% for large and 25% for medium-sized organisations

General administration

General administration is the second largest area of investment and represents 2.93% of turnover and $1,970 per FTE Small organisations spent the highest proportion of turnover by far, at 7.6% compared with only 1.8% and 2.8% for medium and large organisations Small and large organisations spent the highest proportion of admin expenditure on office coordination and support, whereas medium organisations spent the most on office

reception services

Fleet

The median cost to provide fleet was $1,893 per FTE and $9,924 per vehicle, with a median running cost of 55 cents per kilometre Vehicle ownership costs were the highest component of fleet expenditure for all organisations, followed by petrol costs Large organisations operate the most efficient fleets, whilst also having the lowest utilisation and median fleet age, suggesting favourable ownership costs Small and medium organisations have greater variation in fleet composition, with a higher median proportion of specialist vehicles

Finance

The median cost to deliver finance is $1,415 per FTE and represented a median 2.13% of turnover Median organisations had the most cost-effective finance function and the results suggest some economies of scale are possible Small and medium organisations spent a greater proportion on grant and donation management, whereas large organisations spent more on tax and asset management

HR

Investment in HR represented a median 1.42% of turnover and a median $1,496 per FTE Generally, training was the highest component of HR expenditure for disability service providers regardless of size Median staff turnover tended to increase with organisation size and organisations of all sizes largely filled vacant positions externally

ICT

Median ICT expenditure was 1.04% of turnover and benchmarked at a median $720 per FTE Median ICT investment was low, particularly for small and medium organisations who spent 0.9% and 0.4% of turnover on ICT and heavily relied on contractors Large organisations spent a median 1.9% of turnover on ICT and focussed the majority of this investment on communications services

Payroll Payroll represented the smallest component of back-of-house expenditure at 0.49% of turnover and a median $361 cost per FTE Economies of scale were clear in payroll; large organisations with sizeable payrolls were the most cost-effective per headcount and per payslip


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2 About the NDS Productivity Tool

2.1 Benefits of back-of-house benchmarking The quality and cost of a disability service provider’s back-of-house services directly affects their capacity to deliver critical services to people in need.

Highly efficient organisations that deliver quality back-of-house services have more capability for front-of-house service delivery and their staff spend less time dealing with cumbersome administrative and support services. Enabling quality, cost-effective front-of-house services is critical in a person-centred service environment.

Benchmarking serves as one measure against which costs and quality can be accurately measured, compared and improved. When considered alongside each organisation’s individual context and other performance measures, it can provide management with powerful insight into the performance of an organisation, help identify potential opportunities for improvement and guide strategic decision making. It also establishes a baseline today against which to monitor and evaluate the impact of decisions down the track, particularly in the transition to a person-centred service environment. Within organisations, benchmarking has the potential to improve service delivery and can flow through to improved client outcomes as shown in Figure 3 below.

Figure 3: Benefits of benchmarking through the NDS Productivity Tool

Benchmarking also has the potential to benefit the sector as a whole through the sharing of knowledge, the identification of opportunities for sector-wide collaboration and collective improvement and the setting of higher sector standards. The establishment of a service measurement framework and appropriate disciplines signals to clients, stakeholders and donors that the disability sector is committed to maximising value for money.

2.2 How the NDS Productivity Tool came about Few meaningful internal or industry benchmarks exist in the NSW disability sector against which costs and quality can be accurately measured and improved. This makes it hard to compare the efficiency and effectiveness of administrative and support services across organisations, and increases the difficulty of identifying areas where administrative and support services cost or quality is below par (potentially offering opportunities to improve).

NDS Productivity Tool

Measure cost and quality, share good practice & identify

improvement opportunities

Better supported program staff Improved

client outcomes

Improve back-of-house service quality

Reduce back-of-house cost & reinvest savings

Better program resourcing


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In 2012, NDS and ADHC, through the Industry Development Fund, commissioned Nous Group (“Nous”) to develop a suite of tools for disability service providers in NSW to enable productivity growth and support providers in the transition to a person-centred service environment. Nous has considerable experience in organisational benchmarking, particularly in the not-for-profit sector, and has conducted similar back-of-house benchmarking with thirteen Victorian NFP community services sector organisations each year from 2010 to 2013.

The NDS Productivity Tool (and support resources, such as the good practice guides) were developed over an approximate twelve month period, in close consultation with an advisory group of disability service providers in NSW. The survey questions in the tool were tested with a broader group of small, medium and large disability service providers. The 2012 benchmarking pilot (on which the data in this report is based) was undertaken with 24 organisations representative of the disability sector in NSW. ADHC, NDS and Nous would like to thank these organisations for their participation and input in the development, refinement and testing of the tool.

2.3 About the online tool The NDS Productivity Tool and associated good practice information around back-of-house service delivery is accessible online at www.ndsproductivitytool.org.au.

The tool is open to (and free to use) for ADHC-funded disability service providers in NSW. The tool has been designed for the use and benefit of small, medium and large disability service providers across both metropolitan and regional locations.

Through the online tool, disability service providers are able to submit an organisational profile and benchmarking data for seven back-of-house functions: human resources; payroll; fleet; information and communications technology (ICT); finance; facilities; and general administration. Providers are able to submit data for one or more of these seven areas, with a minimum set of questions required to be completed in each area, in order for the data to be submitted to NDS. Data can be submitted at any time during two broad data entry windows during the year.

Upon close of each data entry window, the data is validated and approved by NDS for inclusion into the pool. Once the pool is finalised and closed, service providers that submitted data for benchmarking are able to log back into the tool and run tailored reports comparing their organisation’s benchmarks against the pool and sub-samples of the pool (e.g. small providers only, or large, regional providers only), as well accessing raw pool data (such as that in this report). Good practice guides for each area of the seven back-of-house areas are also available, to help organisations interpret the implications of the benchmarking tool’s output, identify improvement strategies and share sector knowledge around good practice.

All data submitted into the NDS Productivity Tool remains confidential and all results are presented in aggregate form in order to ensure individual service providers cannot be directly or indirectly identified. Further information about the tool, including the terms and conditions of participation and use and frequently asked questions, are available online on the tool’s website.

Figure 4: NDS Productivity Tool homepage

http://www.ndsproductivitytool.org.au/


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2.4 How benchmarks are calculated and presented All data in this report relates to the 2011-12 financial year. The following business rules have been applied in the calculation and presentation of benchmarks in this report (and also apply to all benchmarks outputs through the NDS Productivity Tool):

A minimum pool size of five (per category and sub-category) must be met for a valid benchmark result to be produced. Note that, due to the time and effort required for data submission of high confidence, fewer small organisations (four) participated in the pilot. Their aggregate benchmarks are still included in this report; however, the validity of the data presented for this sub-sample is low due to the small sample size and no context data has been presented that would allow these providers to be identified.

For the presentation of benchmark data, the median is used (where appropriate) rather than the mean to avoid skews resulting from very large or very small data points.

The number of full-time equivalent staff (FTE) is used as the measure of scale for small, medium and large service providers when presenting comparisons. This is as FTE is a measure often closely related to (and a determinant of) the size of most back-of-house functions. The FTE thresholds used for small, medium and large are outlined in the following section.

Important note: each back-of-house survey in the NDS Productivity Tool (in which data is input) consists of a minimum set of mandatory questions and a broader range of optional questions. Mandatory questions generally consist of high level total cost and effort associated with a particular back-of-house service delivery (e.g. total HR effort and cost), whereas optional questions consist of detailed breakdowns of the cost and effort (e.g. training effort, training cost, recruitment effort, recruitment cost etc.) and context information (e.g. staff turnover). This approach was adopted to ensure organisations had flexibility in the amount of data to submit and to reduce the burden of participation on small organisations.

As not all organisations who submitted survey data for a particular back-of-house area completed all optional questions, there are instances where no, or only partial, detailed cost and effort data by service is available. Therefore, detailed service information is based on data provided by a smaller subset of participating organisations and should be taken as indicative only. Furthermore, all information in this report should be considered in light of the qualifiers and limitations outlined in Section 5.


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3 Profile of participating organisations Twenty-four organisations participated in the pilot of the NDS Productivity Tool. The mix of participating organisations provided a good spread of size, location (both metropolitan and regional) and services. Whilst organisations were not required to provide data for each back-of-house area, and many chose only to answer the minimum set of questions in each area, a sufficient number of organisations submitted data in each area to generate sector-wide benchmarks for each back –of-house function.

For comparison, organisations have been classified into small, medium or large providers, based on the number of full-time equivalent staff (FTE). The profile of organisations in each category and across the pool is outlined in Table 1 below.

Table 1: Profile of organisations by size

Small Medium Large

Actual FTE1 < 50 50 - 249 ≥ 250

Number of organisations 4 14 6

Metro2 0 10 6

Regional 4 4 0

Turnover $0.5m - $2m $4m - $17m $54m - $290m

% disability funded3 86% - 100% 51% - 100% 31% - 64%

Number of services delivered 1 - 3 1 - 10 2 - 9

The majority of organisations that participated in the pilot were funded primarily through disability-related grants and service agreements or had revenues earned primarily from disability-related activities, with 16 organisations specifying they were >50% disability funded. 12 of these organisations were concentrated on disability activities, and had disability funding between 75% and 100%. Two organisations were completely disability funded (100%). Four organisations had no disability funding or answered zero for this question.

Large organisations received comparatively less revenue purely from disability sources, with the highest proportion of disability funding amongst large organisations being less than two-thirds of total revenue. Whilst the proportion of disability funding may not perfectly translate to the proportion of disability service provision, this suggests that larger organisations in the pilot group are more diversified and offer services to groups beyond people with a disability. Small and medium organisations, on the other hand, are more likely to be focussed on providing services specifically for people with a disability (and often cater to a specific type of disability or service).

1 Organisations were asked to specify their actual full-time equivalent staff, excluding any vacancies and volunteers. 2 Includes multi-state and state-wide organisations. Organisations were asked to specify the primary location where disability services are delivered. 3 Organisations were asked to specify the percentage of total revenue that is funded through disability related grants and service agreements or earned through disability related activities.


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Participating organisations were also asked to specify the types of services they delivered. The majority of organisations provided multiple services, with only four organisations in the pilot group specifying that they provided one type of service only. The number of services delivered by organisations across the different size categories is outlined in Table 1 (above). Not surprisingly, small organisations provided a narrower range of services than most medium or large organisations.

The proportion of participating organisations that provided each type of service is presented in Figure 5 below. Figure 5: Service information

The majority of organisations that participated in the pilot provided community access and other support services and respite services (83% and 74% of total organisations respectively). Over one-third of organisations (35%) provided accommodation services. This information should be taken into consideration when interpreting benchmark results, as service profile of participating organisations has a significant impact on the level of back-of-house service provision and asset base required to support front-of-house service delivery.

35%

43% 43% 43%

83%

74%

43%

22%

35%

48%

0%

20%

40%

60%

80%

100%

Accomodation(group homesand residential

facilities)

Accomodationsupport

Earlyintervention

Therapy services Communityaccess and other

support(excludingtherapy)

Respite services Employmentservices

Targetedemploymentsupport and

training

Advocacy,information andalternative forms

ofcommunication

Other support

Prop

ortio

n of

org

anisa

tions

that

pro

vide

d th

e se

rvic

e

Services provided by participating organisations


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4 Benchmark results

4.1 Overall benchmark results Disability service providers spent a median total of $12,248 per FTE on back-of-house services, which represented 15.5% of total turnover. The organisations reported that the highest level of investment in back-of-house services as a proportion of turnover (revenue) was spent on facilities at 4.19%. The facilities services include property management, repairs, maintenance, utilities, fire, safety, inspections, major works and refurbishments. The provision of fleet services received the second highest proportion of turnover (2.93%). Across all organisations, the smallest proportion (0.49%) of turnover was spent on the payroll function.

When viewed as a cost per full time equivalent employee, expenditure on facilities remains highest at $3,484 per FTE; second highest is general administration at $1,970, and fleet is the third highest cost at $1,833 per FTE. The payroll function remains the lowest cost at $361 per FTE. Figure 6 provides the total expenditure for all organisations in back-of-house services by service type.

Figure 6: Total spend on back-of house functions as percentage of turnover (left) and per FTE (right) - for all organisations

4.19%

3.29%

2.93%

2.13%

1.42%

1.04%

0.49%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%

Facilities

Fleet

Administration

Finance

HR

ICT

Payroll

Total spend on back-of-house functions as a percentage of turnover (all organisations)

3,484

1,970

1,893

1,496

1,415

720

361

- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Facilities

Administration

Fleet

HR

Finance

ICT

Payroll

$

Total spend on back-of-house functions per FTE (all organisations)


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4.1.1 Overall benchmark results by organisation size The median spend per FTE on back-of-house function by organisation size (and as a proportion of turnover) is detailed in Table 2 below.

Table 2: Back-of-house spend per FTE and as a proportion of turnover (by size)

Facilities Fleet Administration Finance HR ICT Payroll

Small organisations $3,277 (3.3%)

$2,489 (2.6%)

$4,090 (7.6%)

$1,994 (2.5%)

$1,506 (1.4%)

$528 (0.9%)

$761 (0.9%)

Medium organisations

$3,009 (4.8%)

$2,347 (4.0%)

$692 (1.8%)

$1,162 (2.6%)

$646 (1.2%)

$293 (0.4%)

$351 (0.5%)

Large organisations $5,444 (6.5%)

$3,253 (3.3%)

$1,540 (2.8%)

$1,370 (1.5%)

$1,515 (1.5%)

$1,398 (1.9%)

$244 (0.3%)

Figure 7: Total spend on back-of-house functions as a percentage of turnover (by size)

Figure 8: Total spend on back-of-house functions per FTE (by size)

The facilities function received the highest median proportion of turnover spent by large organisations, which may be due to their higher investment in care facilities. Large organisations’ higher median investment in ICT may reflect investments in more sophisticated systems, whereas small and medium organisations may focus on

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%

Facilities

Fleet

Administration

Finance

HR

ICT

Payroll

Total spend on back-of-house functions as a percentage of turnover (by organisation size)

Large Medium Small

- 1,000 2,000 3,000 4,000 5,000 6,000

Facilities

Administration

Fleet

HR

Finance

ICT

Payroll

$

Total spend on back-of-house functions per FTE (by organisation size)

Large organisations Medium organisations Small organisations


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maintenance and staff costs, and run less sophisticated systems. Payroll offers an example of economies of scale in a transactional process, where large organisations achieved lower costs per FTE and small organisations spent the most.

Expressed as a cost per FTE, small organisations spent $4,091 per FTE on their administration function. In provision of facilities, large organisations spent $5,444 per FTE on this function and medium organisations spent $3,009, as shown in Figure 8. The smallest expenditure per FTE was by large organisations on payroll at $244 per FTE. Small and medium organisations spent the least per FTE on their ICT function, at $293 and $529 per FTE respectively.

4.1.2 Satisfaction with the back-of-house functions In terms of satisfaction with the back-of-house functions, across all organisations the overall staff satisfaction level was highest for payroll, finance and facilities functions, which each received a “satisfied” score4 of 6 out of 7. HR, fleet, ICT and general administration received slightly lower satisfaction scores. Median satisfaction across functions is shown in Figure 9 below.

Figure 9: Satisfaction with back-of-house functions (all organisations)

4 A score of 1 represents “highly dissatisfied” and 7 represents “highly satisfied”. Organisations were asked to specify a rating, as well as how this rating was determined (either through a staff survey, management

survey or at the discretion of the individual completing the survey).

Satisfaction with back-of-house functions (all organisations)

HR Fleet ICT Payroll Finance Facilities

5 5 5 6 6 6

General administration

5.5


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4.2 Facilities The nature and number of facilities owned and operated by a disability service provider depends on the type of services they provide and where they are located. For this reason, facilities can be a significant expense for disability service providers that provide services such as accommodation and group home support and those located in metropolitan areas. It can be less expensive for disability service providers whose primary facilities are corporate offices and those which operate in rural and regional locations. However, having ‘fit-for-purpose’ and efficiently operated facilities is important for all organisations to deliver effective front-of-house services.

Investment in facilities represented 4.19% of turnover across all organisations and was the highest median back-of-house service expenditure area. The median total spend on the facilities function across all organisations was $3,484 per FTE. The median facilities cost per square metre across all organisations was $208. In general, organisations were ‘satisfied’ with their facilities function, rating the function 6 out of 7 on the satisfaction scale. These facilities benchmarks are summarised in Table 3 below (left).

Table 3: Facilities function results across all organisations

All organisations

Facilities expense as a % of turnover 4.19%

Facilities expense per FTE $3,484

Total facilities cost per square metre $208

Satisfaction 6 out of 7

Figure 10: Facilities expenditure as a proportion of turnover (by size)

Large organisations spent a relatively greater proportion of total revenue (turnover) on the facilities function, followed by medium then small organisations. Figure 10 above (right) presents facilities expenditure as a proportion of total revenue across small medium and large organisations. It also shows that medium and large organisations spend a greater proportion of turnover than the pool median (4.19%) on facilities, whereas small organisations spend less.

3.3%

4.8%

6.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Small organisations Medium organisations Large organisations

Facilities expenditure as a proportion of total revenue (by size)

All organisations (4.2%)


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4.2.1 Facilities function results by organisation size Figure 11 below (left) benchmarks the facilities cost per square metre between small, medium and large organisations. Large organisations had the lowest facilities cost per square metre ($119), which was considerably less than small ($243) and medium organisations ($292). Two potential reasons for this variance between small and medium and large organisations could be:

Economies of scale – large organisations are likely to operate larger or more numerous facilities for service delivery and are therefore better able to leverage their size and sophistication to efficiently service these facilities

Centralisation of back office – large organisations may be more inclined to centralise their back office and rationalise the amount of corporate functions and administrative activities conducted in multiple locations. This is likely to result in lower facilities expenditure, particularly through reduced rent and depreciation expenses for commercial office space.

Figure 11: Facilities cost per square metre (by organisation size)

Figure 12: Facilities service cost per square metre (by size)

Figure 12 above (right) provides a breakdown of facilities costs per square metre across the different service areas of the facilities function, compared by size. It shows that for small organisations, rent and depreciation is the overwhelming facilities cost for the organisation (combined 84% of facilities costs per square metre). Depreciation is the largest expense component for both small and large organisations. Repairs and maintenance is the largest component for medium organisations and both medium and large organisations spend considerably more on repairs and maintenance than small organisations.

It is difficult to draw conclusions based on these finds without a good understanding of context, given that facilities is one area where the size and nature of the function will vary greatly depending on the types of services delivered. However, the results broadly suggest that:

243

292

119

-

50

100

150

200

250

300

350

Facilities function cost per square metre (by organisation size)


$

0% 10% 20% 30% 40% 50%

Rent

Depreciation expense

Major works and refurbishments

Repairs and maintenance

Utilities

Property management

Fire, safety and inspections

Facilities service costs per square metre (by size)



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Costs associated with ownership and tenancies are the greatest component of facilities expenditure. Organisations should therefore seek to optimise their property strategy and carefully consider lease vs. buy decisions

Repairs and maintenance and utilities costs are considerably higher for large and medium organisations than small organisations. This could be due to the fact that medium and large organisations are more likely to provide intensive care and accommodation facilities, and thus incur greater costs in these service categories than small organisations, which are more likely to operate day services in their facilities.

Medium-sized organisations tend to under-invest in property management and fire, safety and inspections compared to small and large organisations.

4.2.2 Facilities function results by location Facilities was an area where providers expressed interest in comparing results by location, in particular the difference in rental costs between metropolitan and regional organisations. The benchmarked rental expense per leased square metre between metropolitan (including multi-state and state-wide) and regional organisations is presented in Table 4 below. As expected, organisations that operated in metropolitan locations incurred higher rental costs than regional-only organisations, with a difference of $92 per square metre per annum between the two.

Table 4: Rental costs by location

Metro organisations Regional organisations

Rent expense per leased square metre (per annum) $280 $188

4.2.3 Satisfaction with facilities function Figure 13 below displays the satisfaction with the facilities function. Overall, organisations were “satisfied” with their facilities function, rating the function 6 out of 7. Medium sized organisations rated their satisfaction with facilities slightly lower at 5 out of 7, corresponding with a “slightly satisfied” score.

Figure 13: Level of satisfaction with facilities (by organisation size)


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4.3 General administration General administration is an important function to enable the effective and efficient operation of any organisation. The scope of work performed by administrative staff often varies widely; however, in most cases, administrative staff handle general enquiries, support frontline and Executive staff and allow them to focus on their core functions and ensure the organisation runs smoothly on a day-to-day basis.

Investment in administration services represents 2.93% as a proportion of total revenue. The median cost across all organisations to provide general administration was $1,970 per FTE. Satisfaction with administration services was 5.5 out of 7, corresponding to a rating between “slightly satisfied” and “satisfied”. These benchmarks are summarised in Table 5 below (left).

Table 5: General administration function results across all organisations

All organisations

Administration expense as a % of turnover 2.93%

Administration expense per FTE $1,970

Satisfaction 5.5 out of 7

Figure 14: General Administration service cost as a proportion of total turnover (by size)

Investment in administration is significantly higher for small organisations, with a median 7.6% of total revenue invested in the function. Medium sized organisations invest the lowest proportion of total revenue in administration services at 1.8%. Figure 14 above (right) shows administration expenditure as a proportion of total turnover by organisation size.

7.6%

1.8%

2.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%


Administration expenditure as a proportion of total revenue (by size)



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4.3.1 General administration function results by organisation size Provision of general administration services was most expensive for small organisations, which spent a median of $4,091 per FTE on this function. By comparison, medium organisations spent significantly less at $692 per FTE and large organisations’ expenditure on their general administration function was nearer the lower level at $1,540 per FTE as shown in Figure 15 below (left).

Figure 15: General administration function cost per FTE (by size)

Figure 16: General administration service costs per FTE (by size)

Analysis of service data (Figure 16, above right) showed small organisations place their greatest effort on office co-ordination and support (65% of general administration service costs per FTE). They also report a high proportion in office reception (17%) and executive assistance (11%). Large organisations highest investment in administration services was also on office coordination and support at 61% of general administration service costs per FTE.

The reported data reflects a significantly low relative investment in administration by medium organisations. These organisations report that, although their operating hours are the same, they provide a median of 1.9 FTE in administration support compared to 3.3 FTE in small organisations and 51 FTE in large organisations. Medium organisations’ highest area of expense per FTE was on office reception (54%).

4,091

692

1,540

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

General Administration function cost per FTE (by organisation size)


$

0% 10% 20% 30% 40% 50% 60% 70%

Office coordination andsupport

Office reception

Executive assistance

Mail and courier services

Rostering

Other

Administration service costs per FTE (by size)



| 1 6 |

4.3.2 Staff satisfaction with General Administration function By organisation size, the level of staff satisfaction with the General Administration function ranged from 5 to 6 out of 7. Small organisations rated5 the lowest in satisfaction with the General Administrative function (at 5 out of 7) and medium organisations’ General Administration function received a higher score of 6 out of 7. The relatively high staff satisfaction level of 5.5 out of 7 may reflect the high visibility and acknowledged necessity of the services provided. This is shown in Figure 17 below.

Figure 17: Level of satisfaction with general administration function (by size)

5 Rating scale: 1 represents “highly dissatisfied” and 7 represents “highly satisfied”.


| 1 7 |

4.4 Fleet Fleet can be a considerable cost, particularly for those disability service providers that deliver services across broad geographical areas, such as regional organisations. The fleet function is also important for those disability service providers that provide community access services and those that deliver critical services to the client’s home. Analysis of the median fleet size and type of fleet illustrates the importance of fleet to disability service providers and demonstrates the relatively high proportion of specialist vehicles, which may impact the costs of acquisition and ongoing servicing.

Table 6 below (left) displays fleet benchmarks across all organisations. Investment in back-of-house fleet services represents a median of 3.3% of turnover for disability service providers. The median cost to provide the fleet function per vehicle was $9,924, with a median fleet running cost of 55 cents per kilometre. The median investment in fleet services was $1,893 per FTE. Expenditure on fleet accounts for 4% of the proportion of revenue for medium sized organisations and 2.6% for small organisations. Satisfaction in fleet services was rated as 5 of 7 (“slightly satisfied”).

Table 6: Fleet function results across all organisations

All organisations

Fleet expense as a % of turnover 3.3%

Fleet expense per FTE $1,893

Fleet running cost per vehicle $9,924

Fleet running cost per km $0.55


Figure 18: Fleet service cost as a proportion of total turnover (by size)

Analysis of fleet services by organisation size reveals that medium sized organisations invest the highest proportion of turnover (4.0%) in fleet services while small organisations invest the lowest (2.6%). The fleet expenditure as a proportion of turnover by size of organisation is shown in Figure 18 above (right).

2.6%

4.0%

3.3%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%


Fleet expenditure as a proportion of total revenue (by size)



| 1 8 |

4.4.1 Fleet function results by organisation size The median cost to provide fleet services was highest for medium organisations, which spend $11,154 per vehicle or $0.77 on fleet running costs per kilometre. Small organisations spent almost as much $10,814 per vehicle or $0.75 on fleet running costs per kilometre on these services. Large organisations spent the least at $8,506 per vehicle or $0.45 per kilometre. The proportion of fleet running costs per vehicle and per kilometre is shown in Figure 19 and Figure 20 below (left and right, respectively).

Figure 19: Fleet running costs per vehicle (by size)

Figure 20: Fleet running costs per kilometre (by size)

Disability service providers reported a median of 30 vehicles across all organisations. Analysis of fleet size and composition in Table 7 below shows the median total fleet size and number of specialist vehicles. These indicate a relatively high proportion of specialist vehicles overall and particularly by medium sized providers.

Table 7: Fleet composition and size (by size)

Small Medium Large

Number of specialist vehicles 4 15 64

Total fleet size (median) 10.5 29.5 223

10,814 11,154

8,506

-

2,000

4,000

6,000

8,000

10,000

12,000General Fleet running cost per vehicle (by organisation size)


$

0.75 0.77

0.45

-

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90General Fleet running cost per kilometre (by organisation size)


$


| 1 9 |

Analysis of the type of fleet service by organisation size reveals the highest median proportion of total fleet services cost was related to vehicle ownership. This accounts for 55% of small organisations total fleet expenses, 38% of medium and 29% of large organisations. The second highest proportion of fleet function cost was spent on petrol which accounts for between 21% and 23% of fleet expenditure (based on reported median rates). Costs associated with fleet services by size of organisation are shown in Figure 21 below.

Organisations overall reported a median mileage of 9,000km per vehicle per year. Medium and large organisations report that a median of 100% of the fleet is owned by the organisation, whereas for small organisations a median of 93% of the fleet is owned and 7% is leased.

Medium sized organisations reported a higher average age of the fleet at a median of 6.5 years, compared to a median 3.85 and 2.5 years in small and large organisations respectively.

Vehicles in medium size organisations are predominantly used from a pool (median of 90%), compared to 66% of small organisations’ vehicles and 39% of large organisations vehicles.

Large organisations report lower rates of utilisation (79%) and a younger fleet age; however despite this, achieve the lowest operating costs per vehicle and kilometre. This suggests they are achieving economies of scale in vehicle ownership costs.

By contrast small and medium sized organisations report higher rates of utilisation (100% and 90% respectively), operate older fleets and direct a higher proportion to fleet management, yet achieve considerably higher costs per vehicle and per kilometre.

Figure 21: Fleet running costs by service type (by size)

0% 10% 20% 30% 40% 50% 60%

Petrol

Maintenance

Vehicle ownership

Insurance

Fleet management and administration

Repairs (from accidents)

Private mileage claims

Other

Out-sourced fleet management

Facilities (car parking)

Fringe Benefit Tax

Private contributions

Fleet service costs per FTE (by size)



| 2 0 |

4.4.2 Satisfaction with fleet function Across all organisations, satisfaction with the fleet function achieved a rating of 5 out of 7, corresponding to “slightly satisfied”. Medium organisations rated lowest in satisfaction with their Fleet function (at 5 out of 7) and both small and large organisations’ fleet functions received a higher score of 5 out of 7. This is shown in Figure 22 below.

Figure 22: Level of satisfaction with fleet function (by size)


| 2 1 |

4.5 Finance The finance function is fundamental to the day-to-day operations of all disability service providers. Developing appropriate budgets, processing accounts, managing organisation’s financial resources need to be done efficiently and effectively. As revenue composition changes and becomes more volatile in a person-centred service environment, invoicing and accounts receivable activities will also become increasingly important.

Investment in finance services represented 2.13% of turnover across all organisations. The median total spend on the finance function across all organisations was $1,415 per FTE. In general, organisations were ‘satisfied’ with their facilities function, rating the function 6 out of 7 on the satisfaction scale. These finance benchmarks are summarised in Table 8 below (left).

Table 8: Facilities function results across all organisations

All organisations

Finance expense as a % of total turnover 2.13%

Finance expense per FTE $1,415


Figure 23: Finance expenditure as a proportion of turnover (by size)

Figure 23 above (right) compares finance expenditure as a proportion of total revenue (turnover) between small, medium and large organisations. It shows that both small and medium organisations spend approximately the same proportion of turnover on their finance function, which is higher than the pool median of 2.1%. Large organisations, on the other hand, spend proportionately less of their turnover on finance.

2.5%2.6%

1.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%


Finance expenditure as a proportion of total revenue (by size)



| 2 2 |

4.5.1 Finance function results by organisation size Figure 24 below (left) benchmarks the finance expense per FTE between small, medium and large organisations. Medium organisations had the lowest finance cost per FTE ($1,162), followed by large organisations ($1,370) and then small organisations ($1,994). These results suggest economies of scale are possible in the finance function; it could be that medium organisations have a simpler or more highly utilised finance function than larger organisations, which are more likely to have multiple finance teams and more sophisticated (and potentially slightly more costly) systems.

Figure 24: Finance expense per FTE (by size)

Figure 25: Finance service costs per FTE (by size)

Figure 25 above (right) provides a breakdown of finance service costs per FTE across the different service areas of the finance function, compared by size. Financial and management accounting together comprise the great proportion of finance costs across organisations of all sizes; however, for large and medium organisations, financial accounting is the greater area of investment whereas for small organisations it is management accounting.

Some key insights from the data and some potential explanations are:

Large organisations, not surprisingly, spent the greatest amount on tax, asset management and other. This is likely due to the comparatively larger balance sheet of large organisations, who reported a median value of assets under management of $22m, compared to only $5m for medium organisations and $250k for small organisations.

Small organisations spent the highest proportion on grant and donation management, followed by medium organisations. This could be due to the fact that this is a more crucial source of income for them (larger organisations are likely to have more diversified sources of income) and hence it is reasonable to see proportionately higher effort into this service.

1,994

1,1621,370

-

500

1,000

1,500

2,000

2,500General Finance function cost per FTE (by organisation size)


$

0% 10% 20% 30% 40% 50%

Financial accounting

Grant and donation management

Management accounting

External reporting and financial governance

Tax, asset management and other

Finance service costs (by size)



| 2 3 |

Context information provided by organisations on their financial accounting service showed that small and medium organisations had a lower median proportion of payments made through EFT (68% and 64% respectively) compared to large organisations (90%). These payments were instead made by cheque. This could account for some of the additional cost, due to the increased handling associated with cheque-writing compared with partially-automated bulk EFT payments.

4.5.2 Satisfaction with finance function Figure 26 below displays the satisfaction with the finance function. Overall, organisations were “satisfied” with their finance function, with a median rating of 6 out of 7 across all organisations. Large organisations scored slightly lower.

Figure 26: Level of satisfaction with Finance function (by size)


| 2 4 |

4.6 Human Resources Disability service organisations are faced with significant opportunities and challenges when it comes to managing their workforce. Organisations will need to attract, retain and develop their workforce given the expected growth in jobs in the sector over the next several years. Flexible and adaptable working arrangements will become increasingly important in a person-centred environment. Organisations will also need to utilise best practice people management to effectively deliver services and become an employer of choice, and also develop the sector to become a sector of choice.

Investment in human resources (HR) services represented 1.42% of turnover across all organisations. The median total spend on the HR function across all organisations was $1,496 per FTE. A subset of organisations provided information on training; these organisations spent a median of $653 on training per FTE. In general, organisations were ‘slightly satisfied’ with their HR function, rating the function 5 out of 7 on the satisfaction scale. These HR benchmarks are summarised in Table 9 below (left).

Table 9: HR function results across all organisations

All organisations

HR expense as a % of total turnover 1.42%

HR expense per FTE $1,496

Investment in training per FTE $653


Figure 27: HR expenditure as a proportion of turnover (by size)

Figure 27 compares HR expenditure as a proportion of total revenue (turnover) between small, medium and large organisations. Proportionate HR expenditure did not vary greatly between organisations of different sizes, with a spread of only 0.3% of total revenue across the medians. Medium-sized organisations were found to spend the smallest proportion of turnover on HR (1.2%), whereas large organisations were found to spend the most (1.5%).

1.4%

1.2%

1.5%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%


HR expenditure as a proportion of total revenue (by size)



| 2 5 |

4.6.1 HR function results by organisation size Figure 28 below (left) benchmarks the HR expense per headcount between small, medium and large organisations. Note that headcount is used instead of FTE as it is more closely related to HR costs (for example, recruitment will need to incur for each individual employee, regardless of whether they are a full-time equivalent or not).

A comparison of HR investment by organisation size shows that large organisations spent the highest median amount per headcount ($1,457) on their HR function, whereas medium organisations spent considerably less ($543) per headcount. Small organisations sat between the two, with a median spend of $1,168 per headcount. As with other areas, one reason for the medium organisations’ result could be due to many medium organisations having a simpler or more highly utilised HR function than larger organisations – essentially maintaining a ‘small’ organisation’s back of house whilst servicing more employees and clients.

Figure 28: HR expense per headcount (by size)

Figure 29: HR service costs per headcount (by size)

The breakdown of HR service costs per headcount across the different service areas of HR, compared by size, is outlined in Figure 29 above (right). It shows that training is the largest expenditure component within HR for small and large organisations (excluding the ‘other’ component which will vary between organisations). WHS was the largest component for medium organisations (however, as reporting service costs is not compulsory in the NDS Productivity Tool, this result is likely to be skewed by a number of larger medium organisations who were able to calculate and report their WHS expenditure). Training was the second highest component of expenditure for medium organisations.

Some key insights from the HR data above and from additional context data provided through the tool are:

Generally, training was the highest component of HR expenditure for disability service providers regardless of size

1,168

543

1,457

-

200

400

600

800

1,000

1,200

1,400

1,600

$

Total spend on HR function per headcount (by organisation size)


0% 10% 20% 30% 40%

Training

Management services

WHS

Workplace relations

Recruitment and selection

Performance management

Other

HR service costs per headcount (by size)



| 2 6 |

Staff turnover is a likely driver of key HR service costs, in particular recruitment and selection, and training. The median staff turnover rate across all organisations was 12%. Small organisations reported the median lowest turnover (8.5%). Medium and large organisations both reported higher median turnover (12% and 17% respectively)

Disability service providers largely filled vacant positions externally. This was more the case for medium and large organisations (83% and 85% of vacant positions filled externally, respectively) than small organisations (75%).

4.6.2 Training costs by organisation size A subset of organisations that submitted HR data reported investment in professional development and training. The median investment in training per FTE was $653 across all organisations. A comparison of training investment between organisations of different sizes is provided is Figure 30 below. Medium organisations reported the highest training investment per FTE.

Figure 30: Investment in training (by size)

An analysis of context information provided around training revealed that:

Training across the sector is overwhelmingly delivered in a classroom environment (92% of training methods used) with small components delivered online (5%) or being paper-based (3%). When compared by size, large organisations reported a higher median of training delivered online (25%), whereas small and medium organisations’ training delivery largely mirrored that of the broader sector.

574

695

611

-

100

200

300

400

500

600

700

800$

Training cost per FTE (by organisation size)



| 2 7 |

Large organisations also tended to deliver the majority of their training internally (in-house), whereas small and medium providers reported primarily using external providers.

4.6.3 Satisfaction with HR function Figure 31 below displays the satisfaction with the HR function. Overall, organisations were “slightly satisfied” with their HR function, rating the function 5 out of 7. Small organisations rated their satisfaction with HR slightly lower at 4 out of 7, corresponding with a “neutral” score.

Figure 31: Level of satisfaction with the HR function (by size)


| 2 8 |

4.7 Information and Communications Technology High quality ICT provides staff with valuable client information when they need it, can support service planning and improve efficiency. Low quality ICT support leaves staff without the information they require, reduces efficiency and limits organisational effectiveness because senior management do not have the information required to proactively manage the organisation or service delivery.

Investment in information and communications technology (ICT) represented 1.04% of turnover across all organisations. The median total spend on the ICT function across all organisations was $720 per FTE. In general, organisations were “slightly satisfied” with their ICT function, rating the function 5 out of 7 on the satisfaction scale. These ICT benchmarks are summarised in Table 10 below (left).

Table 10: ICT function results across all organisations

All organisations

ICT expense as a % of total turnover 1.04%

ICT expense per FTE $720


Figure 32: ICT expenditure as a proportion of turnover (by size)

Figure 32 above (right) compares ICT expenditure as a proportion of total revenue (turnover) between small, medium and large organisations. Overall, ICT investment was found to be lower than originally anticipated (1.0% of turnover), particularly amongst medium-sized organisations, which reported the lowest proportion of turnover spent on the ICT function (0.4%). Small organisations spent an additional 0.5% of turnover on ICT (0.9%). Large organisations reported spending the greatest proportion of turnover on ICT (1.9%).

0.9%

0.4%

1.9%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%


ICT expenditure as a proportion of total revenue (by size)



| 2 9 |

4.7.1 ICT function results by organisation size Figure 33 below (left) benchmarks the ICT expenditure per FTE between small, medium and large organisations. Large organisations spent the highest amount on ICT per FTE ($1,935) by a considerable margin; small and medium organisations spent $681 and $312 per FTE respectively. An analysis of the context data provided in the ICT surveys and from discussions with service providers suggests the following possible explanations for these results:

It is likely that small and medium organisations both utilise simple and ‘off-the-shelf’ ICT systems and products, accounting for the lower ICT spend per FTE. As organisations expand their size and operations, a ‘tipping point’ is reached whereby additional investment and a significant upgrade of the ICT function to an enterprise-level configuration is required. This often involves not only an upgrade in hardware and software, but also deployment of ICT across the organisation and in frontline service delivery. This can be accompanied by significant back-of-house investment to support this functionality.

Small and medium-sized organisations tended to primarily utilise contractors for their ICT effort (median of 100% and 69% of total ICT personnel, respectively) and it is possible that these contractors are only employed on an ‘as-needs’ basis (i.e. to respond to incidents or on specific projects). Larger organisations, on the other hand, used a smaller proportion of contractors (median of 5.5% of total ICT personnel) and are therefore likely employing (and require) full-time staff, contributing to their higher overall ICT cost.

Figure 33: ICT function cost per FTE (by size)

Figure 34: ICT service expenses per FTE (by size)

Figure 34 above (right) demonstrates the relative expenditure across the different service components of ICT by organisation size. It shows that for small and medium-sized organisations, applications support, operations and maintenance is the biggest area of ICT expenditure and, along with base IT environment

681

312

1,935

-

500

1,000

1,500

2,000

2,500

General ICT function cost per FTE (by organisation size)


$

0% 10% 20% 30% 40% 50%

Base IT environment

Communications services

Other

Applications support, operations andmaintenance

New or enhancements of existing ICT

ICT service costs per FTE (by size)



| 3 0 |

expenditure, highlights that small and medium organisations are largely focussed on support of ‘business-as-usual’ and maintaining existing system viability. In comparison, communications is the largest area of expenditure for large organisations. This is not surprising given that large, often geographically diverse organisations will prioritise communications infrastructure and investment in data network links (both between sites and to the internet) in order to support operations, and will incur higher data and transmission costs.

Some additional insights from the ICT data above and from additional context data provided through the tool are:

The median number of communication devices supported by large organisations was considerably higher than small or medium organisations, likely contributing to the higher proportionate expenditure in communications. The number of communications devices supported across different organisations is outlined in Table 11 below:

Table 11: Communications devices supported (by size)

All organisations Small organisations Medium organisations Large organisations

Number of telephone handsets in use 57.5 21.5 35 500

Number of mobiles in use 44.5 20.5 49 300

Within applications support, operations and maintenance, the largest areas of expenditure were on the finance system and CRM system. Large organisations also reported fundraising applications as a relatively significant area of expenditure; small and medium organisations by and large did not invest much in fundraising applications.

Large organisations undertook the highest volume of projects to upgrade or significantly enhance ICT capability over the course of the financial year. Large organisations reported a median of eight projects over the year, whereas medium organisations reported a median of only two and small organisations reported none (a median of zero).


| 3 1 |

4.7.2 Satisfaction with ICT function Figure 35 below displays the satisfaction with the ICT function. Overall, organisations were “slightly satisfied” with their ICT function, rating the function 5 out of 7. Small organisations rated their satisfaction with ICT slightly lower at 4 out of 7, corresponding with a “neutral” score.

Figure 35: Level of satisfaction with ICT function (by size)

It may be reasonable to expect organisations to be generally neutral about an ICT function, as ICT services are often viewed as “there when you need it” and, unless significant failure occurs, little consideration is given to the day-to-day ICT service. The rating may also represent the experience from a helpdesk, rather than the broader function.


| 3 2 |

4.8 Payroll Payroll is a critical back-of-house function for all organisations. Paying the right amount, on time is important to maintain staff satisfaction and productivity. For most disability service providers, salary costs are a significant (if not the largest) proportion of the budget, making payroll services more important than for other organisations that have smaller payrolls.

Investment in payroll services represented 0.49% of turnover across all organisations and was the smallest median back-of-house service expenditure area. The median total spend on the payroll function across all organisations was $361 per FTE and $195 per headcount. The median payroll cost across organisations was $9.04 per payslip. For a subset of organisations that provided salary packaging services, and provided data on this through the tool, the median salary packaging cost was $226 per staff member that utilised salary packaging. In general, organisations were ‘satisfied’ with their payroll function, rating the function 6 out of 7 on the satisfaction scale. These payroll benchmarks are summarised in Table 12 below.

Table 12: HR function results across all organisations

All organisations

Payroll expense as a % of total turnover 0.49%

General payroll expense per FTE6

$361

General payroll expense per headcount6 $195

General payroll cost per payslip6 $9.04

Salary packaging cost per member $226


6 General payroll costs exclude salary packaging.


| 3 3 |

4.8.1 Payroll function results by organisation size Payroll was an area that clearly illustrated the potential for economies of scale in transactional back-of-house service delivery. Large organisations benchmarked the lowest median payroll cost per headcount and cost per payslip ($155 and $5, respectively). Medium organisations incurred a median payroll cost per headcount of $209 and a median cost per payslip of $5. Small organisations had the highest median cost in both categories ($346 per headcount and $13 per payslip). These results are represented in Figure 36 and Figure 37 below.

Figure 36: General payroll cost per headcount (by size)

Figure 37: General payroll cost per payslip (by size)

Context data around payroll revealed that: The frequency of pay periods amongst participating organisations was almost universally fortnightly, with a small number of medium organisations reporting

an operation with weekly pay periods.

The number of payroll changes required per fortnight could be driver of cost, particularly for small organisations. Small organisations reported a median of 20 payroll changes per fortnight (28% of the median number of payslips processed each fortnight). Comparatively, large organisations reported a median of 200 changes per fortnight (20% of median fortnightly payslips) and medium-sized organisations did better still (median of 10 per fortnight, or 7% of median fortnightly payslips).

The proportion of staff in different payroll categories increased with organisation size, with large organisations reporting the lowest proportion of staff on basic salaries, very few casual staff and a larger proportion of rostered staff. The median staff breakdown by payroll category is provided in Table 13:

346

209

155

-

50

100

150

200

250

300

350

400

General payroll cost per headcount (by organisation size)


$

13

9

5

-

2

4

6

8

10

12

14

16

General payroll cost per payslip (by organisation size)


$


| 3 4 |

Table 13: Staff in different payroll categories (by size)


Basic salary 53% 54% 49% 46%

Casual 45% 46% 34% 8%

Rosters 2% 0% 6% 33%

Other 0% 0% 10% 13%

Salary packaging services were more likely utilised by staff in larger organisations. The median number and proportion of staff that use salary packaging by organisation size is presented in Table 14 that follows:

Table 14: Utilisation of salary packaging services (by size)


Number of staff who use salary packaging 47.5 18 55 570

% fortnightly payroll 47.5% 24% 39% 58%

4.8.2 Satisfaction with payroll function Figure 38 below displays the satisfaction with the payroll function. Overall, organisations were “satisfied” with their payroll function, rating the function 6 out of 7. Large organisations rated their satisfaction with payroll slightly lower at 5.5 out of 7, corresponding with a score between “slightly satisfied” and “satisfied”.

Figure 38: Level of satisfaction with payroll function (by size)


| 3 5 |

5 Important qualifiers and limitations about the information in this report The majority of organisations provided data for all or most of the back-of-house services benchmarked through the NDS Productivity Tool. In some cases though, organisations were unable to collect the required data to an acceptable level of quality or within the specified period of time for the pilot. In a few cases, certain back-of-house functions were not relevant to an organisation (e.g. the organisation did not operate a fleet). In these instances, organisations did not submit data for particular functions. It is expected that familiarity with the tool, improvements in reporting and data collection and a longer data entry window will increase the quality and quantity of data submitted in future years.

When considering the benchmarking results presented in this report and throughout the NDS Productivity Tool, it is important to remember that: The results presented are medians of the pool and of the small, medium and large sub-sets of the pool.

Staff costs included gross salary only. For example, whilst workcover costs are included within the HR functional areas, the cost of providing staff with technology support is included in ICT, costs such as superannuation and accommodation costs have been excluded. This reduced the effort required by participating organisations to collect the data and still enabled valuable comparison between organisations.

Some figures have been estimated. Whilst reasonable effort has been made by participating organisations and NDS to ensure the validity of the data provided, it is unlikely to be 100% accurate. As measurement systems and processes improve over time, data quality and accuracy is expected to improve.

Good back-of-house services enable staff to deliver quality, efficient front-of-house services. It is difficult to measure the contribution back-of-house services makes to staff efficiency and organisational effectiveness. Proxies such as staff satisfaction and retention have been used instead. Although cost KPIs are easier to measure, readers are advised not to focus too heavily on cost or staff may end up burdened with ineffective back-of-house services, become less efficient and be impeded in their service delivery to clients.

Low cost does not necessarily equate to good practice. It is possible for organisations to provide low cost services by using equipment which is beyond end-of-life and making do with limited staff numbers. In addition, their satisfaction ratings may be higher than they ‘should be’ because staff are aware that the organisation is doing the best they can with limited resources. This is not necessarily good practice.

Results have not been adjusted to consider an organisations context and practice – i.e. there is no ‘difficulty’ or ‘complexity’ weighting for delivering back-of-house services in each organisation to take into consideration factors such as the number of sites, size (which often provides efficiencies of scale) or service complexity (number of roster staff, types and number of services provided, etc.). No two organisations are alike; the results should be interpreted with professional judgement.

Only the effort of HR function staff was captured. The group decided that it would be difficult and overly time consuming to measure the time and effort of non-HR/training function staff across each HR/training service. For example:

The effort of program managers interviewing candidates, reviewing CVs, etc.

Attending a WH&S committee meeting.

Organisations that use non-HR staff to undertake HR activities will therefore have lower HR costs and efforts than organisations that have a HR team that performs the majority of HR activities.


| 3 6 |

A seven-point scale was used for satisfaction with back-of-house ratings – from 1 (Highly Dissatisfied) through to 7 (Highly Satisfied).

Some data points are missing – not all organisations provided data for all data points. If no result is provided for a particular benchmark, this does not imply zero cost or quality, but rather that the minimum sample size to generate a valid result was not met, or that organisations were unable to provide the required information for benchmarking.

Economies of scale are generally available to larger organisations (at least in transactional services). Areas where larger organisations costs benchmarked higher may indicate differences in context and practice, rather than a lack of economies of scale.

Smaller back-of-house services have a higher margin of error. For example, if an organisation spends just 0.2 FTE on financial reporting, payroll or helpdesk services, and there is little other cost, an increase or decrease of 0.1 FTE would adjust the cost up or down by 50% – a significant difference in service cost KPIs.

Documents

Disability Service Provider Back-of-House Services...Disability service providers spent a median total of $12,248 per FTE on back-of-house services, which represented 15.5% of total