What is ideal staffing rate of a consulting company ?

Case Case Interview case study staffing rate
Recent activity on Apr 10, 2017
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Anonymous A asked on Apr 09, 2017

How can we calculate the ideal staffing rate of a company with following information :

- Number of consultants : 150

- TJM : 3500

- Rentability : 15%

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Vasilis
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replied on Apr 10, 2017
x-BCG Dubai, x-Recruitment lead for BCG, Case Interview Expert (350+ interviews, 100% recommendation rate), Ops Manager @ Uber

Hello Anonymous,

This is a tough one. There is no ideal staffing rate really, since the difficulty and strategic importance of the project are crucial parameters in the staffing process. At BCG, we could overstaff a project that is very critical to us, in order to position ourselves better for future work. Similarly, we could understaff a project that we know is within our realm of expertise and would allow us to knock the ball out of the park without much effort.

Hope that makes sense!

Vasilis

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Cyrus replied on Apr 10, 2017
Paris based MBA/engineer, interested in strategy & management consulting

Hi there, you need a few more parameters to calculate that. Basically it is the ratio between the charged hours and the salaried hours. A consultant also needs time for continuous education, trainings, interviewing candidates, holidays. Usually it is around 80%.

In this example, I think they wanted you to calculate the break-even point. If you have a consultant in France, starting level making 40kEUR let us just say, that means 167 EUR/day, let's assume 250 EUR with social expenses and miscellaneous.

The contribution margin for each day on project is 15%*3500EUR=525 EUR

Therefore if he is active at least 250/525=48% of the time, then the cabinet is not overstaffed. The staffing for the whole company is the weighted average of staffing rates.

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saline on Apr 10, 2017
I didnt get 15% in your calculation. Also if you assume a consultant costs 167 a day and paid 40 k, you assume that he is working 240 days and not 221. Why ? Many thanks

(edited)

Cyrus on Apr 11, 2017
The 15% was given by the person who asked this question, read the top of page. The numbers are arbitrary, what counts is the logic.
Vasilis gave the best answer

Vasilis

x-BCG Dubai, x-Recruitment lead for BCG, Case Interview Expert (350+ interviews, 100% recommendation rate), Ops Manager
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