With recent data signaling a cooldown in the U.S. labor market, finance leaders, like their peers in other functions, are feeling the effects. Recruiting skilled talent is taking longer, and many organizations are holding steady on headcount. Against this backdrop, understanding and managing personnel costs is becoming a critical lever for improving cost effectiveness.
One of the most practical ways to do that is to benchmark finance function personnel costs per finance full-time equivalent (FTE) employee and use that metric as a management tool. This approach allows organizations to understand how their spending compares with peers and where there may be opportunities to work more efficiently.
Establish a baseline
Cross-functional benchmarking data from the American Productivity & Quality Center shows that total finance personnel cost per finance function FTE typically ranges from about $51,000 at the low end to more than $121,000 at the high end. These costs include salaries, wages, bonuses, insurance and benefits for employees who support the full range of finance activities, including financial planning and analysis, tax and treasury, accounts payable, payroll, accounting, reporting and internal audit.
Finance function personnel cost per finance FTE varies across industries and regions, and these differences must be considered when benchmarking. But identifying where your organization 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. Start by breaking down personnel costs by function and role. Identify which activities require advanced skills and where highly compensated staff may be spending time on transactional tasks that could be automated or reassigned.
Even highly skilled employees are limited by inefficient processes or fragmented systems. Standardizing processes, documenting workflows, and ensuring consistent data definitions can help reduce rework and free finance professionals to focus on analysis and decision support.
Match the work to the right structure
In many organizations, 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. Outsourcing payroll or investment management, for example, can ease staffing pressures while preserving service quality.
Another option is 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 organizations to operate more efficiently without reducing quality.
Use technology to ease cost pressure
Automation has already proven to be an effective way to lower costs and increase productivity in finance. Standardizing and automating routine activities, such as accounts payable, narrative reporting and reconciliations, can reduce the number of hours required to complete these processes. That, in turn, lowers the overall personnel cost per FTE or allows organizations to manage growth without adding new headcount.
Artificial intelligence is now expanding those possibilities. Analysts expect it to stabilize finance personnel costs in the coming years by taking on repetitive and analytical work that has traditionally required junior or mid-level staff. According to reporting from Goldman Sachs, AI is already enabling organizations to expand output without adding equivalent headcount, shifting the relationship between labor and productivity. In finance, this could mean slower cost growth over time, rather than large spikes in labor spending.
To achieve that, organizations need 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, 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, including 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
The labor market will inevitably 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 organizations that succeed in the next several years won’t necessarily be the ones with the biggest finance teams. They’ll be the ones that consistently get more value from the resources they have and keep their personnel costs under control, even as conditions change.
