Worksheet: Map cost to function and set it beside revenue

Cost by function often gets worked out once for a board paper, then goes stale. This sheet maps every overhead cost to a function, shows three years against revenue, and asks the fastest grower why. It builds the Competent step of the check:

Cost by function is reported every year alongside revenue, and a function growing faster than revenue has to say why.

Step 1. Three years by function

Function	Cost, two years ago	Cost, last year	Cost, this year	Share of revenue this year	Growth over two years
Finance
People and HR
IT
Sales
Marketing
Operations overhead
Executive and legal
Revenue
e.g. IT	$2.1m	$2.6m	$3.2m	2.1%	52%

Step 2. Price each central service

Central service	Annual cost	Units of service (payslips, invoices, devices)	Cost per unit	Shown to the teams?

Step 3. The fastest grower says why

Function	Growth against revenue growth	Its explanation	Accepted, or action	Owner

Put the step 1 table in the annual report to the board, every year.

A business under 50 people: split overhead into a few lines, such as premises, admin and IT. Show each as a share of revenue for three years, then ask why the fastest-growing line grew.

Done when: cost by function is reported each year beside revenue, and any function growing faster than revenue has given a written reason.

Adapted from our own organisation and capability review (PJP, 2017).