Your employees’ billable hours are the lifeblood of your business, but they can also be a source of frustration. A recent AEC industry study pegged employee utilization rates–defined as the percentage of billable hours out of total hours worked–at around 59 percent, a grim reminder that the average business is losing around 40 percent of its worker productivity to non-billable activities.
There are some approaches to boosting your employee utilization rate that will not only help increase productivity and revenue, but also provide your employees with a supportive workplace environment.
1. Manage stakeholder expectations. Managing your client’s expectations is a given, although scope creep can (and usually does) happen. However, are you also managing the expectations of your internal stakeholders – your employees? For example, your business development reps need a clear understanding of what your team can provide. Business development should regularly communicate with project managers to clarify expectations. Your billable employees should understand time as a valuable corporate resource and expect to use it carefully. Finally, manage your own expectations. Employees are human. They will need time to think about solving problems, address business-related issues that are not billable, and discuss projects with co-workers.
2. Track time effectively. At a minimum, billable employees should be monitoring and recording their activities throughout the day in the same way, with a full time resolution, before leaving the office or signing off. Software can help this process by eliminating the need for workers to manually enter all their times and activities. It can also help prevent that dreaded “What did I do?” look that comes at the end of a busy workday after putting out fires on multiple projects.
3. Collect and analyze your data. The data you gather from your billing activities, time sheets, and projects will help establish clear benchmarks and goals for increasing the utilization of your teams and individual employees. Are billable employees performing nonbillable activities that other members of your office staff can handle, such as making copies? Is there a certain client who is monopolizing your team’s time but providing little benefit to your business? Is there a specific type of project area where your whole team may need training? Data analysis provides you with actionable metrics for approaching employee utilization at your company. It also helps you identify important financial aspects of your work, such as your earned value for the project, allowing you to better plan costs and resources for future work.
4. Set reasonable goals. Every project is different, but over time, you will have a stronger sense of the time commitment for various types of projects. Setting reasonable utilization goals provides a benchmark for individual workers and departments. It also supports better planning and distribution of corporate resources. An example of a reasonable goal might be 75 percent billable hours per month, depending on your company’s current situation.
5. Incentivize. Making employees feel like they are a part of the entire company’s success is essential to increasing productivity, improving morale, and building team cohesion. When goals are reached by individuals and teams, provide bonuses or extra privileges to highlight their success.
Boosting employee utilization rates is a process that will take some time but will result in a stronger bottom line for your business. By managing expectations, tracking time, analyzing your employees’ data, setting reasonable goals, and incentivizing your teams’ billable hours, you can capture lost productivity, identify gaps and potential areas of growth, and realize greater profitability.