4 Crucial Steps to Improve Your Utilization Rates
Note: This is an excerpt from our ebook, “The Step-by-Step Guide to Successful Resource Management.” Download the full ebook to learn more.
Utilization rate is a metric used in professional and creative services to reveal your employees’ efficiency and productivity, which is based on the percent of time spent working on productive activities.
Most services organizations monitor two types of utilization:
- Total Utilization: This metric measures the percent of time your paid resources spend on any productive work, including business development and proposal-writing.
- Billable Utilization: This metric is the percentage of a paid resource’s time you can bill to clients. Billable hours reflect time spent specifically on revenue-generating activities (i.e., project tasks, client meetings).
However, you can’t just assign more work to your team without any insight into their current utilization rate and how they’re spending their time. In fact, for most resources, they’re likely already very busy. So how can you start realizing the benefits of improved utilization in your organization?
Step One – Create Healthy Time Tracking Policies
Time tracking is the place you want to start, as it’s central to analyzing utilization. Almost all services organizations track time in some capacity. Most will also admit to needing to improve processes here. Start by simplifying and standardizing project plans and templates, and the associated way you capture and track time. Keep it simple and make sure that team members can input time easily and from any device. Then be sure to provide detailed, written policies and procedures for all team members. No exceptions.
Once you have comprehensive and reliable time tracking in place, implement regular audits of time and utilization (at a minimum, do this weekly, but daily audits can be even more effective) to be sure entries are being done by all resources, and so you can keep regular tabs on utilization. Review and highlight under- or over-utilized people. Finally, take swift action to get your under-utilized people billable again.
Step Two – Empower Your People With Real-Time Data
A resource management dashboard is to a manager what the cockpit instrument panel is to a pilot: without it, you can’t effectively manage the journey or land at your desired destination. A dashboard with Time and Utilization Tracking can work as your personal utilization manager, providing important metrics in real-time, which create a high degree of visibility on performance against time targets and utilization goals.
Don’t keep the information to yourself — it’s much more valuable when the entire team can access the information as well. Provide real-time data that shows your team how they are performing so they can take immediate action to improve their performance by raising their hand when they have available time.
Step Three – Centralize Resource Management Across Your Entire Talent Pool
Centralization allows you to fill gaps quickly by tapping excess internal capacity before looking outside to a partner. According to our 2019 State of the Services Economy report, 80% of services organizations currently provide remote work. This amount will only continue to rise, meaning that the location of a resource is less of a constraint. It’s getting easier to manage a team across geographies, even globally.
Today, the best practice is to provide visibility to staffing managers across the entire company, even in different regions, for shared access to a talent pool.
Step Four – Monitor and Reduce Non-Billable Time
It’s important to also track your non-billable work closely. Identify 3-5 different types of non-billable activities your people spend time on—for example, new business efforts, marketing, or administrative tasks—and track against those categories so you can easily see distribution of time and trends. The goal is to reduce this type of work to only value- added activities — work that advances your future utilization, revenue, and margin achievements.
Take Your Resources to the Next Level
Learn more about the critical steps that you should take to strengthen your resource management, and the major benefits that can result, in our helpful ebook, “The Step-by-Step Guide to Successful Resource Management.”