Free Consulting Friday: 100% Utilization

Old timey steam whistle

Question

Hey Golobish Group, I really want to get my (professional services) team to 100% utilization. How can I do that?

Answer

Since utilization rate is a calculation, the easiest way to get to 100% is to simply change your calculation method. Problem solved. Ha!

Image Caption: Old-timey steam whistle reminiscent of the ones from Road Runner cartoons.

While the above may sound absurd, the first thing you should do when considering utilization policy is to make sure you’re locked in on a calculation method and framework; i.e., decide on the number of hours in a period a resource should work, whether or not you’re going to include vacation time, holidays, etc., and if you’re going to make a distinction between “resource utilization” and “billable utilization.” Once you have top down organizational buy in on the above, you’re ready to set your baseline and begin making policy.

As a quick reminder, “resource utilization” is simply the raw amount of time a person works on tasks for your business. It often includes helping sales and marketing, professional development, HR stuff, team building and “bench time” (pretty good to have since it keeps people sharp and makes your shop a “career” place for top talent). Relatedly, “billable utilization” is the time a person works on actual client tasks that earn money. Understanding how both impact your calculation method, framework and resulting policy is important.

Now that you’re ready to test out some policy, you’ve likely realized that hitting 100% is a bit more nuanced than you originally thought. What’s also likely is that you’re now trying to hit a different number than you originally intended which, again, is likely to be less than a simple 100%. However, if you’re truly still interested in hitting 100%, I’d argue that your time may be better spent understanding your team’s capacity and increasing their efficiency.

If you have contracted hourly resources, you’re probably off the hook for a method. If you have people on retainers, the method may be a simple ratio of hours used to hours allotted. In the case of the latter, getting retained resources to use up the time they’ve allotted for you is generally a matter of tightening up your project management ops.

Finally, the most fun way to get to 100% utilization is to simply close more deals.

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