Keep in mind that this number doesn’t include admin tasks. Billable hours: The number of hours an employee spends on tasks and deliverables for which you can bill clients.You can calculate this metric using a standard employee utilization rate formula. How to calculate your employee utilization rate You can also give underperforming team members the tools they need to spend more time on client work and less on non-billable tasks. This way, you can encourage high performers to become even more productive, given the confines of their role. While aiming for an overall standard of 75%–90% is helpful, setting benchmarks for individual teams or employees is just as beneficial. A good rate for one team or employee might be a low utilization rate for another. In other words, utilization rates may vary even within your business. Average utilization rates vary based on a range of different elements, including some of these common factors: Keep in mind that what’s considered good is relative. This range is considered average for service providers. Instead, a more realistic employee utilization rate typically falls between 75% and 90%. Training and professional development sessions.Meetings with colleagues, teams, and supervisors.Emails, Slack messages, and other internal communication.From BPOs and KPOs to contact centers and agencies, every service provider requires employees to complete at least some admin tasks, such as: No business focuses only on billable tasks. While it’s tempting to aim for a 100% employee utilization rate, that isn’t realistic and shouldn’t be a key metric for any role or team. What’s considered a good utilization rate? Agencies providing software development or creative services.Knowledge process outsourcing (KPO) companies that manage specialized contractors.Business process outsourcing (BPO) companies managing client services.Outsourced contact centers handling inbound or outbound communication for clients.Some businesses that could benefit from measuring utilization rates include: Because it measures billable hours, it’s more important for companies providing professional services to clients. Though it’s a useful metric, not every business type needs to track it. It can also offer guidance on everything from team structures to recruitment processes. Tracking this metric can help you forecast staffing needs, allocate resources, and plan projects. Since productive employees often drive more profit, they usually contribute more value to the organization. A higher utilization rate typically signals a more productive employee. Think of it as a way to gauge productivity and profitability. It can help you measure overhead costs and assess how efficiently your team is working. It gets measured as a percentage of their total hours, ranging from 0% to 100%.īy measuring the utilization rate, you can compare how much time your team spends on client work versus administrative tasks. Start tracking time and improving utilization ratesĪn employee utilization rate is a metric that reflects how much of an employee’s total hours are billable.8 tips to improve your company’s utilization rate.How to calculate your employee utilization rate.What’s considered a good utilization rate?.We’ll also explore tips for improving this metric and increasing your profit margin as you scale your business. In this article, we’ll cover everything you need to know about the ideal utilization rate for your service-based business. How do you calculate this rate and keep it as high as possible? Not monitoring this metric means you could be doing a lot of work without many client deliverables or billable hours to show for it. Tracking your employee utilization rate is essential for service providers that need to optimize resources and improve profitability. Do your employees always seem to be working hard, yet their total billable hours remain low?
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