If there’s one guarantee about life in the digital agency world, there won’t be many dull moments.
It’s full-on and fast-paced, which is why most of us adore it, but with that speed comes the potential to take your eye off the ball when it comes to the behind-the-scenes of your individual business.
Let’s face it, most digital creatives don’t get into their job to take into consideration utilization and time-tracking. But failing to get to grips along with your worker utilization rate can limit business growth, hinder staff development and lead to poor decisions based on gut feeling as a substitute of fact. This blog looks at utilization rates, what they really mean, and the way understanding your agency may very well be truly transformational for your online business.
What Exactly are Employee Utilization Rates?
Utilization rates measure how much time staff is spending on client work (chargeable hours) versus work that isn’t directly bringing in any income.
For example, writing social media posts for a client could be chargeable work, sitting in a gathering about how the agency is planning to attract latest clients isn’t.
What Rate Should an Agency Be Aiming for?
This is a bit of a ‘how long is a bit of string’ query because the answer will vary from agency to agency, and what’s right for one may very well be fallacious for one more.
According to Agency Works, the industry average utilization rate is around 65%, nonetheless, a really perfect figure could be 75%. But things are rarely so simple as this and comparisons between your agency and one other aren’t all the time helpful.
Agencies are available all sizes and shapes, with various cultures. Some have a really relaxed culture, with teams chatting over breakfast or Friday afternoon drinks – this will appear to lower utilization rates but have a positive effect on staff satisfaction and retention rates, so there’s all the time a balance to be found.
What are the Benefits of Understanding Utilization Rates?
Understanding how much chargeable time everyone in your agency can achieve each week enables you to work out how much capability you’ve and the way much revenue you possibly can realistically bill.
The ideal scenario is that on average team members are working on chargeable work 75% of the time. To move as close to this scenario as possible, you would like a transparent view of what number of hours you may sell and what’s booked against each department. From there, you may take a look at where there are gaps, and your sales or client team can look to fill these gaps in capability.
And, because understanding your agency utilization rates requires accurate time-tracking, it brings with it a raft of advantages and opportunities:
- Avoiding over-servicing: Accurate utilization data helps you retain a grasp on what’s happening. You can see if a job’s nearing budget or elements of it are taking too long, and take proactive measures. Make sure people log all their time to the job – not only scheduled time – so you may accurately track where you’re overrunning on client work. You can’t fix it, in the event you don’t understand it’s happening!
- Improved estimating: The accurate time-tracking required for getting your utilization rates right gives you an important benchmark against which to quote for future jobs. You can take a look at past work and see exactly how long a specific task has taken and who was involved, allowing you to price latest business more accurately.
- Staff wellbeing: While staff may initially resist the idea of logging their time intimately, it ultimately leads to many advantages for them – less time spent over-servicing on jobs and cramming in extra hours at the last minute, less idle time waiting for jobs to are available, and an understanding that they need to speak up if overloaded with work. By mitigating the peaks and troughs in demand it will possibly help reduce burn-out and increase overall satisfaction.
How to Track Utilization Rates?
Keeping track of how time is spent is one of the most precious reporting tactics you may employ. You can take a look at how well-utilised and billable your people are, which ultimately translates into how profitable they are.
Imagine you’ve a team of 10 designers, charged at £100ph, each with a utilization rate of 65%. Multiplied by the number of hours they work — they may generate £1,131k of revenue per 12 months. Now, increase their utilization rate to 75% — they may generate £1,305k per 12 months — that’s an additional £174k!
Ideal utilization rates will look different for all agencies and the individual teams inside them. What’s necessary is that when you get an accurate handle in your current utilization rate, you’ve a benchmark upon which to improve and a way of measuring any changes’ success.
Some smaller agencies will find they will carry on top of utilization tracking through the clever use of spreadsheets alone, but this requires lots of effort and time, and won’t link in with all the other key elements of your online business.
This is where agency management software is available in.
These platforms typically allow you to:
- See your utilization rates vs. targets
- Forecast capability and see the impact of winning latest business
- Manage projects from transient to billing
- See where you overservicing and where you earning profits
- Give you real-time reporting on every aspect of your agency
- Convert allocated tasks into timesheets with a single click
Choosing the right one for you may take time but it surely’s not a choice to be rushed. Make sure you search for systems that will be adapted to your online business needs because it grows and where the providers can be available to offer ongoing support at every stage.
In a nutshell, accurate worker utilization rates make every other aspect of a business easier. They provide a place to begin on your resource planning, enable you to see which clients and projects are the most profitable and, ultimately, fast-track your online business growth.
For an summary of how Synergist can assist you to maximise your utilization rates, book a demo.
Read the full article here
