High utilisation is important, but what does ‘utilisation’ mean?

There’s nothing worse for the manager of a team of consultants (or lawyers, or engineers, or, indeed, hairdressers(!)) than to see them kicking their heels with nothing to do. If no one is working, no one is making money for the organisation. High utilisation isn’t enough to make you profitable, but it’s usually a necessary first condition. You need to measure it, and forecast it carefully.


But what does utilisation mean? Ask your peers at a conference the level of utilisation they achieve in their organisation and they’ll confidently say ‘75%’ or ‘90%’ or ‘50%’ but in my experience different managers use different measures. Is utilisation the proportion of time your staff spend on chargeable work, or on both chargeable work and valuable internal work (such as a research and development)? Do it take account of absences such as holiday, training, internal meetings, and other such activities that reduce the time that’s available for external or internal work? And if you have targets, do you have different targets for different roles in your organisation, so that an overall measurement reflects the fact that a consultant is employed to be available full time, but a manager must also manage? How do you handle overtime? Does it increase utilisation or is overtime available time too? Is it possible for your staff to be utilised more than 100%?


But it doesn’t matter if you’re using slightly different measurements from your peers. I don’t think there are international benchmarks for professional service staff utilisation. You don’t need to conform to any international notion  (and, I’m not sure there is one) but if it matters to you, you should certainly be able to measure it, and in such a way that it gives you information that you can work with. No measurement means no management. You need to be able to make sensible comparisons over time, that aren’t subject to seasonal influences, such as vacation, and across different parts of your organisation.


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