Full Sail Partners Blog
Myth or Reality: Higher utilization yields higher revenues? Well, both actually. But before I explain, I’m going to start with this quote from Zig Zigler,
“Success is the maximum utilization of the ability that you have.”
This is the perfect quote to start our discussion regarding utilization, because it specifies that success (i.e. defined by higher revenues for most companies) comes from utilization of ability and NOT from a higher utilization of time.
The time utilization myth
Too many professional services firms looking to improve revenue and profit numbers are chasing this goal a bit myopically. Their logic sounds reasonable but comes up against a “theory vs. reality” wall: more money comes from higher utilization of resources, i.e. their consultants. So they put into place incentive programs that encourage their consultants to work more. Consequently, these consultants put in high numbers per week leading, too often, to burnout and turnover coupled with the often very ugly effect of lowering customer satisfaction, because the consultant has lower motivation for solving and higher interest in billing.
The balance with reality
Luckily, these days, more and more professional services firms are wise to this “higher utilization brings higher dollars” fallacy. They understand that chasing the utilization dollar by itself is a delusion. Here are the steps of the real logic:
- Greater financial rewards for companies come from happy, prepared, challenged and respected employees, because
- These employees do what’s best for their customer, while still balancing the number of hours it took to solve their customer’s problem, and
- Then, customers who have had previous problems solved, use your company’s consultants again thereby generating even more revenue.
This brings us back to our initial quote –business success comes from utilizing employees’ abilities and not just their time.
But how? How does a company go from making employees focus on utilization to their being self-motivated to be happy and work more, successfully? Here are three suggestions.
- Know, really know, where your consultants strengths are. Why is that important to utilization, you ask? For two reasons: 1) it’s not the number of consultants you use; it’s the right consultants, and 2) happy employees who are on project they are good at work harder simply because they are happy. A circular logic that is, indeed, true. If you know what your consultants are good at and organize projects accordingly, your happy employees will continuously work a) harder because they enjoy it and b) smarter because they are good at it.
- Get rid of “high utilization” numbers as the sole focus of employee incentive plans. Sure, it’s okay to keep a facet of utilization in the verbiage of their incentive programs, but balance that with another positively motivating focus like customer satisfaction, so that employees get the message that they need to work hard to solve customer issues and not just bill high numbers.
- Better utilization comes from better processes. Take a close look at the work your consultants are doing. Are they overwhelmed with administrative and/or manual processes (e.g. filling out project planning forms, expense reimbursement processes, or dealing with emails/directives which constantly impact work week schedules)? Now, take a close look at how many of these could be automated or even switched to a different employee whose job is NOT consulting with customers.
Utilization is not just about improving your professional services firm’s revenue and profit numbers; it’s really about
- Automating processes to make not only your consultants but also your entire company more efficient
- Shifting administrative work to non-utilization based employees
- Balancing utilization incentives with more employee and/or customer focused incentives
- Focusing on your consultants’ strengths
But you don’t have to do this alone. Reach out to us to take a look at your utilization and see, first hand, how making these small changes will yield big results.
