Measuring Employee Productivity and Profitability with Software
Of all the metrics that professional services firms can track, two of the most important are utilization and realization. These are different, but related ways of measuring employee productivity and profitability. Both can be measured with a high degree of accuracy — and made visible to management — using software.
A quick jargon review
Utilization measures the hours charged to a client’s project compared to the total available hours (usually 40 hours per week). For example, if an employees’ expected work week is 40 hours and the employee achieves 35 hours of client chargeable work then their utilization rate is 87.5%.
Utilization is not necessarily within an employee’s control: for example, an employee might be working on an important internal project that can’t be billed. Because of the many variables that affect utilization, the longer the period over which it’s tracked — say, over the course of a year — the more useful it is in evaluating performance against employee and company goals.
The second metric, realization, refers to the actual revenue based on employees’ hours charged and billed to clients compared to what they should have generated from their utilization achieved. It’s a measure of their profitability, and a metric that provides valuable insight into how well a company is able to translate hours worked on projects into revenue. In a perfect world utilization and realization will be equal, but this is rarely the case. Realization can also help in compensation and promotion reviews, staffing decisions, project and unit pricing and assessing the health of the company itself.
The impact of measuring employee productivity and profitability can be enhanced further by a commitment to Earned Value Management (EVM), a project management technique for objectively measuring project performance and progress. Together, these techniques help a firm gain a clear, objective view of employee and project performance, identify where resources are over- and under-utilized, and optimize workforce utilization and profitability.
Software solutions
There are a number of software solutions for measuring employee productivity and profitability. Some focus specifically on project and resource management, while others provide these functions as part of larger, more integrated solutions.
For example, Deltek Vision can provide a firm with comprehensive visibility into its organization, efficient oversight of its projects and people, and efficient automation of processes. Most significantly, it allows the firm to be proactive rather than reactive in addressing resource management issues, thus increasing the probability of project success. On a more tactical level, the product’s Employee Realization feature allows a user to track and report on realization values, compare utilization vs. realization, optimize staff utilization, minimize scheduling conflict, and substantially reduce the potential for missed milestones.
Whatever approach an organization uses in measuring employee productivity and profitability, doing so requires a sustained effort and commitment on the part of management. Handled correctly, however, the payoff is immense: instant visibility into resource commitments across an entire organization, and granular awareness of who is available (and when) with the skills needed to satisfy projects’ technical requirements.

Missed project deliverables and deadlines — Getting the work done on time sounds simple, but it’s not. It’s a complex balancing act involving creativity, quality control, resource management and much more. If you don’t have sound processes in place, all the best thinking in the world won’t mean a thing.
In this situation, I observed people giving advice as opposed to just sharing experiences. I found it curious that contributors to the forum assumed many of the variables the person inquiring had not provided and further, the person making the inquiry hoped to find solutions without providing any background or specifics.
ERP – Enterprise Resource Planning is a system facilitating the flow of information between all business functions, from your Finance and Management Accounting to Project management, Client Relationship Management (CRM – see more below), Human Resources, Inventory and Purchasing.
and money into this decision. The message must come from the top. If the executives of your firm don’t see the importance, then others will probably feel the same way. As with any new process or change, it’s important to demonstrate a ROI and the key areas that will be improved within your company.
Try this with a small group of invoices to start until you get the hang of it. Then expand to include all your invoices. This method not only saves you time and money (printing and mailing costs) in producing final invoices, but it also gets your invoice to your client sooner which can reduce your cash cycle days.
Full Sail Partners assisted Wiss, Janney, Elstner Associates, Inc., a prominent A/E/C firm ranked on Engineering News-Record's list of the Top 500 Design Firms in America, with the implementation of Deltek Vision across its business. Full Sail Partners built numerous workflows in Deltek Vision such as conflict checking, project initiation, billing, and project status report. As a result, WJE realized an annual savings of about $1.8 million and a reduction in DSOs of 45 days. The cost to purchase and implement Deltek Vision paid for itself over 30 times in just one year. 