We get it. Nobody likes tracking their time. There’s no way around it. It sucks. But as much as it sucks,
there are 3 critical reasons to enforce strict time tracking:
1) Increase performance of an individual team member by $24,912.
2) Avoid the turtle growing to its tank and avoid write-offs!
3) End the misquoting of customers.
Reason #1: Increase Performance of an Individual Team Member by $24,912
If you’re tracking time, you can measure utilization. Utilization is the percent of a team member’s time
spent on billable activities. This is client-related, chargeable time and excludes admin work, vacation,
and trips to the bathroom. Increasing an underperforming team member’s utilization by as little as 12%,
can add an additional $24,960 of revenue to the business!!!
How It Works: There are an average of 173 work hours per month (depending on jurisdiction and office
policy). Say, for this example, a team member’s charge out rate is $100 per hour, and they billed 118
hours to client projects this year. Also say the target utilization for the company is 80%.
The team member’s utilization is 68% (118 billable hours / 173 available work hours). This is 12% below
the target of 80% utilization. Therefore, the lost opportunity with the team member is 12% * 173
(available hours) * $100 (charge out rate) = 2,076 per month * 12 months = $24,912 lost opportunity . . .
with this ONE team member.
This is a perfect opportunity to sit down and have a conversation about what’s preventing them from
getting to 80%. Maybe they just don’t know that’s the expectation. Maybe there are processes or other
admin in the way. Perhaps they haven’t been trained. Maybe, they’re just the wrong fit for your
company. Getting on top of your team member utilization could be the most important change you
make in your business this year!!!
Reason #2: Avoid the Problem of a Turtle Growing to its Tank
Did you know a turtle will grow based on the size of tank it lives in? Want a small turtle? Give it a small
tank. Want a monster? Big tank it is. The same thing is true when it comes to professional services.
Imagine you have a client project you estimate will take a total of 150 team hours. Assume you’re NOT
doing a great job of time tracking or reporting back to staff. Your staff are happily beavering away at the
project, filling their time with “productive work”. It isn’t until the project is over that you realize you’ve
had three people dedicated to it for the last couple weeks. That’s 240 hours!!!
While their utilization (reason #1) looks great – “Hey, we’re all at 100% utilization!!!”, you have to write
off 90 hours of time. At $100 per hour, that’s $9,000 written off. Ouch!
Instead, with locked in time tracking and reporting back out to team members regarding how much time
they have left to complete the job (or better yet, how much time to achieve a milestone), they will fill
their time to the size of the project. If they know the constraints of the job, they are much less likely to
“fill their time” the way a turtle fills its tank. They’ll allocate it where it’s supposed to be. No surprise
for you, no frustration for you.
Reason #3: End the Misquoting of Customers
Unless you have a data-driven, rock-solid report of how much time historical jobs take, it will be almost
impossible to get your quotes perfect. No big deal, you say? You’ve got a good idea and base your
quotes off that?
He’s the thing . . . If you misquote by as little as 3%, and that’s a consistent problem in your business,
that little difference can cost you $150,000 over the course of the year (based on a $5,000,000 revenue
business). Those little 3% differences add up quickly over time!
Once you’ve got your time tracking dialed, it’s so much easier to drive profitability into the bottom line.
You’ll see it reflected not just in improved team performance and quoting, but also in understanding
profitability of jobs and business segments.
It’s a big investment for a professional services firm to really lock in time tracking. It’s also one of the
biggest opportunities for positive change!
Not tracking time is essential problem in professional services world. If you’re not sure how to solve this
problem, give us a shout. We’d be happy to talk you through it!