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Iryna Viter

A Kinder Way to Interpret Utilization Rates

Utilization can be easily misinterpreted by both resource managers and their teams. Here's a more human way to look at it.

Numbers often guide our decisions, especially when it comes to understanding how effectively we're using our time at work. 

But the term "utilization rates," which innocently measures this efficiency, can sometimes morph into a less benign concept and become a pressure point. In fact, if not explained properly, it's starting to feel like it's about exploiting people rather than 1) identifying opportunities for professional development and 2) optimizing the overall workflow to support both the organization's goals and the employees' well-being.

Changing the narrative, we can have both data and understanding from our employees that are tracking time. Let's look at how we can explain and then read utilization rates in a more human way.

'The Story of an Hour': How to explain utilization rates to your teams

I really liked how Christine Robinson, former Director of Resource Management at Baker Tilly, explained this indirectly in our recent webinar: Resourcing for Success.

Logging hours is not a checkbox excercise

At first glance, tracking utilization - how much we work and on what - might seem like a mere administrative task. However, as Christine elegantly points out, there's a deeper story unfolding in every hour we account for. Rather than a simple tally of time spent, she invites us to see each hour as a building block in the larger structure of the company's goals and health.

When I spoke to one of the team members about logging hours, he seemed to brush it off as just another box to check. We were instructed to update the schedule, and I made sure it was done. But when I asked if he understood the purpose behind logging hours, he simply replied, "To track work hours, right?" I had to delve deeper, linking it to "The Story of an Hour," explaining how each hour contributes to a larger narrative. 

I stressed that it's not just about individual hours but the collective impact they have on organizational performance. This influences decisions affecting everything from meeting objectives to providing opportunities for professional growth like training or attending conferences. It's crucial to understand that these figures reflect the workload necessary for successful operations.

Hours help leadership understand the bigger picture

Each hour of work is not just a drop in the day's bucket but a crucial piece of a much larger puzzle. It tells the story of not only our individual contributions but also our collective impact on the organization's journey toward its goals. Each hour, when viewed together, offers a clear picture of: 

  • Where we stand
  • Where we excel at
  • Where we need support or additional resources

Hours matter for personal growth and organizational health

Usually, hours tell more than just how busy we are. They help resource managers understand the demand for our services and skills, pointing out where we're stretched too thin or where we have room to grow. This isn't about pushing for more hours; it's about making the best use of the time we have. It's about ensuring we have the space for meaningful work without the risk of burnout.

Moreover, this insight allows resource managers to plan better for the future - be it through hiring, training, or reallocating resources - to ensure that as our organization evolves, we're all moving forward together, not just keeping pace.

By sharing their workload stories, team members are contributing to a larger narrative - one that includes opportunities for professional development, upskilling, and even influence over the kind of projects they work on. It's about opening doors to learning and growth opportunities, funded by collective success.

By accurately understanding our workload, businesses can make informed decisions about hiring and training, ensuring that everyone has the support they need to excel without being overwhelmed.

It's a conversation, not just a calculation

Finally, tracking utilization isn't a one-way street; it's part of an ongoing dialogue between employees and the leadership. It's about making work visible so that together, we can make educated decisions that benefit everyone - decisions that help us grow, adapt, and thrive as a collective.

This approach to time tracking and utilization can transform the way we view utilization - from a metric of productivity to a measure of our commitment to each other's success and well-being.

Note: Understanding this story isn't just about recognizing the need for tactical adjustments, such as hiring more staff or providing additional support during peak times. It's about fostering a culture where employees feel valued and heard, where their work-life balance is protected, and where their growth and well-being are integral to the organization's success.

How to interpret utilization rates

Resource managers can interpret utilization differently, but here's our take at Runn and what we think high and low utilization rates actually mean. We use our own platform to allocate people to projects, log hours, and measure utilization. 

Get visibility of your planned vs actual utilization with Runn's platform for resource planning

150% utilization predicts a delay

At first glance, a 150% utilization rate might seem like a sign of productivity and high demand. But let's pause and consider what this number is truly telling us. A rate exceeding 100% signals not just a high demand for services but an unsustainable workload that can lead to burnout, decreased quality of work, and, inevitably, delays. 

It's a clear indication that the team or individual is stretched too thin, and it's a call to action for leaders to reevaluate work distribution, prioritize tasks, and possibly expand the team or outsource some of the workload.

120% utilization means there’s demand for a particular skill set

A 120% utilization rate highlights a significant demand for a specific skill set within your team or organization. This number should serve as a beacon, guiding us to understand which skills are in high demand and, therefore, where to direct our resources and focus for training and development. 

It's an opportunity to recognize and value the skills that are driving such demand, fostering an environment where those skills can be further developed and shared among team members.

Further reading: How to Forecast Resource Demand - A Visual Guide

80% utilization equals balance

An 80% utilization rate is often seen as the sweet spot in many industries. It suggests that there's a healthy balance between workload and capacity, allowing for high productivity without overburdening the team. This balance is crucial for sustainable growth, innovation, and job satisfaction. It also leaves room for unexpected tasks or challenges, ensuring that the team can adapt without sacrificing their well-being or quality of work.

Related: Setting the Bar with Utilization Goals? Here's How to Start

30% rates are the window of opportunity for re-skilling and training

While a 30% utilization rate might initially raise concerns about underperformance or lack of demand, it's essential to view it through a lens of opportunity. This rate offers a valuable window for re-skilling and training, allowing individuals and teams to prepare for future demands and challenges. It's a time to invest in professional development, explore new technologies, and foster a culture of continuous learning. By doing so, we not only enhance the capabilities of our team but also increase job satisfaction and engagement.

Related: How Businesses Can Make the Most Out of Bench Time

To wrap it up, here's the story our CEO Tim Copeland shared with us:

A few months back, I engaged in a conversation with the CFO of a considerably large company. During our discussion, he recounted an experience where the company had shifted its focus from staff utilization. This change came after two decades of operating as a well-established organization. For about 20 years, utilization was their North Star, getting the most out of their staff's time. It was all about making sure everyone's busy and that supposedly drove their success.

However, they’ve come to realize that the skill set possessed by their workforce wasn't necessarily the most sought-after in the market. Consequently, they chose to temporarily step back from focusing on utilization and redirect their efforts towards comprehensive staff training and development, with a particular focus on their sales team. The company even sought projects aligned with the evolving skill set they were cultivating.

This strategic shift wasn't without its challenges. It involved a six-month period of significant adjustments, entailing substantial costs for the transformative process. The result, upon reevaluation, was a scenario in which their staff's utilization was lower than before, yet the work they were undertaking held greater value for their clients.

This transition yielded an intriguing synergy: the company's profitability increased while the workforce experienced reduced stress levels.

Operating under the premise that allocating 100% of staff time solely to work tasks left little room for creativity, and even practical considerations like sick leave, they recalibrated their approach. By targeting, for instance, 80% of planned work, they allowed space for spontaneity and creativity to flourish. Instead of aiming for that elusive 100% utilization, they dialed it down to 80%.

Ultimately, this balance facilitated a more productive and innovative work environment. Entrusting employees to manage their time effectively eliminated the need for micromanagement on an hourly basis.

In conclusion, while utilization rates are important indicators of how effectively individuals and resources spend time, it's vital to interpret these numbers with empathy and a focus on the human aspect. 

Each rate tells a story and presents an opportunity for growth, balance, and development. By adopting a kinder approach to interpreting these rates, we can create a more supportive, resilient, and adaptable professional environment.

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