Every manager likes to see their team members busy and productive, but at some point there’s a fine line between busy and overwhelmed. If you feel like you’re hovering there or even crossing it from time to time, you may be wondering if it’s time to hire.
Bringing on a new employee is a big decision. You want to be sure that the current workload will remain consistent so you’re staffed appropriately. You also realize that jobs matter. You want your team to feel stable in their positions and not worried that the company is at risk of downsizing due to an ebb in the workflow.
Volum8 Creative Inc. is a design and development boutique located in the Hudson Valley of New York and faced this same dilemma in their early days. The startup team was trying to scale their company using static spreadsheets, but they found they weren’t able to accurately project hiring needs or future profitability. The company came across 10,000ft, and found that its Utilization Report offered a way to map out projects and mock up projections to manage growth.
“We knew ideally how many projects we would need to close and what types they would need to be. We knew which rates were fair, yet profitable and more importantly, we knew when we would need to bring on new people to accommodate further growth,” says Volum8 founder and creative director, Charlie Graham.
Here’s How It Works
Utilization Reports in 10,000ft measure the amount of time an employee is available for productive, billable work. This is a critical metric because it helps you understand how well you’re optimizing your team members’ time and talent.
While the primary purpose of Utilization Reports is to help you understand if you’re billing enough to cover your costs and overhead, the insights also can alert you when it’s time to hire. It’s away to know not just who you have, but who you need.
Utilization is calculated by dividing actual billable hours by available hours, multiplied by 100%. For example, if someone has 30 actual hours and 40 available hours, their utilization rate is 75%.
If an employee’s utilization rate consistently approaches 100%, they might be bordering on feeling overwhelmed, and this is a signal that it may be time to expand. On the flip side, if the utilization rate is consistently low, there may not be enough work in the pipeline. Utilization rates that are consistently too high or too low aren’t good for your organization and typically indicate future risks. For a deeper dive on utilization rates, check out this article.
See It In Action
Consider this scenario: Your company has 75 employees and five freelancers that you use on an occasional basis. Based on your current workload, your project management team is 106% utilized while your creative team is at 60%.
This Utilization Report may indicate two things. First, you may need to hire a project manager who can take some of the workload off of your senior team so you’re best able to oversee your creative team. Second, you may need to scale back on your usage of freelancers, bringing that work back to the in-house creative team you’ve already got on the bench.
Utilization Reports are a high-level, quick way to check the temperature of your team’s capacity and your company’s business pipeline. The Utilization Heatmap view of the schedule is also a good way to see when it’s time to start considering adding a new role.
Utilization Reports allow you to look back in time at actual hours as well as forecast the future based on scheduled assignments. To maximize your team’s time and talent, it helps to set a target utilization—a fixed value that can be set for your company. When thinking about your team’s target utilization, it’s good to consider that you want your team to be comfortably staffed, but not consistently at 100%. Save time in the day for tasks such as administrative work, responding to emails and taking a lunch break.
Volum8 sets a target utilization of 70%, with 30% of their time spent on internal work. “I’ve been a creative my whole life, and I know you can’t work a 40-hour work week every single week without getting burned out,” explains Graham.
When to Hire
Tracking utilization and target utilization rates is the first step. To determine if you have enough work to hire another employee, you can set up placeholder resources. Placeholders help you indicate the type of person you need to hire - or even the type of person you need for an individual project - and you can include specific information for each role, like average bill rate, location, skills, and seniority.
Let’s use our project manager example. Create a fictional placeholder employee in 10,000ft and start assigning tasks that aren’t currently getting done or that are pushing an actual employee over their target utilization.
Once you see that your placeholder hits 40 hours a week for a certain time frame that feels comfortable - maybe three months in a row - you can justify to the rest of the leadership team that you have enough work to hire someone.
Using placeholder resources, you may also discover that you don’t have enough work, and a freelancer is a better option. Once you get your new team members hired or your freelancer onboarded, simply reassign the work from the Placeholder resource.
Instead of relying on a feeling that it’s time to hire, Utilization Reports in 10,000ft give you reliable data so you can better forecast your company's growth and be certain it’s a smart time to bring on a new employee.
Have questions about utilization reports, placeholder assignments, or planning for growth? Send us a note - we're here to help.