How to Staff Your Firm to Boost Utilization Rates

February 12, 2020 Trilby Lawless

This post was updated on June 22, 2020.

Your firm’s utilization rate is one of the key metrics behind being profitable and having consistent growth. We talk a lot about how great it is to track this insight, but what you really need to know is what to do if your rate is low. How do you fix the problem? 

Adjusting the way you are allocating your currents staff’s time is a great place to start, but if that doesn’t work it’s time to go a layer deeper and look into how your team is structured. This post will help you properly determine how to staff your firm that makes the most sense with your project structures and workload requirements. 

Finding the Right Mix of Full-Time and Contracted Staff

Your project margins and success is dependent on the team you built: hiring right people, skillsets, and selecting between full-time employees and contract workers. Most likely, if your utilization rates are low it’s because you have too many full-time workers spending wasted hours on non-billable tasks or bench time. A contract worker, on the other hand, would be available for the projects and cut down on the wasted downtime. 

It might sound like this is a simple fix, but really it’s all about striking a balance. Your full-time employees still add immense value to your services firm.  Once you’ve found the right mix of contracted and full-time staff, it will enable your full-time employees to work efficiently without having too little or too much time on their hands, and your contracted employees can be brought in on a regular basis for projects as needed. Boom - your utilization rates will sore! 

Let’s take a look at the factors to weigh when constructing your team. 

Evaluating Responsibilities to Make the Right Hiring Decision 

Weigh the hours: Compare how many project hours your firm has on average and subtract the amount of time being tracked to them by your current team. Then evaluate if the hours left are best suited for a full-time position or a regular contractor.     

Stay mindful of logged hours: Beware of hiring a contractor, thinking it will be a more flexible path if they need to become full-time. The IRS states that independent contractors cannot work beyond 1,040 hours a year. If the time you need to fill exceeds this amount, a full-time employee may be better in the long run. 

Compare individual utilization rates: Try to get as granular as possible with where your allocations are suffering. Is it one or two full-time employees that are carrying more than their fair share of work? Be conscious about if your hiring choices will negatively impact them or improve burnout. 

Be conscious of project sensitivity: If your client projects typically involve sensitive information, you may want to budget this work for a full-time employee. Contractors could potentially also take on work for a client’s competition, which could harm your trust. 

Choose a variety of skillsets: Offering specialized skills is a great way to grow your services offerings and have a competitive edge, but be honest with yourself on how often this will come up with your routine work. If it’s still infrequent and a growing segment of your firm, a contract worker will give you more flexibility. 

When to Select a Contract Worker

Seasonal projects: If your business has a busy time/season, contracted workers are great for extra hands, without harming utilization rates the rest of the year. 

Specialized service offerings: Niche services and skills that your firm offers for upselling or special projects, but aren’t used regularly. 

Internal operations: Depending on your firm size, administrative work, bookkeeping or in-house marketing may not be a full-time position.

When to Select a Full-Time Employee

Building a network: If your target market is a local audience or a specific niche, it’s important to have a loyal network of people to leverage your business. 

Long-term, detailed projects: Work that requires detailed project management and supervision should be handled by someone who is full-time committed to the job. 

Developing client relationships: Gaining new clients can be expensive, so having a familiar team to build trusting relationships with clients is important for making the partnership last. If your client is paired with new faces for each project, their loyalty is at greater risk of wavering. 

Blending Your Dispersed Workforce 

Once you’ve found the right mix of contracted and full-time employees for your firm, it’s important to invest in the collaboration of the employees and provide tools for seamless communication. Get a head start by viewing our guide on remote management for professional services firms

 

About the Author

Trilby Lawless

Digital Content Manager

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