It's vital that you share these target utilization rates with each employee and their managers. It's impossible to hit a target if you don't know what you're shooting for. Allow employees to take ownership of their utilization rate, and don't punish employees who don't hit their target rate unless it's because of negligence.
It's probably not their fault if there isn't enough billable work to charge for. Instead, reward employees who manage to hit or exceed their utilization targets. Employees who are positively motivated to hit their goals will take a more active role in the company.
They may even go so far as to try and bring in business to boost billable hours. Ideally, your employees should see target utilization rates as an exciting challenge, not a weight on their shoulders.
There are plenty of benefits to using time tracking software to track billable hours, as long as the tool is easy to use. Or perhaps some of their hours are getting miscategorized because of poor software design and implementation. Time tracking software ideally makes the process as easy and as accurate as possible. Once your employees start accurately recording their hours in a timely fashion, you may discover that your organization is doing better than you thought. This is a big one.
As we said, every company needs some non-billable time built into its schedule, but too much non-billable time is an indication of waste. This can be an indication that:. We already know that available time is a finite resource. This can lead to disastrous consequences, like being turned down for a perceived lack of capacity to do the work, and further degrading the backlog of billable work that could raise your utilization rates.
From that perspective, reducing wasted non-billable hours can create a positive feedback loop that ramps utilization rates in an upward trajectory. The best way to optimize your utilization rates is to gather good, accurate information. In Table 2 we present for every group and year basic statistics for input and output variables: mean, standard deviation, minimum and maximum values. The results concerning CU are summarised in Table 3.
We calculate also, for every group, the growth rate of sales and of fixed assets for and , in constant prices , and the results are given in Table 4. If analyse the figures in Table 4 we can see that when compare groups 2 and 3 the results go in the same line with the intuition. When consider group 1 relative to group 2 the results go against the intuition.
The results in Table 4 , support the intuition when look at group 2 relative to group 1 but, not for group 2 vs. The conclusion is that there is no clear-cut relationship between the percentage of FA, the percentage of sales and CU over- and under-utilisation.
In the sample of firms we are analysing the exact correspondence between physical capital and money value of accounting fixed assets is far to be achieved. It appears here the very well know problem related with the economic interpretation of accounting valuation rules. In our specific case study, this problem is probably amplified by the severe inflation rate and the unclear application of accounting principles as we didn't dispose of an audit report for any of the firms included in the survey.
As it can be seen from the data, in Romania in and , the inflation rate was particularly high. In other words, the observed level of fixed inputs does not imply any inefficiency for these firms provided that it appears as being the optimal level for them.
A similar picture is valid for the rest of the groups. The firms have cost excess due to the structure of the fixed inputs. Group 2 i. This work is intended to have two main contributions. The first one is the proposal of cost inefficiency estimation, applied within a non-parametric setting. The differences in cost among firms could be explained considering mainly two approaches: analysing the size of the firms or the level of fixed inputs. In this paper we deal with the problem of fixed inputs and the capacity utilisation as influential factor, provided that the literature sorted out the first approach long ago.
The second contribution relates to the empirical application in itself. Total Factor Productivity TFP is a standard measure widely used in many empirical studies concerning the well-established market economies but has not been used to a large extent in transition economies for which there is not that much work done on productivity analysis, in a non-parametric framework, in particular. In average our findings show that in most of the cases the prevalent situation is the under-utilisation of the existent capacity.
This generates cost inefficiency stimulated at the same time by a slow-down in the domestic demand. The results we obtained do not clearly confirm our previous way of thinking about this subject: the more physical capital the more under-utilisation and the greater the importance of fixed assets in accounting balance sheets. This could be partially explained by the fact that apart from working with data on a transition economy like the Romanian high inflation in the period analysed , we face the very common problem of most part of the non-parametric research that is, the impossibility of measuring the real cost frontier.
We operate with the empirical cost frontier and for this reason it could be also that the reference units, perform on the frontier because they simply manage better their variable inputs without optimising the level of fixed inputs we would like to thank to an anonymous referee for the suggestion of an extension of cost inefficiency analysis considering the size of the firms as an influential factor, and the role played by the variable inputs. The authors thank Kristiaan Kerstens, Marcos Estellita Lins, the guest editor, and three anonymous referees for their helpful comments.
Abrir menu Brasil. Pesquisa Operacional. Abrir menu. Diego Prior Nela Filimon About the authors. Keywords: capacity utilisation, DEA, cost efficiency. Introduction The concept of capacity utilisation CU has been largely analysed in the economic literature from various perspectives, both theoretically and empirically, and has been very often used to explain changes in macroeconomic indicators like inflation rate or labour productivity. Brief Review of the Literature on Capacity Utilisation One of the most used definitions of CU rate is as the ratio of actual output to the potential output.
Modelling Cost Efficiency in the Short and Long-Run Any of the definitions of capacity given above is more or less valid depending on the specific technological characteristics of the production process in question.
Model 1 The notation we shall introduce here will be valid for the rest of the paper. A procedure for ranking efficient units in Data Envelopment Analysis. Management Science , 39 , Measuring and assessing capacity utilisation in the manufacturing sectors of nine OECD countries. European Economic Review , 30 , Capacity utilisation measures: underlying economic theory and an alternative approach.
American Economic Review , 71 2 , Segment shifts and capacity utilisation in the US automobile industry. For example it will:. Your utilisation rate will tell you how effective your agency is and also give you a clear idea of things you can do to improve profits. If your utilisation rate is too high it will show that you may need to look at growing your team so your people are not overworked and you have capacity to take on more work as your agency grows.
If your rate is too low it will show you that you need to focus on bringing in new business as well as reviewing processes to ensure any non-billable activities are efficient as possible.
By tracking utilisation by team you can learn which teams are more profitable than others and use this to dig deeper to understand why this is. It may be that they do something a particular way that could be shared with other teams as best practice and so raise the bar across your whole agency. Find out where you have spare capacity or not enough capacity and redistribute people accordingly. It can also help ensure the right people are doing the right work. To see which projects are on track to meet budget and if they are over, find out why.
Over budget, projects are often due to scope creep which, if it goes unspotted, will hit profits. If you are tracking your time and utilisation you can spot scope-creep early and renegotiate fees before a project over-runs. Employee utilisation is how efficiently a company uses its staff to be the most productive they can be.
This can be determined by looking at how much time employees spend on specific assignments and tasks as a percentage of their available time on the job. For many organisations, business is booming making them busy, but yet they still think they can get more out of their team.
Frequently, companies struggle to improve productivity and employee utilisation without truly understanding the current state of play.
In this blog we discuss ways in which you can analyse the performance of your team to help drive productivity. This is true of employee productivity and utilisation where many variables dictate how productive or how well utilised an employee is. For example, a small business manufacturing and delivering products. What is more productive, an employee who works 8 hours a day on product development, or a similar employee who works 10 hours per day but spends three hours on administration, breaks and socialising.
It appears, the eight hour a day employee looks the most productive but we have no idea from hours alone how this impacts the goals and objectives of the business or compares to what the employee was planned to do.
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