Monday, November 9, 2009

The Elephant in the Room

ElephantBusiness Strategies

In last week’s post, Productivity Lows? Snooze Those Woes,  I discussed how requiring time off increases productivity.  This was a subject of a Harvard Business Review article titled Making Time Off Predictable – And Required.

If you’re working in the service industry where any time spent away from service hours is lost time, or spoilage in business-speak, you’re faced with a big question: how would you convince the powers-that-be of allowing and requiring time off for each employee? This is the elephant in the room that everyone wants to ignore.  It seems common sense to allow people time off they’ve earned, but how do you implement such a system.  It seems too big an undertaking, especially if your organization requires, or at least encourages through bonuses tied to billable hours. 

Pondering this question I remembered a recent book I read, The 4-Hour Work Week (Amazon link), by Tim Ferriss. In it Tim defines a process for convincing yourself, or your boss, to work away from the office.  The idea is that you would use strict metrics that you’re already being measured by to show an increase in productivity when you’re away from office.

In our case that means conducting an experiment and showing the results to management for review.

Let’s take the service of consulting as an example.  In consulting the employee’s annual productivity is measured in billable hours, or utilization.  In case you’re unfamiliar with the term “utilization,” just know that utilization is the total number of hours you’ve billed in a given period, like a year, over the total number of hours you could potentially bill for that same period.  Assuming a 52-week year, ten holidays, the total potential billable hours are 2,000.  So, if you bill 1,000 hours for that year, your utilization would be 50%.

The idea would be to take your annual utilization goals as your measuring stick for demonstrating INCREASED productivity even when you take time off.  Let’s use an example to demonstrate what I’m suggesting.  Let’s assume you’re a manager in charge of five employees.  You are responsible for their utilization goals, where their total potential annual billable hours are 10,000.  With a utilization goal of 85%, the team’s goal equates to 8,500 hours annually, or 340 hours every two weeks, equivalent to 68 hours for each person.  I chose two weeks since this is usually the pay period for which utilization can be calculated.

I suggest giving each of your team members a day off over a two week period, but with the given premise that the team still make up their billable goals.  You also setup so that no more than two people are off on the same day. This means that the team still needs to bill 340 hours over nine working days, or 76 hours per person over that same period. 

With this experiment you’ve given each person an extra day off, possibly a three-day weekend, but only increased their workload by 12%.  In other words, if they each bill 7.6 hours per day for nine days instead of 6.8 hours, they’ll make up for the day off.  Likely, nobody bills 6.8 hours per day or any other one-tenth fraction of hour.  So, the more realistic numbers will be an average of 7 hours, increased to 8 hours billed per day as a result of making up for lost hours from a day off.  This is an actual increase of 14% in billable hours. 

In other words, by giving a day off to someone, you’ve actually ended up increasing your team’s total billable hours and utilization.  In total utilization numbers, you’re looking at going from 85% utilization to 97% utilization! What’s more, you’ve given each team member an additional 50 days off per year, or 10 weeks off. 

Talk about a win-win scenario!

What Do You Think?

Do you think this experiment makes sense?  How does this reasoning settle with you?  Please feel free to show your reactions below in the Comments section.