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Why Service Businesses Must Track Employee Utilization Rates

 
  Sherry Rahbar, Partner, CFO Edge, LLC  
   
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  Article Summary  
Unlike manufacturers who create and track products for sale, a less tangible inventory - billable time for employees' work - means that service businesses must track employee utilization rates.

The employee utilization rate is a key performance indicator (KPI) for service businesses, and it is based on a comparison between hours billed to clients and hours worked by employees.

A higher employee utilization rate delivers higher efficiency in generating billable hours and usually higher revenue.

Illustrated are two methods to calculate an employee utilization rate, as well as ways to use it to work smarter rather than longer.

Employee utilization rates can be used to measure and manage performance at corporate, department, team and individual levels.

Doing so supports the ability to assess where corrective action should be taken and the specific steps needed to improve performance.

Los Angeles and Southern California executives who are looking at ways to improve performance and revenue can benefit from talking with a provider of CFO services.

An on-demand CFO services professional brings a proven track record of identifying the right employee utilization rate variables, benchmarks, and goals needed to improve productivity.

  Open as PDF Open the entire article as a downloadable PDF (No form completion is requested.)  
     
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