If you work for a legal firm, accounting company or agency, you’ll know that billable hours are the lifeblood of your business. For this reason, company leadership is often fixated on trying to increase utilization rate. Yet according to Clio’s latest Legal Trends Report, the average utilization rate was only 31% in 2020 – meaning that 69% of firm activity couldn’t be billed. Thankfully, there are a multitude of ways to maximize efficiency and increase company productivity without cutting corners on essential non-billable work. Here are just six simple ways to improve your utilization rate.
Non-billable work isn’t the enemy
Before diving in, let’s address the elephant in the room: non-billable hours. Unfortunately, many firms try to improve utilization rate by simply clamping down on non-billable work. But it’s crucial to understand that non-billable work itself is not the problem – it forms the backbone of every business. For law firms, accounting companies and agencies, some of the most important tasks and activities that fall under the “non-billable” bracket include:
- Marketing, meet and greets, conference appearances
- Business development, initial consultations, calling prospects
- Time tracking and reporting
- Client invoicing, expense management, staff payroll
- Mentoring and training
- Work organization, case and project management, scheduling
- Breaks and travel
As such, trying to achieve 100% utilization will never be healthy or sustainable. Having non-billable time on your books doesn’t make you inefficient or unproductive; it’s crucial to staying profitable, developing your business, and protecting employee wellbeing. As you seek to build workflow efficiency, think carefully about what utilization rate your business can survive on.
How to improve utilization rate
Improving your team’s utilization rate requires you to revisit the ways you work, build digital maturity and increase process efficiency to take the friction out of producing high-quality work. Crucially, that means improving the structures around billable as well as non-billable work. Here are just seven places to start:
1. Actually capture all your billable hours
Accurately accounting for all your billable hours seems elementary, yet hundreds of thousands of businesses continue to use unreliable manual-based systems to capture their billable time. These can range form basic pen and paper and spreadsheets, to sophisticated-looking timesheet software that use stop/start timers. The impact of these methods on profitability can’t be understated: US companies alone lose $50,000 per employee each year in billable hours due to error-prone manual time tracking, and studies show that manual timesheets are only ever 67% accurate – even when logged daily. To improve your utilization rate, swap guesstimation and manual error for robust, automatic time tracking solutions which ensure all your billable hours are actually recorded.
2. Automate repetitive, low-value admin
Don’t just stop at automating time tracking: think about how you can streamline other parts of essential admin. Due to their repetitive nature, things like expense tracking, accounting, invoicing and payroll can be partly outsourced to intelligent software. Then turn your attention to your daily workflows: What tools do you work with? Are they difficult or intuitive to use? Are there better options out there? From email management to meeting scheduling, there are a ton of low-value daily tasks you can automate. Finally, research how you can apply AI and automation within your particular industry niche to drive.
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3. Set clear expectations for clients
Tech aside, another way to increase your team’s utilization rate is to address the additional tasks and questions that eat into your profitability. That starts with better managing client expectations. It’s important to provide realistic estimates and timeframes, and to ensure you’ve properly highlighted the risks and deliverables associated with each project. The last thing you want is an endless back and forth of small fixes or clarification because you didn’t clearly communicate the boundaries of your service or the scope of a piece of work. Business development reps should communicate often with project managers to set expectations – and every team member must understand that their time is an expensive resource, and they should strive to spend it on productive work.
4. Give people more control over the structure of their day
Giving your employees more autonomy and control over the ways they work can have a powerful effect on utilization rate. Autonomy has a knock-on effect on productivity, creativity and the quality of work produced – and it allows employees to play to their strengths: structuring their work to align with their energy and attention peaks – whether they are a morning person, night owl, or something inbetween. Offering employees the flexibility to design their schedules makes it easier for them to find their flow and do more productive deep work – the type of work that generates profits.
5. Seriously address your meeting culture
Anyone who’s ever worked in an office knows how frustrating it can be to be pulled into meetings when you’re in the middle of imporant deep work. While some meetings are useful and productive, many are not: meetings consume about 15.5 hours of the average employee’s weekly schedule – and many of these are utterly pointless. According to Doodle, who analyzed 19 million meetings, the cost of inefficient meetings in 2019 was $399 billion in the US, and $58 billion in the UK.
Not only are these meetings a waste of what could be efficient billable time, they also break our focus and drain us. Meeting recovery syndrome (MRS) is very real: it’s the sensation of feeling strangely tired when we come out of a meeting we didn’t need to be in – which just chips away at our productivity and motivation even more. There are a ton of ways to keep your meetings effective – from addressing poorly-scheduled meetings that break up focus time to allowing people to opt-out of meetings when they have nothing to contribute.
6. Continually refine your planning
One you’ve started tracking all your hours and have a clear picture of where your time’s going, you’ll be able to see what your planned vs actual time looks like. For example, if you spend 70% of your time on non-billable work, but that was always the plan, there’s no problem. However, if you only intended to do 30% non-billable work, clearly something is amiss – and improving your planning is the best way to rectify this. Project planning tools and resource scheduling software can help you keep on track and provide key information about planned utilization vs. actual utilization. Plus, they can also help you balance resources, quickly spot badly utilized resources, and identify potential skills and training requirements, all of which can further boost utilization rate in the future.