I’m going through an internal struggle to wrap my head around, as an employer, what is a reasonable amount of hours per week that I can expect to bill from any given employee.
I believe there are several levels to this….If you see it differently I’d love to hear your thoughts.
Director level – there are management tasks and core business tasks that are non-billable. These will take away from your ability to bill out a full 40 hrs/week. What is reasonable for these individuals from a planning perspective in your opinion?
Manager/Senior Level – Again, some time is going to go into planning, management, etc. for this level. What is reasonable best case bill out rate for this level.
Employee Level – these are the soldiers. Can you reasonably expect 40 billable hours from the troops? If not, what is reasonable?
I’d like you to consider this to be a best case scenario situation. You have enough work for everyone to keep them all topped up. This is also in a service industry scenario…not corporate.
I will address number 3. you can expect them to be 40 hours billable if they are putting in a 50-60 hour work week. a rule of thumb i have been taught and learned is that you can expect on average a 85% billable. if they are putting in a 40 hour work week. I have heard of some firms that pay their designers for 40 hours a week but demand/expect them to put in 50-60 an hour in order to make the 40 hours of billable.
Now the logic behind a person truly providing you 40hours billable in a 40 hour work week would mean no bathroom breaks, no conversation not project related, no interruptions, no nothing… in then end not making for the most happy of work places but instead more of a sweat shop…
I had heard a rule of thumb that you can expect 1440 hours per year for an employee. I never sliced it down to the different levels, so I’m not sure about that. I do know that when I was doing design consulting, I billed a hell of a lot more than 1440 hours per year.
If you’re really curious. Ask your employees to track every minute of every day for a week. Jotting down what time they started something, when they were interrupted to ask questions, discuss, eat, phone calls, etc. Then see what the average is. (Good luck getting a positive reaction from all this though…)
I am not wanting to go all Draconian on people, but I do want to create a reasonable plan that everyone can buy into (partners in particular).
I also believe that it is reasonable for me to bill clients for a 5 minute bathroom break, etc., walk around the block to clear the head, etc. as this stuff is, often, where good ideas can come from. This is all part of what they would be paying their employees for.
What this is more about, is that you realize quickly after running a business that the idea of a 40 billable week is a misnomer (minus the idea of a 50+ hr week to achieve the 40 billable).
From a planning perspective, I need to be realistic. 40 hour work week provides X amount of actual billable hours. Y amount of hours will be spent on non-billable work (especially for mgmt positions). If overtime is put in, that is either gravy, or I have to expect that it will be taken back by the employee as time off in the future, etc.
On the last comment, we do make a point of giving “comp time” if a project’s demands have employees in late into the night or early morning for a couple of days in a row. Makes employees feel better and averages out the percentages (115% billable wtf?)
As a director I’m probably in the 70% range (shhh).
Our company is 40hrs per week for general staff, about 30-35 for mid-level managers and about 20-30 for top brass. We are typically expected to have about 5-10 non-billable hours per week as well.
As a #3 soldier in the trenches I can provide some data points from the last three years:
2009 - fairly busy – billed about 1400hrs or 28 per week
2010 - things tanked for us – billed just 950hrs or just 19 per week
2011 - Things came back pretty hard – billed 1750hrs or 35 hrs per week (which as I earned later was the 2nd most anyone billed in the last 10 years)
2012 - Insanely busy – billed 500hrs in the Jan/Feb
To shine a qualitative light on things would say that 2011 was the best year as far as work went. In 2009 I did not always have something to do. In 2010 I was bored/nervous as there were cuts being made. 2012 has been destroying me. 12hr days 6 days a week to get to around 60 billed is not a fun time.
We are also paid for a only 40hr week. Fringe benefits of flex time, no appreciable dress code, bring the dog to work, arcade games, pool table, foosball, free beer, use of machine shop.
Thanks, Sprockets…that does help put some perspective on it.
From a planning perspective, I calculate your numbers a bit differently. I have to consider vacation, stat, and sick days into the planning. Which leaves me with 225 billable days per year if I provide 4 weeks of vacation.
If you divide by 45 instead of 52 weeks/year, your average billable rate per week is higher.
I took into account two weeks of vacation and so divided my yearly totals by 50. I did forget about holidays and I unintentionally left out sick days as I have not called in sick to a job since 2006 or so – the concept of a sick day is a little foreign to me right now.
Four weeks of vacation? Our company vacation plan bumps to three weeks at five years of service and I think after ten years you get bumped to four weeks. I would have to take up a new hobby to fill an extra two weeks of vacation time. Or maybe I would actually finish some of my side projects that have been in various states of completion for the last few years . . .
When it comes to the billable rates for directors, it all depends on what they do right now I manage 5 people, do BD pitches and proposals, assisting in recruiting people, as well as writing and speaking on top of leading two project teams, one with 11 people on it, the second with just 3-4… All that stuff takes time. I think if your expectations are similar, than 70-75% would be better. If your directors are not doing all of those other marketing and BD activities then maybe 80% will do it.
Well, I managed to prove that sick days are needed on Monday. Feeling human again now, thank goodness.
Currently they aren’t needing to do BD efforts, but I can see where that would kick in as the team grows (we’re no Frog ).
I’ll say one thing with respect to vacation, I believe the US has it backwards from a human resources perspective by not giving more vacation time…but man, from a business perspective 4 weeks off kills the bottom line.
I wonder why the US economy doesn’t do better, then.
Over here in Germany almost everyone has 6 Weeks paid
vacation and full medical…and businesses do great.
I guess part of the answer is, that giving your employee
time to recharge the batteries and grow as a person helps
“the bottom line” and much so in the creative business.
There are already enough zombiees around. Bringing your
clients in contact with real human beings might give you
end of rant
And no, I didn’t take my full holidays for a few years, but
having a little kid, now I do. Owning a share of our
small business I am kind of paying myself to go on holiday.
What I hate though, are employees, who try to build “bridges”
with their holidays and try to wring out even more weeks
by combining their days off with state given non work days.
Within the first weeks of the year we make a company holiday plan, that tries to take into account
the wants and needs of our few souls here . But there are few people who do not understand the
concept of “give and take”.