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vices and best skills
advisor status
practices

Exhibit 13.4 Expanded Alignment Chart for a Sales Professional
292 Services Delivery: Taking Care of Business

and engage the team members with niche branding skills in the development
of marketing plans (assuming they have the bandwidth for this work).
Knowing what you need to meet your objectives and who in your organi-
zation has the talents, capabilities, skills, and passion components are two of
the three basic ingredients needed to effectively manage your workforce.
The third is effective utilization, which refers to the degree that you are
consuming the available talents, capabilities, skills, and passion of the re-
sources in your organization, specifically the billable resources. Before we
begin to explore the most effective ways for you to manage your aggregate
billable resources, however, it is important that we first examine the area of
individual sustainable workloads.


Determine the Optimal Level of Individual
Resource Utilization
Two of the most common utilization mistakes are under- and overutilizing
individuals. In the former, your company operates at suboptimal capacity
because your resources are not being used as fully as possible. In the latter,
you are also, surprisingly enough, still operating at suboptimal capacity be-
cause some of your people are at, or close to, burnout and they are per-
forming at less then peak levels. Let™s examine these two challenges more
closely and then discuss what we can do to create a balance in utilization
that ensures you will draw the best sustainable level of optimal output from
your employees.

Underutilization
Individual underutilization occurs when you are unaware of what it takes to
perform the steps in various processes and end up providing people with
roles that contain a great deal of slack. With the exception of a few hardy
and self-motivated souls, this slack time is often filled with other low-value
activities. Some underutilized individuals also feel unappreciated as a result
of being underchallenged.
Several years ago, I interviewed a number of people in a financial ser-
vices company as part of an outsourcing program transition. The company
had just outsourced much of their IT organization, and the outsourcing
company wanted to know what these people did for the client in order to de-
termine how to fill these needs. To my surprise, a number of them worked
in shifts babysitting a data communication console. Their sole job was to call
a technician if the third light from the right on the second row of the con-
sole turned red. This happened perhaps once or twice per month. (For the
balance of the time, they sat there and read paperback novels, according to
the local gossip.)
293
Resource Management

Overutilization
The f lip side of the individual underutilization coin is overutilization.
Overutilization occurs when a person in your organization, usually one who
is highly talented and able to engage in various revenue-generating projects,
is overextended. The results of being overextended for a prolonged period of
time are disengagement, where the person starts caring less and less about
the quality of his or her work and, in time, outright burnout.
Sometimes companies take the position that disengagement and burnout
are personal problems that suffering employees need to handle. According to
noted experts, however, such as Dr. Michael Leiter, coauthor of the book The
Truth About Burnout, lack of a balanced resource utilization practice in
today™s workplace is the chief cause of burnout, which, in turn, costs these
companies billions in lost revenue opportunities. “In today™s workplace,” states
Dr. Leiter, “organizations are responding to the challenges of global competi-
tion, tightening budgets and downsizing by making people work harder instead
of smarter resulting in the exhaustion, cynicism and ineffectiveness character-
istic of burnout.”5 The fact is that overextending people or overutilizing does
not increase real productivity as measured in results over the long run.
When it comes to dealing with burnout and stress, much of the advice we
hear or read focuses on how managers can help people cope with the “stres-
sors.” These techniques are useful and come in handy as temporary symptom
relievers, but, unfortunately, they do not position or fortify people to reach
real higher levels of performance nor do they address the larger company
problems. Simply treating the symptoms of burnout is like giving someone a
medicine that provides temporary relief from the external signs of a cold.
After the relief medication wears off, the person is still sick and operating at
less than optimal levels. Likewise, after these temporary relief solutions,
people are still “disengaged” and performing at less than peak levels. “The
real solution,” states Leiter, “to enabling people to effectively respond to the
increase in demands will come from organizations and individuals signifi-
cantly re-thinking the way people work and effectively managing work.”6 By
taking this advice seriously, we create environments that support true peak
performance as measured by business results instead of the “frenzied busy
work” and late nights that mask the diminishing returns of people who are
not producing at optimal levels of performance.
Given that we now have a good picture of the impact and causes of under-
and overutilization, the question is: “ What can you do to strike a balance and
achieve optimal individual utilization?”


Optimizing Utilization of Firm Resources
The key to successfully driving individual optimal results is to secure a clear
understanding of the work requirements and to set standard expectations
294 Services Delivery: Taking Care of Business

and determine the level of sustainable performance. Specifically, you need
to answer the following questions:

• What should be your reasonable expectations relative to revenue pro-
duced by billable resources?
• In connection with your nonbillable resources, what is a sustainable in-
dividual workload in your space? How many hours can you reasonably
expect to draw from various resources based on the type of work they
do? How do you objectively determine the answer to this question?
• What are the core activities that you want your resources in particular
roles to focus on in order to contribute to key company goals?

Ronald A. Gunn, a managing director of Strategic Futures and a specialist
in strategic management and human resource development issues, provides a
very simple formula that helps us to answer the first question.7 According to
Gunn, the optimal goal of a professional services organization relative to
billable resources should be to realize a return equal to somewhere between
2.5 and 3.0 times the employee™s fully burdened salary. For example, let™s as-
sume you have a billable employee who earns $4,200 per month and your av-
erage burden rate is 30 percent. Based on Gunn™s formula, you should be
securing a monthly revenue yield ranging between $13,650 per month
($4,200 — 1.3 — 2.5) and $16,380 per month ($4,200 — 1.3 — 3).
“If you have an employee who on a monthly basis is producing three times
his or her burdened salary, you may have a disaster in the making,” states
Gunn. “I think of this metric as being the indicator of engine performance
on a tachometer. If I see someone remaining at the top of performance for an
extended period of time without throttling back a bit, I know I am ready to
burn oil.”8 Gunn advises managers to aim for the sustainable middle ground
of 2.7 and 2.8 as an annual average. (These metrics, according to Gunn, are
applicable to any professional services organization.)
If you consider the preceding rule together with the concept of billable
hours, it will give you a basic idea of how to set adequate billing rates for your
resources, so you can meet financial targets without burning out your billable
team. For example, assuming a 40-hour workweek, two weeks™ vacation, one
week for training, 10 personal days, and 10 holidays, an organization would
have 1,800 potential billable hours (2,080 ’ 80 vacation hours ’ 40 training
hours ’ 80 holiday hours ’ 80 personal hours = 1,800). Using the $4,200 a
month salary example, which translates into $50,400 per year, to attain a goal
of, for example, 2.8 times salary as a revenue figure within the confines of
your projected utilization availability, you would need to set a rate of $101.92
per hour (50,400 — 1.30 — 2.8 divided by 1,800 = $101.92). In actual practice,
you would set your rates for a pool of resources, with some individual billing
higher and others lower. You would also round out the rate to a whole dollar
figure (e.g., $102). Essentially, your goal would be to achieve a billing rate of
295
Resource Management

2.7 to 2.8 across the entire pool. Competition and other business factors be-
yond available work hours and yield targets will inf luence your rates. The key
message here is to make sure you keep all of these factors in mind when set-
ting rates and expectations.
As for individuals who are in nonbillable positions, one tool I™ve developed
specifically for the IT space, but which has global application and can be
used by any professional services organization, is the Sustainable Workload
Tool chart. To create this chart:

• Create a four-column, two-row table with your word processor.
• Across the top row, label the columns from left to right:
”Company Objectives
”Team Goals
”Weekly Activity
”Time Required
• Populate the “Company Objectives” and “Team Goals” columns with
your alignment chart company objectives and team goals.
• In the next column to the right, list the person™s weekly or monthly
activities.
• Finally, in the rightmost column, list the amount of time spent on each
activity.
• At the bottom of your one-page chart, outside the table grid, note how
many hours a week you can reasonably expect a resource to operate op-
timally based on the intensity of the type of work.
• Beneath the targeted weekly time allotment, note the actual time uti-
lized resulting from the tabulation of the results in the rightmost col-
umn of your chart.

Exhibits 13.5 and 13.6 contain examples of this tool and examples of how
you can use it to assess an individual™s current workload and determine
whether it is business-focused and sustainable.
A careful look at these two exhibits reveals that sales rep 1 is overutilized.
Perhaps, he or she:

• Has too many accounts.
• Needs help to reduce the amount of time it takes to prepare the
weekly pipeline presentations, or maybe this meeting should be made
biweekly.
• Perhaps, if the sales manager has more bandwidth, the salesperson
should not be helping the manager with the regional presentation. (This
may be something the manager can do alone.)
296 Services Delivery: Taking Care of Business

COMPANY TEAM WEEKLY TIME
OBJECTIVES GOALS ACTIVITY REQUIRED
5 percent increase in Increase new business Prospecting 15 hours
market share 5 percent 10 hours
New customer meetings
5 hours
30 percent gross mar- Close only high margin Presentation prepara-
10 hours
gin (up 3 percent) business tion for weekly internal
15 hours
10 percent increase in Go deeper into clients sales pipeline meeting
2 hours
overall revenue (combined with new Reviewing account
clients results in 10 per-
Establish niche brand financials
cent revenue increase)
value Relationship building
Gain trusted advisor meetings with existing
status clients
Helping sales manager
prepare for her monthly
call with the regional
management

Notes: Target utilization = 45 hours per week; Actual utilization = 57 hours per week.

Exhibit 13.5 Workload Chart for Sales Professional”Rep 1



Sales rep number 2, on the other hand, appears to be:

• On the surface, balanced in terms of total work time, but
• Spending more time on internal work than sales rep number 1.
• Perhaps able to handle more accounts, but might need more training.
• Taking longer to perform back office account work as compared to sales
rep number 1.

Surfacing the type of data displayed on the Sustainable Workload Tool
will help you get a clear picture of what firm resources are individually ca-
pable of doing within various roles on a sustainable level. The next step is to
set up the means by which you can effectively manage the aggregate activity
and workload balances among your various teams to ensure that resources are
collectively maintained at optimum levels of operation. For example, in the
case of XYZ Company, assuming they have 20 salespeople, the goal would be
to keep them each working no more and no less than 45 hours per week on a
steady basis.
In summary, by tracking and managing the revenue generation of your
billable resources within the established levels of expectation as well as the
amount of time both billable and nonbillable resources invest in the organi-
zation using the Sustainable Workload Tool, you can maintain a high-perfor-
mance, well-tuned operation.
297
Resource Management

COMPANY TEAM WEEKLY TIME
OBJECTIVES GOALS ACTIVITY REQUIRED
5 hours
5 percent increase in Increase new business Prospecting
market share 5 percent 5 hours
New customer meetings
10 hours
30 percent gross mar- Close only high margin Presentation prepara-
15 hours
gin (up 3 percent) business tion for weekly internal
10 hours
10 percent increase in Go deeper into clients sales pipeline meeting
5 Hours
overall revenue (combined with new Reviewing account
clients results in 10 per-
Establish niche brand financials
cent revenue increase)
value Relationship building
Gain trusted advisor meetings with existing
status clients
Helping sales manager
prepare for her monthly
call with the regional
management

Notes: Target utilization = 45 hours per week; Actual utilization = 45 hours per week.

Exhibit 13.6 Workload Chart for Sales Professional”Rep 2

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