Keep people productive, but keep the whip out of the office… keep it at home if that floats your boat.
In any business, Agency or otherwise, productivity is key. You want to be able to get the most out of your team, and put them in a position where they can succeed. In this post we’ll talk about how to do just that – increase productivity within your digital agency. We’ll start by looking at what Agency productivity actually is, then look at ways you can measure it and improve it. Finally, we’ll take a look at some strategies for dealing with low-performing employees from a productivity perspective.
Definitions are needed I reckon
What does “Productivity” or “Utilisation” mean?
In simple terms, Agency productivity is a measure of how much work is being completed by employees in a given period of time. This can be expressed as a percentage, and is usually calculated on a monthly or yearly basis. For example, if an Agency has 100 billable hours in a month, and its employees complete 80 hours of work, then the Agency’s utilisation rate would be 80%.
What are “Billable Hours” in a Digital Agency?
Billable hours are the number of hours that an Agency can charge a client for. This will vary from Agency to Agency, but is generally based on the type of work being completed, and the agreement between the Agency and the client. For example, some Agencies may only bill for project-based work, while others may bill for all work completed, regardless of the project. Billable hours might be best described as the line items on a client contract or scope of work that get done, like Keyword Research or Ad Creative design. Think of it as the ‘stuff that would get shipped’ to a client.
What are “Non-Billable Hours” in a Digital Agency?
Non-billable hours are the number of hours that an Agency cannot charge a client for. This might include time spent in meetings, training, or administrative work. Non-billable hours are generally not as important to Agency productivity, as they don’t directly generate revenue. However, they can still have an indirect impact on productivity, as they can take away from time that could be spent on billable work. HR, team meetings, finance work and even the marketing that an agency might do for itself may count as non-billable hours. Just because they aren’t billable, you need to still count them!
What is a good Productivity or Utilisation rate?
A good utilisation rate will vary from Agency to Agency, and will be dependent on the type of work being completed. For example, an Agency that specializes in project-based work might have a lower utilisation rate than an Agency that provides ongoing services to clients. This is because project-based work often has more down time between projects, while ongoing services have a steadier flow of work. A good utilisation rate is also dependent on the size of the Agency, as larger Agencies will often have more non-billable hours, and may therefore have a lower utilisation rate. Generally speaking, a good utilisation rate for a digital Agency is around 80%.
Consider most people are humans 😜
80% sounds nice and simple as a number to track but it fast becomes a little more complicated. If you don’t add in the human factor, then you may be expecting more than people can give you. When you add into the first part of your calculations, many leaders forget that 5 days a week and, lets say, 7.5hr days, doesn’t really end up as being 37.5hrs a week or 150hrs a month. Take into account missing info, absences, holidays and other things that usually eat into work time and you get (across the year) about 80-90 percent of that “in work”. Your initial input of Total Hours ought to reflect this.
What do you usually measure?
The key measurements are all time based initially. You take the total time a person has available to work and then have them measure their activities, tagged as Billable or Non-Billable. Then you divide the total hours with the available hours, leaving you with the total utilisation rate as a percentage. You should also show the split of Billable and Non-Billable time there too, this will be a different expectation depending on the person’s role in the agency. An Exec would be 80:20 in favour of Billable hours for example, aiming for all tracked hours to be around 80% of the total available.
Is time really the best measure of productivity?
No, not really! You can log all your hours and be perfect in terms of targeted utilisation rates and produce terrible results for clients or make lots of mistakes. Often times, in a digital agency, time is the most simple and effective way to measure productivity but you should blend this data into something else that you measure, both at agency team and staff levels.
You could also measure:
- Client NPS scores
- Team NPS scores
- Task completion rates (and number of overdue tasks)
- Unplanned absence rate
Blending these things together per-person, per-team and for the whole agency help you to see the big picture and drill down to an individual so that you can help them be more productive OR reward them 1:1.
How should you measure it?
This ultimately depends on how sophisticated you want to be and what reporting you already do. Your current project management platform may dictate the decision as it may have time tracking as a feature or add-on. The reality is, like the old acronym goes GIGO, if you can’t properly plug the data into something that makes it meaningful it’s probably a waste of data. Think about how to report it, who needs the information, what might you use the information to decide on and so on. Sometimes a simple spreadsheet is fine for a micro-agency, but for anything larger than 5 people, a proper solution is needed. The small relative expense for time tracking software will pay for itself in the long term, if you make use of the insight.
How do you increase productivity?
There are a number of simple things you can do to increase productivity in your Agency. We’ve compiled some of the most effective below:
- Automate where possible: Use technology to automate tasks that would otherwise be carried out manually. This frees up time for employees to focus on higher-value tasks.
- Set clear goals and objectives: Make sure everyone in the Agency knows what is expected of them and what the goals are. This will help to focus employees and make sure they are working towards collective success.
- Encourage collaboration: Working together can be more effective than working alone. Encourage employees to collaborate on tasks and projects whenever possible.
- Provide feedback: regular feedback is is essential for employees to know what they are doing well and where they can improve. Make sure to give both positive and constructive feedback in a timely manner.
- Promote flexible working: allow employees to have some flexibility in when and how they work. This can help to increase productivity by making sure employees are working at times that suit them best for their own productivity rates.
Be the right kind of leader
It’s often easier to work from a mindset of getting the task done, and if you’re a process driven agency leader, you’ll jump to that first. People can’t be always on, all the time. They need some downtime as well as new challenges, balanced will with a well rounded leader. Transactional leaders focus on tasks, Transformational leaders focus on the people who do the tasks.
Chris’ Car analogy
Balancing work for productivity means ensuring that a member of the team is not driving their company car 100 mph day in and day out. If they do that, they’ll run out of gas fast! It’s better that they drive at a variable speed, making the most of the downhill where they can. They’d have the radio on and enjoy the drive more than breakneck speed for a short period then motionless until someone comes to help them out.
Client retention is linked to productivity….trust me!
If you retain your best clients, the processes become simpler, the shorthand between client and agency team becomes more clear and communication has less chance of causing friction. Long-term retained clients don’t add pressure to do needless tasks, just to tick boxes when they trust you. Trusting you and the team means they know you’ll be as productive as possible to get their results without wasting time. It’s easier to manage expectations and deliver to a long-term client than to spend lots of Billable time on Non-Billable activities like onboarding new clients to replace churned ones. More juicy advice here.
In conclusion, track time but don’t just measure it. Make the time tracked useful by turning it into information that can help the Agency become more productive. Utilisation rates are a good place to start but think about what else the data can tell you. Use technology to automate where possible, set clear goals and objectives, encourage collaboration, provide feedback and promote flexible working. Be the right kind of leader – one who focuses on people as well as tasks. And finally, client retention is linked to productivity so make sure you’re doing everything you can to keep your best clients happy.