A new utilization approach

Apr 23, 2023

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If you trust your staff and have hired people with integrity, you will never need to tell someone you want them 90 percent utilized.

I was just a young engineer, but far enough into my career that I was learning a little about project financials and was keyed in more when company leaders mentioned things like “multiplier” and “chargeability.” I could see that I needed to understand these concepts better if I was going to be in their place someday. I worked for a good company; one where leaders discussed company financials frequently at our quarterly meetings or casually around the office. However, even as a young engineer, the one thing I could never understand was the constant drum beat over chargeability, or utilization. They were open about how the company was performing, but the thing I heard more than anything was utilization.

“We need to get our utilization up” was a frequent message, and everyone had a goal to keep. This message was conveyed when we were very busy and when we were less so, although the urgency was probably heightened during those lean times. I can still remember this thought quite clearly: “What good does it do to charge to a project with no budget?” The other question we often grumbled in our little cohort (we sure did have all the answers back then, didn’t we?) was: “How am I supposed to hit 80 percent utilization when they’ve assigned me this big presentation we have on Friday?”

Being in a position of leadership now, I certainly understand that I wasn’t privy to all the information back then and I was not being fair to a group of smart, dedicated managers and leaders who were all doing their job the best way they knew how. However, the disconnect I sensed back then between my personal desire to work on projects and do my best and this frequent focus on utilization really stuck, and we have carried them into little dogmas that we keep at PGA today. One big one is how we address utilization: We have no individually assigned utilization goals.

Now, many of you reading this may set individual utilization targets for your staff and may even make it part of their performance evaluation. And you may also be one of Zweig Group’s Best Firms To Work For. This article isn’t intended to claim that our philosophy and approach to this particular subject is the only way or even the right way. It works for us and we feel it aligns with our core values and the culture we have created.

For us, it really comes down to trust: Trust in our staff to want to work hard without being micromanaged, and trust in our staff that they want to do quality work on projects for our clients. Assigning individual utilization targets to forecast your revenue is one thing. We do that. Holding individuals accountable for that number is another thing. We do not do that.

Nobody at PGA knows what utilization target we might have set for them in a revenue projection exercise. We feel that it is the responsibility of the manager to drive staff utilization. You want your production staff busy on projects? Give them projects to work on and create a culture where efficiency and excellence are truly valued. Don’t have enough projects to give them? Go win some more projects.

I realize this is an oversimplification, but it drives the point: utilization is the responsibility of leadership, not the individual. If you have hired people with integrity, you will never need to tell someone you want them 90 percent utilized. Just load them up and trust that they want to work on projects. To do otherwise, regardless of your intentions, runs the risk of sending the opposite message. One that says that if I don’t tell you how much I want you working on projects, you’ll just dither the day away. Once staff perceive a lack of trust, they may give you exactly what you’re asking for and charge to projects regardless of budget and the result you probably set these targets to achieve in the first place (net profit) will suffer.

Of course, we do track utilization at PGA. It’s a basic key performance indicator. We saw our effective companywide utilization increase from 57.4 percent in 2021 to 61.5 percent in 2022, all the while maintaining a flexible hybrid work schedule for staff. We never assigned a utilization target. And I hope we never do. We never will as long as I’m around, but my sincere hope is that we can continue to foster a culture at PGA that transcends the founders and perpetuates itself.

That’s a culture of trust and elevating our people first. It’s trusting your managers and leaders to want to grow the business by winning work and keeping folks busy and trusting your production staff to want to work on projects and be efficient. This doesn’t mean you take your hand off the wheel. You will hire knuckleheads eventually who will take advantage of this trust and you will need to deal with it. This is all part of being a good leader. Deal with the knuckleheads without allowing it to jade you so badly that you hold back from trusting the staff who have earned your trust, which is probably most of them. Invest in and trust your people and, in our experience, everything else pretty much takes care of itself. 

Gordon Greene, PE is executive vice president at Patel, Greene & Associates, LLC. Contact him at gordon.greene@patelgreene.com.

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