A trend that I’ve noticed recently in managed services is that companies are struggling to earn a consistent profit, and/or have cash flow issues, often times appear to be over-staffed on their front-line. There are times when your team is completely buried with tickets and the work seems to just pile up.

This pressure often prompts Decision Makers to go out and hire help, showing action and leadership in what appears to be a time of need. Unfortunately, if this was more of a “surge” and less a result of intentional growth, the volume is likely to level out again, leaving the company overstaffed, if they do not re-adjust to the current volume.

An example of this would be if Walmart hired thousands of workers for Black Friday, and then kept them on the payroll for months thereafter, even after sales dropped and foot traffic slowed. The best way to prevent and manage this occurrence is through tracking and analyzing your resource utilization.

Tracking resource time and activity

Time and activity tracking of your service employees can lead to incredible insights into your business, that can be analyzed and optimized to cut wasteful resources and drive more profit. The challenge with this type of system is getting your people to “buy in” and understand that the intent is less about micro-management and more about deep insights into the company.

When your employees are accustomed to working freely without clock management, the shift toward documenting time spent will yield significant pushback. Some may argue that the quality of the result (resolving service tickets for example) is far more important than the time it takes to get there, and they are correct.

However, the consistency of quality results is incredibly important. The best way to achieve this is through collecting data, spotting trends that produce bad results, and making changes to offset them.

Calculating resource utilization

While the formula for calculating resource utilization is simple (time worked / time available = utilization %), there are numerous asterisks that would warrant modifications to suit your business and policies. If your company pays your employee a salary, then you would probably use 40 hours per week as the time available. Adjusting this a few hours to account for scheduled internal meetings and breaks would give you a more accurate reading.

If this were the case, a member of your Help Desk that logged 22 hours on service tickets out of an available 35 hours would have resource utilization of roughly 63 percent. Calculating each employee will allow for you understand who your most productive employees generally are and what the averages are for your company. You can also identify employees that are under-utilized and shift responsibility from over-utilized employees creating a wider balance of responsibility.

Rewarding high resource utilization

The best way to get your team to buy into time-tracking is through an incentive plan. This type of company-wide program is the perfect way to give them the recognition they deserve. The amount in which you reward your employees is based entirely around what you can afford, since all MSPs charge different rates for their service.

Structuring the bonus should simple and easily tracked. I would recommend starting with a small bonus for employees over a 50 percent utilization and create larger bonus thresholds for 60 percent, 70 percent, 80 percent, etc.

You want to make sure that these plans are achievable and that the reward suits the accomplishment. In the era of “work-life balance,” you do not want to create an environment where everyone is intentionally overworked just to earn a decent wage.

Benefits of time tracking culture

Once employees begin to see the benefits of tracking their work and are rewarded for doing so, they will willingly commit to this type of culture. The more they embrace it, the more data you can gather and use to shuffle resources and responsibility around to create a team that is more efficient and happier. You will also know exactly when to hire and when to fire based on actual data, not when your team is pressuring you to do so. 

You may also find that when your time-tracking behavior changes, your Time & Materials billing will go up significantly. You will also have a better idea of how profitable your managed services contracts actually are by tracking time worked on the account and calculating what hourly rate (total billed / hours worked). This now allows you to better renegotiate contracts as they come up for renewal, since you can prove exactly how much service is being provided.

For more ways to grow your managed IT business through integration and analytics, follow the Growth Hacking for MSPs series right here on Smarter MSP. More in-depth coverage and actionable examples of the topic can also be found on MSP Growth Hacks.

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Kevin Clune

Posted by Kevin Clune

Kevin is a former Operations Director of a Top 500 MSP and current Co-Founder/Editor of MSP Growth Hacks, a content platform that helps Managed IT Providers grow their businesses through technology. His past experiences also include Digital Marketing and B2B Lead Generation.

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