KPI of the Week: Utilization Percentage

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A KPI for Service Organizations — The utilization percentage is a KPI used by service industry organizations to measure how many hours each person is spending of available work time on client time. It is calculated by dividing the number of billable time by the number of hours available to be worked. As a standard, the number of hours available to be worked will be number of days times 8 hours. Thus, a standard denominator for a year is 2,080 (52 weeks X 5 days X 8 hours).

It is important when determining the target for the utilization percentage that staff level (supervisor vs non-supervisor), seasonality, and training requirements be taken into account. Different industries exhibit different levels of utilization. Also, when reviewing this KPI, it is important to recognize there can be different factors affecting it.

Low Utilization Percentages can be a result of the following:

Beware of a higher than expected utilization percentage as well. It too can be an indicator of issues as a result of staffing issues, such as needing more staff or a change in the assignment of duties for current staff.

Contact Porte Brown to obtain more information on selecting the best KPIs for the organization.

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