While people are the most precious resource in the professional services sector, business leaders typically don't act like it. Gallup reports the No. 2 reason for burnout continues to be an unmanageable workload. In fact, according to SPI Research’s latest benchmark survey, an annual study my company sponsors, only a small portion of services organizations say they have “comprehensive visibility” into critical business functions like utilization. All the while, employee burnout has been precipitously rising.
The macro-economic environment is drastically changing. At the onset of the pandemic and throughout 2020, consulting organizations trimmed back on hiring, doing more with less. Now, as vaccines continue to roll out, we can expect the post-pandemic boom to kick off soon, creating even more stress on employees who have to deal with an increased workload. With more work, businesses need to grow teams to scale. That means measuring and managing employee burnout must be a business priority.
The Cost Of Not Managing Burnout
You can find a million different ways to calculate the cost of losing a consultant. According to the annual survey from SPI Research, losing a consultant can cost an organization an average of $150,000. Lattice details line item costs like hiring, onboarding and training a replacement. According to research findings, the workplace is a source of stress for 70% of workers in the U.S., and workforce stress impacts healthcare utilization costs, leading to reduced business profits by 10%. But there are also opportunity costs. For consulting and services organizations, losing a consultant with revenue-generating relationships and deep customer knowledge drives the largest variability in cost with millions of dollars of potential impact.
And there’s the very real cost to the employees themselves. According to the World Health Organization, burnout is considered a diagnosable condition. Not only this, but burnout costs the U.S. healthcare system between $125 billion and $190 billion every year, according to findings from 2017.
Many organizations struggle to find a balance between maxing out utilization rates (risking burnout and attrition) and achieving lower utilization rates (affecting revenue). The simple formula for utilization (i.e., hours billed over hours available to bill) isn’t reliable as companies have different expectations for hours worked in a week, and some deduct vacation, training or sick time from the denominator. Additionally, percent utilization goals vary by industry.
So slow and steady wins the race, but now you’re looking at reduced revenue, right? Maybe not.
Could Higher Utilization Actually Prevent Burnout?
Professional services organizations tracking utilization tend to focus solely on billable utilization. This doesn’t give a complete view into burnout. To understand burnout, services firms should aim to adopt a total view of hours worked, including chargeable and productive utilization:
• Chargeable utilization is time that generates revenue. While hours may be billable, it may not be chargeable if it needs to be written off or discounted.
• Productive utilization measures non-billable work that adds value to a professional services organization (e.g., training or research related to billable work).
Wise employers use this data to forecast burnout. How many weeks have consultants been overutilized? Where are consultants spending their time? This nuanced visibility creates the ability to get ahead of employee attrition. A surprising benefit is that this data also helps professional services organizations forecast hiring accurately. As utilization rises, what skills are in high demand, and when will demand exceed supply?
How Do Professional Services Organizations Measure Burnout?
Employees need to understand their time entries are more than a dollar sign to the organization. Here are three things we see professional services organizations implementing:
1. Make the utilization measures visible: Engaged employees understand what’s expected of them, including taking time off for training or vacation.
2. Intervene early: Whether high or low utilization, if certain employees are at risk, reach out to them.
3. One number does not fit all: How we work is becoming as individualized as where we work, so don’t lose sight of the human factor; everyone’s threshold is different and changing daily, numbers can’t tell the whole story, and you’re likely going to find varying degrees of utilitzation in your organization.
Who Is At Fault For Burnout?
Burnout is a two-way street. Employees struggle to realize the amount of choice they have in their own workload. The distance between an employee and high-value work is choice. With that said, employers must measure and use good judgment to ensure their most valued resources stay for a very long time.
In short, it is the employee's responsibility to keep their job, and it’s the employer’s responsibility to retain them by taking a balanced approach to measurement.
Sourced from Forbes - contributed by Denis Whelan