and determine the level of sustainable performance. Specifically, you need to answer the following questions:

What should be your reasonable expectations relative to revenue produced by billable resources?

In connection with your nonbillable resources, what is a sustainable individual workload in your space? How many hours can you reasonably expect to draw from various resources based on the type of work they do? How do you objectively determine the answer to this question?

What are the core activities that you want your resources in particular roles to focus on in order to contribute to key company goals?

Ronald A. Gunn, a managing director of Strategic Futures and a specialist in strategic management and human resource development issues, provides a very simple formula that helps us to answer the first question.7 According to Gunn, the optimal goal of a professional services organization relative to billable resources should be to realize a return equal to somewhere between 2.5 and 3.0 times the employees fully burdened salary. For example, lets assume you have a billable employee who earns $4,200 per month and your average burden rate is 30 percent. Based on Gunns formula, you should be securing a monthly revenue yield ranging between $13,650 per month ($4,200 x 1.3 x 2.5) and $16,380 per month ($4,200 x 1.3 x 3).

If you have an employee who on a monthly basis is producing three times his or her burdened salary, you may have a disaster in the making, states Gunn. I think of this metric as being the indicator of engine performance on a tachometer. If I see someone remaining at the top of performance for an extended period of time without throttling back a bit, I know I am ready to burn oil. 8 Gunn advises managers to aim for the sustainable middle ground of 2.7 and 2.8 as an annual average. (These metrics, according to Gunn, are applicable to any professional services organization.)

If you consider the preceding rule together with the concept of billable hours, it will give you a basic idea of how to set adequate billing rates for your resources, so you can meet financial targets without burning out your billable team. For example, assuming a 40-hour workweek, two weeks vacation, one week for training, 10 personal days, and 10 holidays, an organization would have 1,800 potential billable hours (2,080 - 80 vacation hours - 40 training hours - 80 holiday hours - 80 personal hours = 1,800). Using the $4,200 a month salary example, which translates into $50,400 per year, to attain a goal of, for example, 2.8 times salary as a revenue figure within the confines of your projected utilization availability, you would need to set a rate of $101.92 per hour (50,400 x 1.30 x 2.8 divided by 1,800 = $101.92). In actual practice, you would set your rates for a pool of resources, with some individual billing higher and others lower. You would also round out the rate to a whole dollar figure (e.g., $102). Essentially, your goal would be to achieve a billing rate of

2.7 to 2.8 across the entire pool. Competition and other business factors beyond available work hours and yield targets will influence your rates. The key message here is to make sure you keep all of these factors in mind when setting rates and expectations.

As for individuals who are in nonbillable positions, one tool Ive developed specifically for the IT space, but which has global application and can be used by any professional services organization, is the Sustainable Workload Tool chart. To create this chart:

Create a four-column, two-row table with your word processor. Across the top row, label the columns from left to right:

-Company Objectives

-Team Goals

-Weekly Activity

-Time Required

Populate the Company Objectives and Team Goals columns with your alignment chart company objectives and team goals.

In the next column to the right, list the persons weekly or monthly activities.

Finally, in the rightmost column, list the amount of time spent on each activity.

At the bottom of your one-page chart, outside the table grid, note how many hours a week you can reasonably expect a resource to operate optimally based on the intensity of the type of work.

Beneath the targeted weekly time allotment, note the actual time utilized resulting from the tabulation of the results in the rightmost column of your chart.

Exhibits 13.5 and 13.6 contain examples of this tool and examples of how you can use it to assess an individuals current workload and determine whether it is business-focused and sustainable.

A careful look at these two exhibits reveals that sales rep 1 is overutilized. Perhaps, he or she:

Has too many accounts.

Needs help to reduce the amount of time it takes to prepare the weekly pipeline presentations, or maybe this meeting should be made biweekly.

Perhaps, if the sales manager has more bandwidth, the salesperson should not be helping the manager with the regional presentation. (This may be something the manager can do alone.)

Exhibit 13.5 Workload Chart for Sales Professional-Rep 1

Sales rep number 2, on the other hand, appears to be:

On the surface, balanced in terms of total work time, but Spending more time on internal work than sales rep number 1. Perhaps able to handle more accounts, but might need more training. Taking longer to perform back office account work as compared to sales rep number 1.

Surfacing the type of data displayed on the Sustainable Workload Tool will help you get a clear picture of what firm resources are individually capable of doing within various roles on a sustainable level. The next step is to set up the means by which you can effectively manage the aggregate activity and workload balances among your various teams to ensure that resources are collectively maintained at optimum levels of operation. For example, in the case of XYZ Company, assuming they have 20 salespeople, the goal would be to keep them each working no more and no less than 45 hours per week on a steady basis.

In summary, by tracking and managing the revenue generation of your billable resources within the established levels of expectation as well as the amount of time both billable and nonbillable resources invest in the organization using the Sustainable Workload Tool, you can maintain a high-performance, well-tuned operation.