The 3 step process to improving the productivity of your Digital Agency
By far one of the biggest performance issues we see across digital agencies is under utilisation of staff. Our recent digital agency whitepaper showed that the average productivity rates across digital firms in Australia is 83%. Yet among firms we talk to, it is not uncommon to see productivity as low as 60%.
This observation brings about several questions which I will answer below, including what exactly is a productivity rate? What does it mean in the context of your business – and what can you do to improve it?
What is a productivity rate?
In a business where the value created is a direct result of the output of a person – for example, in legal and accounting firms, chiropractors, plumbers and of course digital agencies – we measure productivity by comparing the amount of time spent on creating value for clients vs the total time spent working in the business.
For example, if one of your employees is at work for 8 hours a day and spends 4 hours creating value for a client, 2 hours in internal meetings and 2 hours on lunch, coffees and chatting with friends, then that person would ‘50% productive’.
What does this mean in my business?
At a very simple level, a 50% productivity rate means that only half of an employee’s time at work is spent creating value for a client and resulting in bringing revenue into the business. Of course, the more productive an employee is, the more revenue will be generated. At a more complex level it could be said that the 2 hours spent in internal meetings from the above example was necessary for running the business and this time spent in meetings will vary day to day, so is not a fixed allocation. The general point is that a rational business owner wants employees to be as productive as possible.
What can you do to improve productivity?
I’ll cut right to the chase and say it: timesheets.
A lot of you are probably squirming in your seats right now thinking how your digital agency will end up like a stale old accounting firm if you implement time sheets – and to some extent you’re right. Time sheets can have a big impact on culture. In my accounting days I dreaded the timesheet – you take a personal phone call, grab a coffee and go to the bathroom and there’s half an hour you can’t charge to the client!
But it doesn’t have to be this way… First let me explain why they are important.
Time sheets are an important way to collect data about your business. For example: How many hours last year were spent doing proposals? How many doing client rework and revisions? How many lost hours due to IT issues? I bet you can’t answer that. But if you could it would reveal some very interesting information.
Maybe the amount of rework you’re doing means you’re under quoting on jobs? Maybe that old hardware you’ve been putting off replacing is actually costing you more in lost time than it is to replace? Maybe there’s one particular person who’s taking a bit longer than usual to get something done and they could use some training or help?
The point of timesheets isn’t to watch your employees’ every move, it’s to gather crucial data about your business. It’s for this reason that you would be mad not to utilise them.
How to implement timesheets without destroying your culture
I’ve thought about this a lot. Part of me knows accounting firms can be so profitable because they know where all their time is going – down to every 6 minute increment. The other part of me remembers how much I hated having to keep track of every.single.minute.
Here’s how to implement timesheets and still maintain a positive and creative culture:
Don’t require time to be kept in specific blocks such as 6 or 10 minutes.
It’s not nice, it’s not practical and it’s simply not necessary. Base the time sheet entries around changes in activities and don’t require every 6 minutes of the day to be accounted for. If 10 minutes here and there is unaccounted for, don’t start breaking people’s balls asking them what they have been doing. It’s a given that some time is going to go “missing” on general life admin activities (tea, coffee, conversations, bathroom breaks).
Explain to your employees why they’re being implemented.
Shifting to timesheets is hard. Like changing any behavior, on their introduction some people will resent it and some will forget to do it. If you explain to your team that you’re more interested in the data around how the business performance and processes are operating as opposed to if staff are slacking off, then everybody will feel more comfortable.
Review the data as group.
Once a month or quarter get your employees together, review the data and come up with ways to improve your processes. Perhaps a lot of time is being sunk into a particular type of process like proposals. If so, the people doing those proposals might have some great ideas on how to improve that. Perhaps the account managers are noticing clients in certain industries require more hand holding than others and the business might be better off not focusing on that industry. Without this data and reviewing with relevant parties, you will not get the insights to make the right decisions. Further, engaging your employees in the process will help them see just how useful timesheet are to the business’ success.
At SBO we are fortunate to see under the hoods of some pretty great businesses in the digital space, and I can tell you the good ones monitor their productivity and make decisions to improve their businesses based off this data.
I’d love to hear your thoughts on this topic, regardless if you think timesheets work or not.