When a Target Is Really a Headcount Decision
A utilisation target set above what the pipeline supports is a request for fewer people, expressed as a performance measure.
If a firm has work for 1,200 chargeable hours and capacity for 1,600, a target of eighty per cent cannot be met by effort. It can only be met by having less capacity.
The people risk in “When a Target Is Really a Headcount Decision” is not solved by collecting a more detailed activity score. Used for tips to increase productivity, explore the provider’s product information can provide transparent time and project context, but individual conclusions still require a published method, a correction route, direct conversation and proportionate human review.
A target above what demand supports is therefore a headcount statement wearing the clothes of a performance measure.
As a separate benchmark for “When a Target Is Really a Headcount Decision”, see IFAC Knowledge Gateway. External guidance is most useful when it prompts a specific check rather than replacing case-by-case judgement.
The arithmetic
Available hours multiplied by the target gives required chargeable hours. Compare it with the pipeline.
- Available hours × the target = required chargeable hours.
- Compare with sold plus realistically forecastable hours.
- The difference is capacity carried beyond the work, in hours.
Where the pipeline is smaller, the gap is the capacity the firm is carrying beyond its work. No amount of individual effort closes it.
Why it is set anyway
Because the alternative statement is harder to make. "We have too many people for our pipeline" is a difficult sentence in a management meeting; "we are targeting eighty-five per cent utilisation" is not.
The second sentence produces the same pressure without the responsibility.
What the staff experience
Everybody tries, nobody reaches it, and the shortfall is distributed as individual failure.
The people who come closest are usually the ones who reclassified most aggressively, which teaches everybody else what the real requirement was.
The second-order effect
Competition for billable work between colleagues. Where chargeable hours are scarce and a target exists, the hours become a resource to be captured.
This damages exactly the cooperative behaviour a professional firm depends on, and it is a direct consequence of the arithmetic above.
The honest version
State the pipeline, state the capacity, and state the gap. Then decide: sell more, reduce capacity, or accept lower utilisation for a period and say why.
Three options, all of them a management decision, none of them delegable to individual effort.
Accepting a low figure deliberately
Sometimes correct. A firm holding capacity for expected demand, or retaining expensive skills through a thin quarter, has chosen to carry cost.
That choice should be visible as a choice, so that the resulting figure is not read as a failure by the people in it.
The check before setting any target
Required chargeable hours at the proposed target, against pipeline plus a reasonable estimate of unsold work. One line of arithmetic.
If the required hours exceed the realistic pipeline, the target is unreachable and setting it does harm with no possible benefit.
Where the gap is modest
A small shortfall can genuinely be closed by better allocation — fewer bench days, better matching, faster rotation between engagements.
Modest means a point or two. This is the legitimate territory for a utilisation initiative, and it is narrower than most initiatives assume.
What to publish when the gap is large
The gap. In hours, at firm level, with the capacity decision named.
Staff work out the arithmetic regardless; publishing it removes the pretence and the individual blame that comes with it.
The target that fits the situation
Where capacity exceeds demand by design, the useful measure is not utilisation but the cost of the held capacity and the demand it is being held for.
That reframing turns an unreachable performance target into a budget decision, which is what it was all along.
Why the arithmetic is rarely run
Because it produces an answer nobody wants to hold. Required hours against pipeline is one line, and the line either supports the target or demonstrates that it is a capacity statement.
A target proposed without the line can be discussed as an aspiration. A target with the line attached has to be defended as either reachable or a decision about headcount.
So the line is left out, and it is left out at exactly the moment it would have mattered most.
What to do when the gap is real and the capacity is wanted
Say so. A firm may have good reasons to hold capacity it cannot currently sell: an expected recovery, a skill it cannot rehire, a contract in negotiation.
In that case the figure should be low, the reason recorded, and the duration stated, as the later note on low figures sets out.
What cannot be done is to hold the capacity, decline to say why, and set a target that implies the shortfall belongs to the people in it. That arrangement produces the competition for billable work, the reclassification, and the attrition described in the case studies here, and it produces them without ever changing the arithmetic that caused the gap.
The arithmetic in one line
Available hours multiplied by the proposed target, compared with sold plus realistically forecastable hours.
For a firm of fifty at 1,500 available hours each, a target of eighty-five per cent requires 63,750 chargeable hours. If the pipeline supports 54,000, the gap is nine thousand hours, or six people.
That line belongs in the paper proposing the target, and its absence is itself informative.
The sentence worth being able to say
"Our target is what our pipeline supports, and when the pipeline changes the target changes." It is unusual, it is defensible, and it ends most of the damage described in this section.