Why Firms Report It
Four reasons a firm publishes a utilisation figure, only two of which are about managing the firm. Naming the reason changes what should be reported.
Firms report utilisation for four reasons: to plan capacity, to understand margin, to reassure an investor or a board, and because they always have. Only the first two are about running the firm, and the last is more common than anybody admits.
The practical lesson in “Why Firms Report It” is that a convenient number should open a question rather than end one. A team considering read more on the provider website for employee monitoring data security can add consistent time and project context, with transparent settings, limited access and a documented review process around every material interpretation.
Naming which reason applies decides what should be published and to whom, and it is a five-minute conversation nobody has.
The assumptions behind “Why Firms Report It” can also be tested against Harvard Business Review management resources. Record which recommendations apply to the real workflow and which do not.
Reason one: capacity
How much room is there, and when. A legitimate and valuable use, and the one the ratio is best suited to.
For this purpose the right figure is forward-looking — committed hours against available hours for the coming weeks — and it is a planning instrument rather than a report card.
Reason two: margin
Whether chargeable time is covering the cost base. Also legitimate, and it needs the ratio read beside realisation and the cost rate, because on its own it says nothing about money.
A firm at eighty-five per cent utilisation and sixty per cent realisation is in more trouble than one at seventy and ninety-five.
Reason three: external reassurance
An investor, a board, an acquirer. Here the figure functions as a signal of operational discipline, and the pressure is to report the most flattering defensible definition.
That pressure is the origin of a good deal of definitional drift, and it is worth naming rather than pretending it does not exist.
Reason four: habit
The pack has a page. The page has always had the page. Nobody has asked what decision it feeds in three years.
The test is the same as for any recurring report: name a decision in the last year that went differently because of this number.
What follows from each reason
- Capacity: forward-looking, by team, weekly, no target.
- Margin: historical, beside realisation and yield, quarterly.
- External: one figure, one definition, stated, never changed.
- Habit: stop.
Why the fourth is dangerous
Because a number produced without a purpose acquires one. It becomes a performance measure by default, because that is the only use anybody can think of for a percentage with a person's name on it.
Reports with no decision behind them drift toward appraisal.
The reason that is never stated
Sometimes the real purpose is comparison between individuals, and everybody knows it and nobody writes it down.
If that is the purpose, it should be stated, because then the firm can have an argument about whether the measure can support it — which it cannot, for reasons the rest of this collection sets out.
Asking the readers
The useful conversation is with whoever receives the report: what do you do with this number? The answers are usually short and often surprising.
In most firms at least one recipient says they look at it and have never acted on it, which is worth knowing.
The header worth adding
One line at the top of the report: what this is for, who decides, and how often. Three facts.
It also makes the annual cull of reporting a two-minute exercise instead of an argument.
The reason that changes over time
A report often starts with one purpose and acquires another. A capacity figure introduced for planning is, two years later, in the appraisal pack, because nobody revisited why it existed.
Drift of purpose is quieter than drift of definition and does more damage. The definition at least gets rebuilt occasionally; the purpose is never written down in the first place, so there is nothing to check it against.
A header line naming the purpose is the only defence, and it works because a purpose on the page is a purpose somebody can dispute.
Asking who the audience is
Capacity reporting wants the people who allocate work. Margin reporting wants the people who price it. External reporting wants one owner and one definition. Habit wants nobody.
The common failure is one report sent to everybody, which means it is built for no particular decision and read by each recipient for whatever they need.
Splitting by audience usually shortens the pack. It also reveals which sections nobody has a use for, and those sections are the ones that have been functioning as a performance measure by default because that was the only reading left available to them.
The annual cull
Once a year, every recurring report is asked to name a decision it changed. Reports that cannot are stopped.
The utilisation page survives this test in firms that use it for capacity planning and fails it in firms that produce it from habit, and the difference is usually obvious within a minute of asking.
A measure that fails the test is not harmless. Left in place with no purpose, it drifts into appraisal, which is the fourth reason becoming the worst version of itself.
Two reports, not one
Where both capacity and margin are genuine purposes, they want different cuts and different audiences, and combining them produces a page that serves neither.
Two short pages beat one long one, and the second one usually gets read.