There’s a common misconception among agency owners and managers that “increasing utilisation” means either “getting more working hours out of the team” or “just doing something constructive for the business”.

Utilisation in a people business is, at its simplest, a measure of the proportion of time your team spend on executing client work (ideally billable client work, but that’s not necessarily the same thing). It’s not the ability to get someone to work a couple of extra hours work for free, and it’s not a scoring system you can artificially boost by making a few new business calls. Utilisation is about getting client work done, not winning it in the first place.

The reason that distinction is important is that your rate card (and so your agency revenue) is calculated and determined by the number of hours your team has available to get client work done. Those hours, multiplied by whatever you can charge for those hours, equals potential revenue, and that’s why marketing and new business “don’t count”; of course they have a major future value, but your potential clients aren’t paying you to woo them (unless, strictly speaking, there’s a pitch fee) so if you’re the marketing or new biz person, then your utilisation isn’t meant to be high.

Low (or even nil) utilisation for certain roles isn’t a bad thing. The HR person most likely never does anything directly for the client, and so quite rightly the expectation is that their utilisation will be precisely zero. Ditto the finance team.

I’ve seen team leaders and business owners get indignant about the utilisation figures for their client-facing team, arguing that someone was spending their time doing the company website or an internal project, or chasing down leads, and so shouldn’t be penalised in their utilisation. The point is that utilisation isn’t necessarily a measure of whether someone is doing their job, it’s a measure of whether the working parts of the overall machine are all calibrated correctly and all working to plan. There are always internal projects and activities, and as long as they have value, they just need planning into target utilisation levels. I’m an bean-counter, and although I like to think I have a value to the agency, you’re never going to make a bean out of charging for my time.

It’s also not necessarily someone’s fault if their utilisation is low; if there’s no client work to do because either the new biz pipeline has dried up or because the resource manager has cocked up, then hopefully they’re doing something useful (albeit not billable) rather than sitting on TikTok, but either way their utilisation will take a hit. Sometimes a team’s low utilisation is at least partly influenced by poor management or planning, or a tendency to have too many all-hands internal meetings.

Most importantly: the agency needs to understand the utilisable profile of its team and plan accordingly, and that means resourcing realistically, setting measurable targets, and making sure the business’s rate card really adds up in the light of that profile.