Adjusted Revenue, Billable Value or Billable Hours Targets for Individuals

Background

We know an individuals productivity percentage shouldn't be a secret or surprise. Every person in your practice should know the rough percentage of their days/weeks/months/year you expect for them to be working on client work based on their role. Because most people have a set billable rate, there is an implied billable value and billable hours here which you can set as a target.

For those practices who have mastered their productivity and moving to the next level of mastering their recoverability, Revenue may be a better target for an individual being the Billable Value of time incurred in a period (time x rate) adjusted by what we couldn't invoice recognised as Net Write Ups on the write up/off date.

Unlike a productivity target however which is independent of leave and working days, Billable Hours, Billable Value and Revenue targets are subject to leave and working day effects. People are less able to meet a fixed monthly Billable Time, Billable Value or Revenue target when there are fewer working days in a month (like February) or they are on leave (like December and January). Your people might be tracking nicely toward their target, go away on leave and find themselves defeated before they re-start by an unrealistic remaining target for the month. What can be done?

Adjusted Revenue, Billable Value and Billable Time Targets

We can adjust a monthly target for an individual by the working days available and the leave planned (and unplanned) in a period. The earlier we can identify and communicate an individuals target for a month ahead, the more likely they are to guide their behaviours toward the desired result. Measuring this retrospectively when all of the leave is known is not as useful.

Adjusting for Leave

Leave both planned and unplanned is the most disruptive factor to an individuals monthly target and will swiftly demotivate them for the remainder of any month where leave occurs with no corresponding adjustment to the monthly individual target.

There are two types of leave that occurs:

1. Planned Leave

This includes public holidays, annual leave, professional development leave, anything we can know about in advance. In order to arrive at a timely and meaningful individual target, planned leave should be time-sheeted in advance as soon as it is applied for or accepted.

2. Unplanned Leave

This includes sick leave, bereavement leave, parental leave and any other leave types we are unable to know in advance.

Here is how we might adjust a target for leave throughout the month:

A $12,000 monthly individual target in April 2024 has 20 working days plus 2 public holidays. Assuming our team are time-sheeting public holidays in advance an adjusted target on 1 April would look like this:

$12,000 x (22-2)/22 = $10,909 starting adjusted target.

Where 22 (or 21.8) is the average number of working days plus public holidays in a month in Australia (with some regional variations). In NZ use 22 also (or 21.8).

This is an adjustment for the calendar effect on working days only, not actual public holidays in a month which we adjust for next:

On 15 April the individual may have incurred:

1 Public timesheeted holidays
1 Upcoming timesheeted holiday (ANZAC)

There is no change to our adjustment target here because both have been time-sheeted in advance.

-4 Planned Leave days
-1 Unplanned leave days (sick)
-2 Upcoming planned leave days timesheeted already in the future
For a total of 7 additional planned and unplanned leave days.

This reduces our 20 (working - public holiday) days to 13. What then is a meaningful adjusted target for this individual on 15 April?

$12,000 x 13/22 = $7,091

This would be a more meaningful and realistic target than $12,000 or $10,909. The earlier and more frequently we can share this adjusted target with an individual, the better they are able to adjusted their priorities/behaviours to meet this target without losing motivation throughout the month through unrealistic targets.