I have gone into many a company whose managers brag to me about their 100% utilization of their people. They have all the techniques down pat and know just how to do it. I see opportunity. If they are willing to listen, I can improve their productivity 20-50% by not trying to get 100% utilization.
First, some terms need to be defined. Availability is the amount of time someone is available to do the job you hired them for. If they are a programmer, they are programming. If they are tech support, they are working with customers. If they are a tech writer, they are writing. Utilization is the amount of the available time that the person is actually doing the work. Many companies count utilization as the percent of hours a person bills to a project. That is merely how someone charges their time, not a measure of what they were doing in that time. To improve utilization, you have to improve both availability and utilization.
To know the actual time someone is working at their job requires observation. Many of these studies have been done for knowledge workers of all kinds, where the researcher follows someone around all day, tracking the time they spend on everything they do. They do this for maybe hundreds of people (multiple researchers of course) over an extended time. Companies pay for this research because they are looking for inefficiencies in their processes. Fortunately a lot of this research is published and the results are very consistent. This means you can use averages instead of paying for the research at your company.
The highest availability anyone has measured was 80%. Your most productive people are available at best 80% of the time to do their jobs. This is actually a good thing! They are not doing nothing in the other 20% of their time. The other time is spent on things such as company town halls, training, meetings with their boss, meetings with their team, and so on. When you think of all the things that pull people away from their work, 20% is a quite reasonable number for those kinds of activities. You want to allow your people time for career development.
You think that the contractors you hire must be at 100% availability. Of course they are 100% available for the hours they bill you. If they are billing you at 40 hours a week, they are almost certainly putting in about another 10 hours a week on their own time (or their staffing company’s time) for these other activities.
If you really had 100% availability, you would have unhappy, burned out employees who quickly leave for better opportunities.
So far, we know we cannot have 100% utilization of people’s time because they need about 20% of their time for activities other than the actual job you hired them to do (programming, writing, tech support, etc.). But what about 100% utilization of the 80%? We can use all our management tricks to get that number; we do it all the time!
Let’s consider all the things that prevent people from working 100% of their available time. Start with task switching. If you assign people to two or more projects at a time, you are losing on average 10% of their time every time they switch between projects due to having to switch their brains from one project to the other. Averaged out, this amounts to about 20% loss of productivity for each project you add (because people don’t usually just switch once between projects). This number is extremely well established based on about 90 years of research. It is real, it is going on, whether you want to admit it or not.
The first step then is to focus your people on one project.
But you say you have specialists and they don’t have that much work to do on one project. Then cross train them. The specialist model has been well studied and shown over and over to be inefficient. It looks appealing on paper, but actual measurement in real life shows that specialists lose most of their time to task switching. You are not getting much actual work out of your specialists anyway, so leave them in one place and teach them new skills.
The second step is help your people gain additional skills so there is more work that they can do.
A final common cause of lack of utilization is the huge number of interruptions due to telephone, e-mail, instant messaging, texting, and so on. For best utilization, you want to focus your people’s time on one project and you want to focus their attention. Get rid of the sources of interruption for some number of hours every day and add practices that help them focus on their work. Since you only have 80% availability, make that 80% as interrupt free as possible. For 6 hours a day, no phone, email, texting, or IM. Seat the whole team together so they do not need to use phone, email, texting, or IM to communicate with each other. Have them work in pairs to stay focused on the job.
The final step is to put people who work together in one place, remove interruptions for 6 hours a day (phone, text, email, IM), and have them work in pairs as much as possible.
There are companies who have taken these steps and watched their productivity soar. Companies who deliver products to market at 1/10th the cost of their competitors. Maybe you don’t get that much lift, but what is the value to you of a modest 10% gain? What if it was 20%? Is that worth changing they way you staff your projects?