Calculating Technician Utilization

Dashboard-HVAC of technician utilization has been a hot topic in the field service industry.  Once calculated only in terms of billable hours, the move towards servitization has precipitated a change in how companies look at utilization.

In the past, utilization was based on one metric–billable hours.  Utilization was easy to calculate billable hours divided by total hours.  This benefits of this metric is that it does not take into account holiday, vacation, paperwork, or time that billable hours are not available.

Contemporary calculations were an answer to the common statement in the field “I do a lot more than just repair equipment…”  This statement is true.  The challenge has been to categorize and track hours in a way that reflects what the service department is actually doing.  For example, a service rep may have a long standing relationship with a customer who is interested in upgrading their current equipment.  The sales rep has asked that the service rep accompany him on a sales visit to the customer.  Is this something the service department should do? Absolutely.  Is it billable labor? Well,that depends…

The concept of utilization has evolved into new categories.  Terms like value and non-value added have helped to better highlight the influence service reps have on an organizations success.  Sales, tech support, and continuous improvement efforts.  So how can you reconcile activities that benefit the company yet do not fall into the very straightforward “billable labor” category?  There is little doubt these other activities support the businesses interest.  The challenge is to develop a policy and a set of procedures that recognizes the service group of organization for supporting these activities.

Many organizations are moving to a sliding scale for recognition of these non-billable labor hours.  The goal of a service department is to provide service.  Servitization philosophy states that there is value to non-billable activities.  It is up to the organization to decide the value of those activities are within the organization.

Service departments are capable of providing more than just service to internal and external customers.  The challenge is to develop the procedures to make sure departments receive financial and operational recognition for those activities.  The first step is to decide what you want your service team to do.  Second step is to develop a metric and launch a definitive method to measure progress and completion.

A well-run service department can do more for your organization than just fix things.

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