5 Ways to Increase Capacity Without Hiring
How do I know when it’s time to hire? When our clients ask us, we typically respond by inquiring why they think they need that new hire. Usually it’s to increase capacity for delivery, which of course is a good thing: more work (hopefully) means more revenue for the business. But I challenge our clients - and I challenge you! – to make sure that your existing capacity isn’t being wasted. I hate that old saw of “If I can measure it I can manage it,” but in this case it’s true.
First, be sure that you are measuring capacity properly. Capacity is not measured by feel! Most timekeeping platforms have a capacity planning or “resourcing” component and I recommend that whoever hands out work in your firm learns to love it. Once you are planning capacity properly you can quickly use these suggestions to optimize the workload of your existing team at a much lower dollar and time cost than hiring someone new.
And without further ado, I present you with five ways to add capacity without hiring:
1. Identify internal low value work
Scalability doesn’t happen by accident. If your existing systems are inefficient, they will scale inefficiently. If your structure has bottlenecks, adding to the team will just make those bottlenecks worse. Look at your time reports to identify low-value work that can be eliminated with a new policy, or automated with a better tool.
One of the biggest ones we hear about is expense reporting and receipt enforcement. Hours and hours still get spent tracking receipts manually (news flash: putting a receipt in Dropbox means you’re doing it manually). Maybe it’s time to consider using a purpose-built platform or even adjusting your expense policies.
There’s an easy way to evaluate the cost of a new tool:
X = ( hours saved per month x hourly sell rate ) – cost of software per person per month
If X is a positive number, it’s a no brainer.
If it’s a negative number, it might still be worth it but will need more consideration.
2. Identify low value work you’re doing for your clients
If you’re doing low-value work for your clients, they probably know it, and either way they probably would appreciate if you weren’t. There are many ways this can manifest but let me give you a real-life example:
I once worked at a design firm that had competitive hourly rates. They did good work and provided a lot of value for their service. But if clients looked hard at their invoices they’d see how many hours of admin went into project delivery, mostly for chasing spreadsheets. I went to the firm’s top clients and I said, would you like us to deliver the same incredible service you’re used to for less money? They all said yes. And I said, great! We’re going to implement professional services automation software. We need to increase our rates slightly to cover this new overhead cost but it’s going to reduce our admin billings by half over the next six months. Some clients thought this was a nice way of telling them we were increasing our rates but to a one, we delivered. Those reduced admin hours got sold, many to those same clients, for more valuable work at a higher rate – everybody won.
3. Identify low-profitability work
Many firms provide at least one service that isn’t part of the firm’s core mission or expertise. Maybe they offer it at the request of a client, or maybe it’s an industry norm - there’s some reason why. Everyone on the team hates performing this service and when you look at the books you see the margin is not as good as your other service lines. If you have a service like this, you know exactly what I mean.
If you’re an architecture firm half-heartedly doing interiors or a graphic design firm kind-of-not-really offering strategy, you might be nodding your head.
Here's an idea: stop performing this service! Partner with another firm who does this better than you and work out a referral deal. Free up your team’s capacity to deliver more of the things you’re good at (and are more profitable).
4. Identify low-profitability clients
When we talk about unprofitable work, sometimes the service is fine, it’s the client who is the problem. You know, that client who makes the deal for three revision cycles, always wants five, and always complains if you charge more – that guy. Or they might be an easy client but somehow they always manage to structure their ask in the least profitable or efficient way for the firm. If your new business pipeline is full, there’s a great way to free up capacity: put this client at the end of the line.
5. Identify deadbeat clients
Finally, identify the deadbeat client. Not all difficult clients (see #4) are deadbeats and sometimes deadbeats are nice. But nearly every customer we have has a client – usually a repeat client – who either doesn’t pay or takes so long to pay you feel like a bank. Even if you like these clients, the sad truth is that they don’t respect you, they don’t respect your team and they don’t respect your business. When you look at that resourcing calendar, clear out the places you’re holding for deadbeats, and slot in some of that sweet new business.
Good resourcing and timekeeping practices will deliver the insights you need to optimize your capacity, separate work streams that contribute to the bottom line from those that you should outsource more cheaply. And THEN you’ll be in a much better place to gauge when it’s time to grow the team and identify the financial key performance indicators (KPI’s) that the support hiring and onboarding process.
If you need help with any of these topics in your business, drop me a line at firstname.lastname@example.org