Ken Hodgkins is the CFO of Metro Testing + Engineering, where he focuses on financial precision to drive innovation in the AEC (architecture, engineering, and construction) space. In a recent meeting with a business leader, Hodgkins encountered difficulties in agreeing on metrics to measure the performance of the team. The business leader consistently tried to modify, normalize, or downplay the metrics presented, highlighting the challenges faced when trying to use internal metrics effectively.
In the AEC industry, a common metric used to measure productivity is utilization, which calculates the amount of time spent on client work by individuals, teams, or companies relative to the total time used. This includes time off for sick days, statutory holidays, and vacation time. While utilization is a useful metric for understanding overall productivity over time, it can be problematic when used to assess individual or team performance, as discussions often get derailed by factors like vacations or sick days.
To address the limitations of traditional utilization metrics, Hodgkins advocates for the use of a modified utilization metric that excludes hours for sick days, holidays, and vacation time from the calculation. Known as “available utilization,” this metric allows for more productive conversations at the individual or team level and enables actionable insights to improve performance. However, it is important to consider the context in which the metric is being used to ensure its relevance and effectiveness.
While available utilization is effective for assessing productivity at the individual or team level, it may not be as valuable when looking at company-wide performance. In such cases, it may be necessary to include the previously excluded time to provide a more comprehensive view of productivity. It is essential to align the purpose of the metric with its use and make adjustments as needed to ensure it is serving its intended purpose effectively.
Overall, it is crucial to use metrics appropriately and understand their purpose to derive meaningful insights and drive performance improvements. Constantly adjusting or making exceptions to metrics may indicate the need for alternative approaches to measure performance effectively. By reevaluating metrics and considering different perspectives, organizations can optimize their performance measurement strategies and achieve their desired outcomes.
