More and more services are paid by the hour. If your service is paid on a fee for service model your organisation can only charge for time that your staff delivers services. These billable hours are critical for generating revenue as they need to cover the costs of your frontline workers but also of the rest of the business.
If the price of your service is significantly higher than the cost per hour, you can probably cope with low billable hours however if the price is only marginally higher than the cost per hour, you really need to maximise billable time.
Setting billable hour KPI targets for staff is common for lawyers and consultants and is being increasingly introduced for some human services. A study conducted by City University London over two years however found that the tyranny of billable hours can lead to over-charging clients, overworking junior staff, ignoring training needs and avoiding long term thinking. It can force people into working in their personal time to complete tasks. It can lead to stress, burnout, and high staff turnover. It also creates a culture where people who bring in the highest number of billable hours are the most respected people in the organisation. This can be demoralising for highly committed and hard-wording individuals with less billable hours who have to justify their daily timesheets to the organisation and the customer.
So how can you maximise billable hours?
Understand the minimum and set a target
We still get surprised in our consulting work how many organisations do not understand what minimum of billable hours their staff needs to achieve for the organisation to break even or make a surplus. If your staff is earning more than the revenue they generate, your services will never be viable. While your organisation is ‘not for profit’ you need to make a profit to be sustainable, so you can deliver on your purpose – unless you can subsidise your income with donations or surpluses from other services. The first step to sustainability is to understand the minimum billable hours and what targets your staff should strive for.
Communicate the targets
It is important to have a regular conversation with your staff, to explain why billable hours are essential and to motivate them to reach the targets. Ask them to monitor themselves and to plan and manage their time in the best possible way. Encourage them to identify what could be improved so they can increase their billable hours and to share their findings and successes with their colleagues. Also, ask how you as a manager or supervisor can support them to achieve the target.
Set KPIs as a target but avoid evaluating each staff member’s performance based on this figure alone. Often these targets are designed on spreadsheets without a real understanding of the person’s everyday realities. Many factors can influence how much billable time an individual worker can achieve. The number of billable hours depends on the type of service, the complexity of the client and the case load, the staff member’s role and responsibilities, your service schedules and customer demand. The level of experience and personal circumstances such as return from illness can also play a role. You cannot ask a staff member to train up a co-worker, participate in a training course or a community of practice meeting and expect that they achieve the same KPI as colleagues who are solely working on billable services.
Setting KPIs that are not achievable bears more risks than they will deliver. Staff that always feel rushed could put client safety and their own safety at risk, impact on service quality and do not find time to support less experienced co-workers and your organisation. You want staff self-motivated to strive for their billable hours target, to deliver high quality services to clients, and to work effectively with colleagues. Set KPIs that are achievable, support staff to achieve them, and include other performance measures that consider how they do their job, not just the number of billable hours they deliver.
Understand and clarify what activities are billable
Billable time is your staff’s time that can be charged to your customer or your customer’s support funding, for example, a customer with an NDIS plan.
Generally, billable time is the time in which your staff engages in direct service provision. This is the time service providers track, record, and invoice. In many cases, service providers also charge for time that is not spent directly ‘with’ the customer but is ‘for’ the customer. This may be the time the staff member is travelling to the client. Or the time staff spends on writing a report for or on behalf of the client. This could also be the time the staff member spends in meetings, phone calls or discussions concerning the customer’s support needs. In the NDIS this is called ‘non face to face time’. For most supports NDIS providers can charge for this time. However, the tasks performed during this time must be directly related to the service provision and not a cost of ‘doing business’.
For any provider it is critically important to determine what are billable tasks and to understand any funding rules that apply. It is equally important to discuss with your customers beforehand what and how your service will be charged.
‘I have worked all day but only achieved three billable hours.’ From our experience, NDIS providers often miss out on critical funding. NDIS funding rules have been undergoing constant changes and it is challenging for providers and staff to stay on top of funding rules. If you do not know and understand the funding rules there is a good chance that you work for customers without charging for all the work that you are doing and that you can and should charge for. At times, we do not value our work, or we are concerned our customers do not have enough funds to pay for the service – but this risks the financial viability of our service provision.
Having clear policies in place what time is billable is likely to increase your organisation’s revenue. Communicating and monitoring billable hour targets will help your staff stay focused on billable tasks. However, the true secret to maximising billable time lies in how your front-line staff spend their non-billable time. In part 2 of this article, we will have a closer look at the importance of non-billable time and how you can grow your productivity by improving the quality of non-billable time. Read the article now.