How do you track billable time in an agency, and how many hours should ad agency employees work?
This is a question that comes up all the time in my work with agencies. The expectation in terms of a work week ranges from 37.5 hours a week to 50 hours a week although most agencies will say 40 in terms of hours worked in a week. So that gives us a range from 1950 hours a year to 2600 hours a year with most people citing the 2080 hours a year number (40 hours/week). But given an average of 3 weeks of time off (vacation and sick) and 10 work holidays (which translates to 5 weeks off) that gets you down to 1762.50 (37.5) to 2,350 as a range with 1880 hours a year being the 40 hour work week average.
So when you think about how you’re going to track billable time, the rule of thumb is that no employee can be billable 100%. So here’s the best practices expectations by job function:
- Project Managers/Production Managers — 80% which is 1,504 hours at the 1880 hours in a year model
- Sr. Account Staff who have more admin/new business responsibilities — 70% which is 1,316 at the 1,880 hours in a year model
- Account Executives (jr and mid range) — 80% which is 1,504 at the 1,880 hours in a year model
- Creatives (writers and art directors) — 75% which is 1,410 at the 1,880 hours in a year model
- Media — 90% which is 1,692 at the 1,880 hours in a year model
And then you have your admin folks, who if you can get 25% billable time from — that’s great.
The reality is….there are plenty of times when your people are working more than 40 hours a week and billable more than their ratio says they should be. But these numbers will give you reasonable ballparks to help you gauge effectiveness, efficiency and when your staff isn’t just blowing smoke — but you really do need to add staff.
We recommend that you share these benchmarks with your entire staff and give them monthly reports on how they compare to the best practices numbers.
The BIG but in the “track billable time” discussion is this. Counting hours should be a management tool for monitoring efficiency and staff workload. It should absolutely NOT be how you are billing clients. Every agency should be using value pricing. More on that next week.