The ques­tion is so sim­ple you expect the answer to be equal­ly straight­for­ward. After all, all the data required to work this out (timesheets and invoic­es) is there, isn’t it?

Well guess what, the answer is straight­for­ward: NO. This can not be done.

Explain­ing why it can not be done is a much hard­er and I’m afraid it’s often writ­ten off as a flaw in Stream­time or waya­head, while in real­i­ty, it doesn’t even mat­ter which project man­age­ment soft­ware you use. NO, the data isn’t there and nev­er will be, no mat­ter what tool you use. It’s just the nature of cre­ative busi­ness­es and the flex­i­bil­i­ty of man­ag­ing the job that pre­vents you from get­ting that information.

But before I explain why, I’ll start with the good news: there are oth­er met­rics avail­able that can tell you exact­ly what you need to know. You just have to rephrase the question!

Jump to the end of the article for the solution.

waya­head offers 2 reports that give you impor­tant insights: the staff per­for­mance report and the job prof­it & recov­ery report. If you’re the impa­tient type, go ahead and scroll right down to the solu­tion at the bot­tom of this page.

But before we get there, let’s tack­le this prob­lem one step at a time.

So we just fin­ished a project. 3 peo­ple worked on it and we billed it out for £1,500. Look­ing at timesheets and billing, we can attribute a % of the rev­enue to each staff:

Pret­ty straight­for­ward, eh! Or is it.

What if Kate and Bran­don were each allowed to spend 4hrs, no more? Bran­don did his job 1h30 faster than planned. But Kate need­ed 1h30m more than she was allowed. Sud­den­ly that cal­cu­la­tion doesn’t look so fair any­more, does it? Are we going to ​‘pun­ish’ Bran­don for being too efficient?

We must con­sid­er the planned time in order to make a fair assess­ment of con­tri­bu­tion for both Kate and Bran­don. And so we work out a clever for­mu­la for this:

And already we see the first prob­lems arise: what if my time on the job wasn’t planned? What if an item was assigned to Kate, but then Nick end­ed up work­ing it? In each of those cas­es it becomes impos­si­ble to apply the same for­mu­la. How do we cal­cu­late Nick’s con­tri­bu­tion in the case below?

And then there is time record­ed on each job that isn’t sold, isn’t planned and isn’t invoiced. Like the account manager’s work or the accountant’s time.

Con­clu­sion:

We can only effi­cient­ly mea­sure con­tri­bu­tion if every job has items planned out for every sin­gle team mem­ber. Only if that is the case can we cor­rect­ly cal­cu­late staff effi­cien­cy. How­ev­er, with the flex­i­bil­i­ty of set­ting up jobs and the nature of the busi­ness, it’s quite nor­mal for a large por­tion of the work not to be prop­er­ly planned and executed.

We got an oppor­tu­ni­ty to win over a new client and we are pitch­ing against some fierce com­pe­ti­tion. If only we could get our foot in the door and prove what we’re worth. We esti­mate the job will take around 100hrs to com­plete, but as an invest­ment into this new account, we only quote the cus­tomer 75hrs. This is not an uncom­mon practice.

So we won the work and the entire team is very excit­ed to get start­ed. But how do we plan this job in? Do we plan it for 75 hours, know­ing the team will over­shoot that time frame? Or do we plan for 100 hours? Either way, it will have effect on the poten­tial cal­cu­la­tions above. Who­ev­er works this project is going to look like they are not con­tri­bu­tion what they should.

Or let’s con­sid­er anoth­er sit­u­a­tion. Some of our work is quot­ed based on the time it’s esti­mat­ed to take. Oth­er work is val­ue based, i.e. how much it’s worth to the client (think new brand/​logo for a nation­al bank). In such a case we know we invoice more than the just the hours spent.

In both cas­es, a person’s rev­enue con­tri­bu­tion is not just deter­mined by how good they are at their jobs. But rather which jobs they are lucky enough to get assigned to! If I had a say in it, I would pre­fer to work on jobs we’ve over­sold or val­ue based jobs.

Con­clu­sion:

To get a fair assess­ment of staff con­tri­bu­tion, we’d also need to take the orig­i­nal bud­get into con­sid­er­a­tion, so we can fur­ther assess over­ser­vic­ing in rela­tion to the com­mer­cial deci­sions we made. How­ev­er, not every job has a quote.

The way invoic­es are cre­at­ed pos­es anoth­er cou­ple of chal­lenges: In an ide­al sce­nario, we look at work com­plet­ed vs work invoiced, right? We per­form 10hrs of Art Direc­tion. Bill 10hrs of Art Direc­tion. Boom. Easy.

How­ev­er, invoic­ing isn’t always in sync with the work per­formed. Some jobs are ful­ly billed in advance, some are billed at the end, some are billed in mul­ti­ple instal­ments. Some jobs are billed on a retain­er basis, where the billing of one job may be done on anoth­er job.

But also, the infor­ma­tion that goes in the invoice (i.e. invoice lines and prices), don’t nec­es­sar­i­ly match up with the planned work or the time record­ed. The invoice could be a sin­gle line with a total price. Or it could be what­ev­er was in the quote in the first place. What if some of the work was han­dled by an exter­nal freelancer?

And what about third par­ty ser­vices? Who ​‘gets cred­it’ for the markup on exter­nal work? A job with a lot of third par­ty work might have a larg­er hours to prof­it ratio than a job with inter­nal hours only.

The bot­tom line is that there is no direct way of con­nect­ing the dots between what’s been record­ed on a job and what’s been invoiced.

Con­clu­sion:

There is a cor­re­la­tion between time record­ed and invoiced, but no direct link, mean­ing there isn’t a sin­gle mag­i­cal for­mu­la that can be used to cal­cu­late con­tri­bu­tion per head.

Giv­en the flex­i­bil­i­ty of quot­ing, sched­ul­ing projects, track­ing time, billing and work­ing with third par­ty sup­pli­ers, it is impos­si­ble to come up with a sin­gle mag­i­cal for­mu­la that will work in all sce­nar­ios. Or more impor­tant­ly, if you sim­ply can’t get a 100% fair assess­ment of people’s con­tri­bu­tion on 100% of the jobs, we shouldn’t try to force it.

It’s not all bad news though. We just have to change what we mea­sure. Let’s take a cou­ple of steps back and think about what we were real­ly try­ing to achieve in the first place. Do we real­ly care how much was invoiced for Kate and Bran­don or do we just need to know if they are pulling their weight?

There are 2 impor­tant met­rics to keep an eye on:

They are 2 sep­a­rate met­rics that can eas­i­ly be mon­i­tored with wayahead.

The Job Prof­it & Recov­ery report tells you how much a client has been charged for the work deliv­ered on each job and sum­maris­es this by com­pa­ny, client man­ag­er and job type. This report uses mech­a­nisms for you to exclude jobs that don’t fit the cor­rect pro­file, mak­ing sure they don’t skew the num­bers. Check out the video below.

The Staff Per­for­mance report mea­sures time record­ed vs time planned. If Kate got assigned 10 tasks for 10 hours each, on aver­age, how much time does she spend against her planned work? Is she 20% more faster? Or is she 10% over.

Inter­est­ing­ly, this report has the same chal­lenges list­ed at the top of this arti­cle. If time wasn’t esti­mat­ed in the first place, or if an item was assigned, but that per­son nev­er worked on it, the Per­for­mance report will exclude those items from the totals.

For most teams this is up to 50% of the items assigned. So if we can’t con­sis­tent­ly guar­an­tee a link between the time planned and the time recored, how would you ever expect the draw that line fur­ther into billing. Try it out and see what % of your work qual­i­fies for per­for­mance metrics.

The per­for­mance report will give you much more detailed insights into staff effi­cien­cy than billing ever could.