The second most important currency at work: Time/Effort

Most industries use ERP (Enterprise Resource Planning) software for optimizing their delivery and operations. They have production targets, and precise information on total material used, person-hours of effort and actual output.

This is hard to do at companies whose employees spend time on computers to deliver their products and services. These include software product or services firms, KPO/BPOs, engineering services, and IT and back office teams at organizations in various sectors.

In such businesses, the Time/Effort put in by their employees drives the total Work Output, which in turn determines the revenue and profitability of the company. Time is each employee’s contribution to assigned work, while Effort is the collective time spent by all team members towards achieving end objectives.

Despite its critical linkage to financial outcome, Time/Effort is not measured in any meaningful way.  Companies adopt a rigorous process to keep track of cash related expense and revenue, with quarterly reports and annual balance sheet for senior management. But there is no equivalent process for what is underpinning the financials: namely Time/Effort.

Productivity is becoming critical

Though proper Time/Effort measurement and estimation has always been of importance, these recent trends are making it critical for Indian companies:

* Billing Rates in IT Services are eroding due to competition, both within India and from other countries such as China, Vietnam, and Philippines.

* In traditional Time & Material based outsourcing, service providers did not have to worry about productivity. To limit costs, outsourced contracts are now increasingly fixed price or service level driven (output based). It is estimated that 30-40% of all contracts are already fixed price, and this will rise to 60% and more in the next few years. Vendors are beginning to focus on productivity improvements to protect their margins.

* For product companies, time-to-market can mean the difference between success and failure. Productivity has to be high, and effort estimates have to be accurate.

Productivity is a problem

Over 50% of cost is in employee compensation, yet there is no easy way to verify that an employee’s time is being utilized properly. Individuals and managers know that time management is a problem, but nobody really is aware of its extent.

Individuals have little idea about their own time at work. There is time misuse – often inadvertently. Industry surveys have routinely shown that on average, an employee spends 6-10 hours per week on internet surfing, not related to business. ‘Away from desk’ absences for extended tea/coffee breaks, cellphone calls, and games areas in office, easily add another 6-10 hours of non-productive work per week.

More subtle is the inefficient use of time. Activities do not match intent due to interruptions, low priority work, extended meetings and calls. Individuals may spend effort on less priority tasks that come to light only after the fact. In large organizations, there can be teams that have less work, and others that are excessively loaded. Senior management usually has no insights into team workload.

Flexi hours, distributed locations, contractors and outsourcing of work, are making it even more challenging to assess Time/Effort issues accurately.

It is nobody’s case that everyone must work like automatons. Employees in knowledge industries need occasional breaks from their high intensity work. Hours on core work must be reasonable but not excessive. This balance can be achieved only if we have facts, based on which the necessary self-improvements can be made.

Current methods are deeply flawed

In contrast to a few years ago, virtually every company today requires employees to fill in timesheets. They are of no value since everyone records what is expected of them – 8 hours of work. Some ask employees to fill in complex details of activities worked on and estimated time. Besides being considered a painful chore, this data is highly inaccurate and very subjective.

Many companies use performance metrics to measure Work Output. They identify your strong, average and weak performers. You can improve output by providing training or replacing below average team members, which takes time. Metrics are most useful in situations where people do similar work. That is rarely the case in large companies, or even in the same project team. For example, in a software group, the lines of code or defects fixed by the user interface team or the kernel team will not be comparable. 

Today, Effort is estimated from approximate headcount and calendar time that they spent on a given project or product release. This method often leads to incorrect conclusions. For example, assume that three different project teams spent 10 person months each on their project. One of them had team members working 50-60 hours average per person each week due to tight deadlines and under-estimation of effort. The second team was underutilized, spending only average 30-35 hours per person-week. The last spent 40 hours, but 15-20% of that was towards maintenance of an older version. Such underlying differences can account for 20-100% variation between calendar and real Effort.

In effect, today’s incomplete and flawed Time/Effort data is only leading to frustration and poor decision-making. 

So what’s the solution?

As the famous US management expert, W. Edwards Demming, put it, ‘You get what you inspect, not what you expect’. The way forward is an automated solution that provides accurate Work Visibility. This can yield the following benefits:

* Employees can see their work hours and key activities, and use that to deliver more work time and stay focused on key activities. Those working long hours can improve their work-life balance.

* Managers get facts about work patterns, and can guide the team to deliver required work hours, and fine tune the time on activities to improve overall work efficiency.

* Senior management can optimize staffing by knowing team-wise work load, and determine exact effort on projects for future estimation.

The foundation for such a solution is the ability to automatically source each individual’s time spent on applications and activities, which is then mapped to objectives. This detailed view is useful to the employee for self-improvement, but will be too overwhelming for managers. The solution must abstract each person’s data into meaningful aggregate trends at the level of team, project, division, location etc. within the enterprise.

How will Work Visibility lead to more Work Output?

Work Output is a function of the team’s capability, the effort that they put in, and the efficiency of their effort.

Your team’s capability to deliver is based on its current members. Its ability to score runs depends on whether it is Kenya or Australia. Performance metrics can help differentiate your strong players from those that need training or replacement. But that takes time.

The effort that they put in has a direct correlation to Output. It may be Virendra Sehwag at the crease, or Ishant Sharma. If they each last 20 overs instead of a few, Sehwag may score a century, but even Ishant will score 30-40 runs. Work Visibility ensures that Effort is at reasonable levels.

Efficiency matters too. Sachin Tendulkar is good at scoring 1s and 2s when the field is spread out, and 4s and 6s during the slog overs. So also, Effort has to be in the proper activities to yield maximum benefit. This can be ensured if Work Visibility extends to being able to track Activities of the team.

Summary

Time/Effort put in by individuals and teams is the primary business driver at IT firms (services and products), Engineering Services, KPOs and back offices of companies. With rising competition and new business models that require greater attention to productivity, they must adopt new solutions. Automated Work Visibility is the key to obtain gains in Work Output, and thereby improve financial performance.

The article is authored by Shirish Deodhar, CEO and Co-Founder, Innovize Tech Software.