Employee Utilization Rate is a metric used to measure how effectively a company is using its human resources. It is usually expressed as a percentage and is calculated by dividing the number of billable hours worked by the number of available hours worked.
Formula for Employee Utilization Rate:
Employee Utilization Rate = (Billable Hours / Available Hours) x 100
In this formula, “Billable Hours” refers to the number of hours that an employee has spent working on billable projects or tasks. “Available Hours” refers to the total number of hours that the employee has been available to work, including both billable and non-billable hours.
For example, if an employee works 40 hours per week and spends 30 of those hours working on billable projects, their utilization rate would be 30/40 x 100 = 75%.
Employee Utilization Rate is commonly used by consulting firms, staffing agencies, and other businesses that bill their clients for the hours their employees work. It is important for these firms to maintain a high utilization rate to maximize revenue. However, this metric can also be used by other types of companies to measure productivity and efficiency of their employees.
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