For many of you, this may be as exciting as cleaning your toilet. I must admit, it was a laborious post to assemble, but for those of you who run client service businesses, this is good stuff. I think you should be doing some flavor of analysis like this.

I mentioned in my Employee Review Season post that I assemble "quantitative performance data' to help me start to assemble a view of how our employees are doing. This stuff is important to look at on an individual basis, but the cumulative numbers really give you an insightful view into the health of your organization.

First, you need to find yourself a decent time tracking tool. We use Tick from the fine folks at Molehill, which I find invaluable. It is elegant, hooks nicely into Basecamp, doesn't try to be an invoicing tool, has robust export functionality and thoughtful print styling. Each time I run payroll, I do a time data export from Tick. That gives me a nice little CSV file that I can open up in Apple Numbers or Excel and begin my obsessive compulsive analysis.

I reorder the data by employee, then client, then project, then date. Then I add up the total time spent on each project, and calculate the percentage of each employee's paycheck that goes to each project. You'll see all of this in the Apple Numbers screen grabs that follow.

In each of these scenarios, let's make the following assumptions:

• This employee (John Doe) gets $1000 a paycheck every two weeks
• We bill clients $100/hour for his services
• There were 80 total possible hours during the pay period

'Billability'

In the client services business, you want your people to be working on projects that pay the bills. Duh. You want to minimize the amount of time they're working on internal projects (with exceptions), or even worse, not working. 'Bench sitting', as they say. Companies with lots of 'bench sitters' don't stay in business long.

An important metric to keep track of is an employee's 'billability'. My spell-checker keeps trying to tell me that 'billability' is spelled incorrectly. I think the word is made up, but I still use it. What is billability? Put simply, it's the amount of time someone spends working on billable client projects, recorded as a percentage.

How do you figure this number out? Simply subtract the non-billable work from the billable work and divide by the number of hours in the pay period.

This will give you a percentage. I try and make sure all of our folks are above 80% billable. This number will dip from time to time due to vacations, sick days or internal projects. But the idea is to make sure they're making money for the company on a consistent basis.

'Utilization'

'Utilization' is simply the percentage of time someone is working. If someone's utilization is pinned at 165%, you know you have to do something. It could be telling you that you need to hire another person to take the load off of that person, or you need to redistribute workload amongst the rest of your team. Then again, it could mean that this person is working on something much longer than they should be. The numbers will raise the flags - only your investigation will determine what's causing them.

On the flip side, if someone is under-utilized, (anything below 80%), you have a different kind of problem. This is more alarming than a low billability percentage. This means someone doesn't have enough work, period, let alone billable work.

'Employee Profitability'

You know how much you pay your employees, and you should also know how much you're billing your clients. This calculation can get more complex, but the easiest way to gauge how much an employee is earning or costing you is to perform a simple bi-weekly profitability calculation.

You obviously want this number to be above zero. You can scrutinize that even further by factoring in other hard and soft costs to get a truer picture of profitability, but this is a nice high-level indicator.

So these are some metrics I pay attention to. This sort of thing, in some flavor or another, has been practiced in every firm I've been a part of. Is it a part of your analysis?

Along with the glorious start of the Major League Baseball season, it's employee review season at Happy Cog. I always perform employee reviews on each employee's yearly anniversary, so I guess I ended up hiring a lot of people in the months of April and May in past years.

There are currently 11 full time employees and 3 contractors in working in our Philly office. Before I started running my own shop, I never really anticipated I'd be knee deep in such things as employee health plans, safe harbor 401(k)s, accidental death & dismemberment coverage, business tax strategies, and so on. To be honest, organizing and maintaining this stuff is as fun as hanging out in a construction site porta-john. On the flip side, I really enjoy the employee review process. I always find it enlightening and I hope my coworkers feel the same way. If they don't, I'll note that on their next review.

I was a management major in college, with a focus in entrepreneurship. I think I had a human resource management class or two, but I'll be damned if I can remember anything from them. Such classes must have been on Friday mornings, because Thursday nights usually involved plenty of Keystone Light followed by solo walks home at 4 AM. As a result, I have learned to rely on real-world experience to inform my process. Sure, I've managed people before running my own firm, but I was never solely responsible for their professional growth, determining their salaries, or making sure they were challenged and happy.

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