Marketing

How to Prepare for Holiday Resource Planning to Help Your Bottom Line


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Paid time off (PTO) has significant implications for any business generating revenue through billable hours. The biggest PTO implications come during peak vacation periods, when people take most of their time off. On paper it would be ideal if each employee takes an average of 1.8 days’ vacation per month. That would be easy to plan and forecast. You would have no problem estimating revenue and expenses per month.

In the reality, however, your employees probably take their time off in bigger chunks during peak times like the holidays. Have you ever heard someone say, "My office is dead between Christmas and New Year's Day?" That's often true. And this dead time makes revenue forecasting challenging, in addition to staffing to meet client demand during these months.

Rather than plan based on a perfect-PTO-averaged environment, embrace the natural ebb and flow of holiday vacation time and get ahead of variant PTO schedules. Here are the important steps to take to strategically schedule resources and keep your business humming according to plan through the holidays.

Understand Holiday Impact on Expected Revenue and Expenses

First, it's important to understand that employees' time off is good for business. Your teams need to recharge and you should encourage that time away. "[W]hen the brain can think positively, productivity improves by 31%, sales increase by 37%, and creativity and revenues can triple,"according to research stated in this Harvard Business Review article.  Vacation time lets people gain fresh perspective and energy.

Ok, so time off is good. But as your finance team will remind you, vacations impact your bottom line. PTO imapcts your bottom line two primary ways: 

  1. Revenue — With the exception of those working on retainers, you generate revenue based on the work you deliver. It’s natural to deliver less work when people are out of the office, and most organizations can expect to have fewer resources available over holiday months. As your clients and customers are also out of the office, it may also mean downtime and less billablle hours for those that are working. This all equates to less revenue generated.

  2. Expenses/Costs — Not all businesses slow down during the holidays, however, in fact some get busier. For example, if you provide services to retail clients, your demand will increase during these months, just when most of your employees are planning travel and time off. This demand results in additional revenue, but you may have to staff up ot meet demand. This can increase your costs, since you’re now paying regular vacation time as well as the additional resources’ costs.

Steps to Plan Resources Around the Holidays

Here are specific ways you can predict and manage holiday staffing. 

  • IDENTIFY TRENDS: Predict when employees will take vacation time based on common holidays and historic time off. Business management software solutions like Mavenlink can forecast these trends, however you can also pull the data manually. This is an important starting point to accurate forecasting and staffing. 
  • CONTROL TIME OFF:  If your business is traditionally really slow, one option is to close the office and enforce time-off (e.g., mandatory vacation time) on slow days surrounding major holidays (e.g., New Year's Eve).  
  • PREDICT RESOURCE AVAILABILITY: Start encouraging employees to enter expected vacation time well in advance. Begin communicating in August about your pre-approval process. This will allow you to get an accurate picture of work that may be delivered, and billed, as well as where you may have reosurcing holes. 
  • MAXIMIZE HOURS: Find useful ways to take advantatge of nonbillable hours. For example get your team to accomplish major internal projects or planning. 


How Retainers Affect Holiday Billable/Nonbillable Hours and PTO

The game changes slightly if you work on a retainer. A retainer means you can expect the same amount of revenue each month, regardless of holidays. If your staff takes a week off in December, then, you will be 25 percent less productive. This means you produce 25 percent less work for the same amount of revenue. You may need to make up that 25 percent of work by hiring additional resources. This in turn adds a greater expense to December.  Plan for this type of divot to your bottom line based on seasonal predictions of when you may need to hire additional resources.

Holiday Staffing: Dos and Don’ts

Use this list to improve how you schedule for holiday months. 

Do Don't

Embrace seasonal vacation fluctuations based on holidays, your history, and your industry

Average monthly time-off expectations 

Understand employees’ intent to take vacation

Ignore client demand fluctuations (e.g., There will be high retail work demand in December) 

Factor seasonal fluctuations into monthly revenue expectations

Overestimate resource availability in holiday months
Maximize your use of billable/nonbillable hours over holidays Go into the holiday months blind to your resources' intent to take off work 
Anticipate months you'll need to staff up  Expect that work will get done over the holidays with whatever resources you have available
Predict well in advance. Planning a year in advance is not too soon Burn out employees with strict PTO restrictions 

 Now that you can better plan for holiday resource utilization and holiday PTO, learn how rate cards can improve your bottom line. Click to access this utilization-improvement webinar.

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