Do I need to hire more staff?

When you challenge your service team to improve you're likely to be met with this response.

"We're too busy, we need more staff."

This is an understandable response, but it's often not the right answer. The service manager views this as a simple input vs. output issue. "If you want us to do more, we need more people to do that."

Instead of viewing the solution as needing to do more, you should look at this as a challenge of doing less!

The Source Of Your Problem

Now the big question is why are you overworked? It could be true that you're understaffed, but this is not often the truth of the matter. Typically the answer is that your service offering is underpriced, there are no standards in place for what technology you manage, there is limited documentation, and/or you are doing a bunch of work that has limited value. 

Taking a lean approach to your workload and making efforts to eliminate the low-value work is a great place to start. Here are some tips to help your team identify where the waste is in your workload.

Do more, by doing less

Time Audits

A detailed review of timesheets and how the staff time is classified is one approach to do this. If that's too cumbersome, have people install a tool like RescueTime, or the old-school way by setting an alarm to ring every hour to jot down what you're working on.

Review the outputs from the time audit. How much of your time is being spent on service work vs. other stuff like communication, meetings, reports, or just wasted? Focus your effort on questioning the value of everything that individuals are working on.

The value doom loop

So often we get trapped in a cycle of doing work but have lost the connection to the value it produces. There are hours being spent on things that no one would miss if you eliminated them. Eliminate that waste.

Rank The Work

A similar approach to eliminating waste is a high-level review of the work being done by the team as a whole. This can be done by reviewing the ticket load and ticket type/sub-type. How is the time more globally spent by the team? Are there processes or areas of the business that seem to eat up a lot of your time, but have questionable value?  I've seen numerous occasions where shops that spend 3-4 hours a week on proactive network reviews, but the outputs are never acted on and the client doesn't understand the value being created by this work. So should it be done at all? 

Another example is 10 hours a week being done on statements of work (SOW) when the close ratio of those SOWs is shockingly low. This is a very expensive waste of time. Look for the low value work the business consuming a lot of time and what can you eliminate that creates more time to spend on high-value activities.

 

Efficiency

If the team says they are tapped out and you have objective measures to confirm that then maybe they're right, but you can't make that judgment without good data. If everyone in the team is 80% or more utilized, that is a strong case that you should hire.

In most cases, you're likely to find that most staff are at 70% (which is fine), and others are at 30-50% utilization. Would you still need more staff if all your team members were performing at full capacity? This requires some in-depth review because there are often good reasons why some people have lower utilization, but focusing on improving the team's overall efficiency is a necessary first step before confirming that you are tapped out and need more people. 

Productivity Metrics 

These are some metrics to consider to gauge your team’s productivity:

• Utilization - at least 70% on average across your resources.

• Tickets per tech

  • T1 = 10-20 tickets per day

  • T2 = 5-10 per day

  • T3 = 3-5 per day

• SLA Compliance

  • You need to measure your SLA compliance. If you're failing work backward in the process to find the friction points

Dig Deeper

When the service team is stressed out the natural reaction is to throw more bodies at the problem, but before you do make sure you review the steps above with your team and look for opportunities to improve. There are always areas to improve a team's efficiency by eliminating waste and helping people to focus on the correct priorities.

KPIs for team growth

There are a few useful metrics you can use to objectively gauge the capacity and growth of your team. We’ve already mentioned utilization as a measure of your team’s efficiency. It can facilitate some projection of your team’s capacity but is better used as a current or historical view of their workload. There is always some tension about staffing, but if you have 4-5 staff already you can start to use these metrics as a gauge for growth. If you’re smaller then just look to scale up to 4-5 staff. This is kind of a low water mark for what needs to happen to truly operate as an MSP-style business. The good news is you can use outsourced resources to scale in an elastic fashion as you grow.

Now, let’s look at a couple of other example KPIs that you can use to determine if you are going to need more staff in the future so you can hire more proactively. 

10K in MRR

Using MRR to gauge your staffing levels assumes that you have a stable team that is meeting your workload needs. 

This is a floating rule, but generally with every 10K in MRR that you add you should consider another staff member to address the increase in workload associated with that growth. 

As you are selling to new clients keep track of your pipeline. Say you’ve sold $5000 in new MRR this month and have another 5-10K in the pipeline that is hot and likely to close. Well, then you should be having internal discussions with your team and/or service manager about adding a new team member. That new team member could be an L1, L2, or L3 depending on the composition of your workload and any bottlenecks that you’re currently facing.

Tech to node ratio

Another useful KPI to measure your team’s capacity is a tech-to-node ratio. This is the number of workstations/servers under management relative to the number of support staff you have to manage them. I find it easier to just count agent-based assets, not including APs, switches, firewalls, etc. 

Your tech-to-node ratio should be about 250-300. Strive for 400, but if you're at 150 or below you are less efficient than the industry average. If you feel that you provide a high level of service then a lower ratio could just indicate being more client experience focused. If that’s your situation, then you may need to recognize a lower ratio and therefore need to hire. Industry benchmarks like this are can be deceiving. Your business model is yours to determine. For example, there are absolutely companies that have 700:1 ratios. There are also HUGE differences between their business model and what is typical in the industry.

Gross margin

Being transparent with your managers about how you’re measuring the business is very useful. Gross Margin is a good way to make this conversation more abstract. Some owners are uncomfortable sharing any detailed financial information with staff. They really shouldn’t be IMHO, but I get that it’s common. Gross margin allows you to have objective measures of business efficiency. Having targets and active measurement of service margin performance for example is an excellent way to lean into this. Say your service manager is asking for two more tier 3 staff. It’s a big cost.

You would maybe say, “We can’t afford that.” 

Instead, you could say, "We can't hire right now. Our margin for the last 3 months has been 53%. We are shooting for 55%. If we hire two new T3s, we’d sink to 38%. Can we chat through some other options?" 

They may not like the decision and think budgets be damned, but having an objective measure to point to vs. them just thinking you're being cheap helps to smooth the discussion. For reference, you should be targeting between 50-70% margin on your MSP services.

Lean out the work on the service desk

Quite often small groups have a lot of legacy work that they have always done, but no one can really tell you what value it provides and to whom. I would take a ruthless look at what occupies your team's time. What value does that work provide to your clients or your company? Focus first and foremost on client requests. Smash your SLA goals and treat everything as secondary. Prioritize your client's work and set everything else to the side. If the work you set aside is so crucial that you can justify hiring additional people to do it then great, but quite often it goes undone and no one notices.

I hope this helps if you want more info like this to help you be a best-in-class service manager. I built a course that trains owners and managers on exactly this type of stuff. You can check out the course here.