Labour Productivity & Non-Billable Time: the gap

What it is

Labour productivity is what happens to the hours you pay for that never make it onto an invoice: shop time, training, waiting for parts, admin, and techs sitting "between calls." Labour is your most expensive input, and every one of those paid-but-unbilled hours converts it straight into overhead. Most owners pay for 40 hours a week per tech and bill 22–26 without realising it — that gap is the single biggest hidden leak in the system. It's related to but distinct from Leak 1 (scheduling and windshield time): that leak is about drive time between jobs, while this one is about shop, admin, training, and waiting time — the paid hours that disappear before a tech ever gets in the truck.

How to spot it

• Techs paid 40 hours are billing 24 or fewer
• Shop time keeps creeping up ("waiting for dispatch")
• The morning starts late — first billable call at 9:30am, not 8am
• Admin and training are scattered through the week instead of blocked
• No one tracks billable versus non-billable hours per tech

How to measure it

Typical impact

$40,000–$70,000per year for a 3-truck shop

Three techs billing 24 of 40 hours (60%) instead of 30 of 40 (75%) works out to roughly 1,980 extra billable hours a year. At $120 an hour that's about $130,000 at the high end — though part of that overlaps with the scheduling leak. Once you strip the overlap, most shops recover $40,000–$70,000 here. This is the single largest leak in the system, and closing it requires no new trucks, no new techs, and not a dollar of marketing.

How to fix it

1. Set billable-hour targets per tech. Give every tech a billable-hour target and review actual against target weekly.
2. Block admin and training time. Schedule admin and training into dedicated blocks rather than letting them scatter through billable hours.
3. Hold dispatch accountable. Make dispatch responsible for keeping techs on jobs so no tech is left "waiting" for the next call.
4. Track a wrench-time KPI. Measure wrench time — the hours a tech actually spends fixing — as a standing number, not a guess.
5. Front-load the day. Get the first job on-site by 8:00am, not 9:30am after coffee.
6. Minimise shop time. Load out the truck the night before so techs leave for the first call instead of standing in the shop.
7. Run a per-tech utilisation dashboard. Publish it so the techs who bill least are visible and the gap has an owner.

The IronMargin angle: the labour-productivity playbook plus the billable-utilisation KPI framework — the highest-leverage fix in the entire system. Recovering even five utilisation points here pays for the membership many times over, and it's the fix our operators — people who have run $20M+ multi-trade companies — reach for first.