“If you can’t measure it, you can’t manage it,” said Peter Drucker, the late management guru and writer. This quote underscores why utilization rates matter: it’s a way to measure performance in order to get the most from your employees. Utilization rate refers to time spent doing billable work. Fred, for example, has a utilization rate of 75%. This means he spends most of his time doing tasks he’ll bill to a client. By contrast, Max has a utilization rate of 30% because he spends most of his day on non-billable work: attending internal meetings and doing administrative tasks. Usually, the higher the utilization rate, the better. This post explains four reasons why utilization matters to your firm.