The Hidden Cost of Low Utilization, With Carson Pierce

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Aug 27, 2025

Carson Pierce, a consultant for agencies on financial metrics, returns to discuss the often-overlooked impacts of low utilization. He explains that underutilized resources, like unused vehicles, quietly consume money. Over-servicing clients dilutes project profitability, while idling team members can shift focus to unproductive internal projects. They also highlight the complexities around maintaining productivity and cash flow during fluctuating workloads, underscoring the need for strategic resource allocation.

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ANECDOTE

Jeep And Moving Truck Examples

Carson compares an unused bright green Jeep he passes daily to underutilized agency capacity.
He also uses the moving-truck example to show when renting beats buying for rare needs.

INSIGHT

Clear Definition Of Utilization

Utilization measures the percentage of paid team capacity used for client work.
Parakeeto defines it as total paid time divided by delivery hours to track revenue-earning activity.

INSIGHT

Underutilization Fuels Over-Servicing

Low utilization often drives over-servicing because people fill idle time by doing extra client work.
That habit distorts client expectations and quietly reduces project profitability.

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Points of Interest

00:01 – 00:51 – Introduction: Marcel welcomes Carson Pierce back to the show and introduces the episode’s focus on utilization, specifically the hidden costs of low utilization in agencies.
01:18 – 01:50 – Why Utilization Matters Now: Marcel notes that many agencies are struggling with overstaffing and underutilization in a difficult market, which compounds hidden costs over time.
01:50 – 02:45 – Carson’s Perspective on Utilization: Carson explains that agency owners often see only the surface-level financial impact of low utilization, but miss the deeper, unexpected effects it creates.
02:45 – 03:26 – Everyday Utilization Analogies: Carson shares real-world examples, like an unused Jeep and moving trucks, to illustrate how underutilized assets quietly drain resources.
03:39 – 05:59 – Defining Utilization Clearly: Marcel defines utilization as the percentage of purchased team capacity actually used for revenue-generating client work, clarifying common misconceptions and variations.
07:25 – 09:25 – Over-Servicing as a Hidden Cost: Carson highlights how idle team members often fill time by overservicing clients, which distorts expectations, undermines project profitability, and becomes habitual.
09:25 – 11:00 – Internal Projects and Incentives: Marcel explains that low utilization often shifts time into internal projects, which can be productive but frequently become unfocused or misaligned with priorities.
11:00 – 13:47 – Lost Efficiency Without Pressure: Carson argues that high utilization forces efficiency improvements, whereas low utilization removes urgency, leading to stagnant processes and missed bottleneck discovery.
15:55 – 17:46 – Disengagement and Cultural Risks: Carson warns that underutilized employees may feel unproductive, disengage, or eventually leave, while survivors of downsizing can resist returning to higher workload levels.
20:08 – 21:34 – Opportunity Cost of Low Utilization: Marcel expands on the long-term financial risks, including reduced profitability, lower enterprise value, depleted cash reserves, and a shift to defensive decision-making.
25:23 – 27:35 – Managing Unutilized Time Wisely: Carson advises agencies to be deliberate with excess capacity, setting clear expectations for client over-servicing or internal projects and preparing for busy periods.
29:21 – 34:21 – Modeling and Leadership Lessons: Marcel and Carson stress the importance of building a business model to set realistic utilization targets, and Marcel shares candid lessons from Parakeeto’s restructuring journey.

Show Notes

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