Episode 307: Utilization Rates for New Team Members: What's Good?

Female emPOWERED Podcast | Episode 307
🎙️ How to Ramp Up New Hires Without Killing Your Profit Margin

Are you staring at your new team member’s half-empty schedule and wondering, “Did I make a mistake?” You’re not alone — and you’re not losing money (even if it feels like it). In this episode, Christa Gurka walks you through how to set realistic utilization expectations for new instructors or clinicians, how to design smart compensation structures, and what you can do if your new hire isn’t meeting targets.

Whether you’ve just hired a Pilates instructor, yoga teacher, or physical therapist, this episode will show you how to onboard and ramp up new hires strategically — so they become profitable, long-term team members that fuel your business growth.

👉 Download Christa’s Free New Hire Utilization Roadmap
https://www.christagurka.com/newhire

💡 What You’ll Learn:

• What "utilization rate" actually means in boutique wellness & cash-based PT
• Healthy benchmarks for new team members (and what’s not realistic)
• Why new hires aren’t profitable on day one — and why that’s OK
• How to structure compensation during ramp-up periods
• 30-60-90 day onboarding plans that actually work
• Common hiring mistakes that kill your profit margin
• How to diagnose whether it’s a marketing, ops, or retention problem
• The math behind profitability (yes, Christa breaks it down for you!)
• When it’s time to start your next hiring search

📌 Mentioned Episodes:

• Ep 305 – Transitioning Clients Off Your Schedule
  
  
• Ep 304 – Compensation Models for Your Team
  
  

📣 Want Christa’s help building a profitable, sustainable team?
Apply for the Inner Circle or attend the upcoming CEO Summit this November.
Visit https://www.fitbizstrategies.com
to learn more.

📱 DM Christa: @christagurka

📥 Download the free roadmap: https://www.christagurka.com/newhire

Transcript

Christa Gurka | Fit Biz Strategies: 0:51

Hey there everyone. Welcome back to another episode of the Female Empowered Podcast. I'm your host, Christa Gurka, and today's episode Piggybacks off of a more recent episode, which was I think it was two episodes ago. episode number, let me check this for you. 3 0 5, where we talked about transitioning patients or clients off of your schedule. So this piggybacks off that a little bit about how. To look at utilization rates for your new team members, so your new Pilates instructors, your new yoga instructors, your new physical therapists that you're hiring. And so if you wanna see or review what, what I recommend in terms of getting people off of your schedule or transitioning people from one PT to the newer pt, go back and listen to episode 3 0 5. But today what we're actually gonna be talking about is. When you bring on a new Pilates instructor, physical therapist, you're super excited to have them on your team. You're onboarding and then Three, four weeks later, you're staring at their half empty schedule and wondering oh no, I'm paying them so much more than they're bringing in. But I, what I want us to talk about today is looking at this in a, from a, a 30,000 foot view and looking at this in long term and setting really good expectations for how to build their schedule, how to get them to optimal utilization. This is one of the most common frustrations I see in studio and clinic owners, and it comes down to setting realistic utilization expectations and preparing for a natural ramp up when you have a new person on your team, especially for cash-based physical therapy practices or Pilates studios where it's not we have a wait list of 4, 5, 6 weeks, which sums. Places do. So if that's the case, the ramp ups gonna be a lot less. Okay? So today what we're gonna be talking about is what healthy utilization actually looks like, how to structure payment in those early days, and how to reframe our own, Personal mindset so that we don't feel like we're losing money, but we're really,'cause what we're really doing is investing in long-term growth. So that's what we're gonna talk about. So first, let's talk about what utilization is. Utilization is simply the percentage of a staff members available hours that are filled. So if you have 10 hours a week and eight session, eight hours are filled with client or classes, then they're 80% utilized. If they have five hours filled out of 10 hours available, they're 50% utilized. That's what we talk about. That's what we mean when we talk about utilization rates. In boutique fitness and wellness, healthy benchmarks look anywhere from, you know, 65, 70% to 85%. same in physical therapy. Physical therapy, 70 to 85. When utilization is too low, our profit margins will sink, and when our utilization is too high, it's just not sustainable. So I don't recommend people, Need or require a 90 to 95 or a hundred percent utilization because it's just not realistic. I to see our benchmarks at 75 to 80% and usually what, what that's tied to is very specific metrics. So we know that at 75% utilization, we'll be generating X amount of money per month, X amount of profit per month, and then. Extrapolate that over a, a year annually, and we know what we're gonna be bringing in annually in terms of revenue and profit. So this is something that we build out when we have the people in our inner circle specifically. And also when we have the summit, which is coming up now, in November, that's what we're gonna be doing with the women that are attending the summit, is showing them what utilization they actually need to hit to achieve their revenue and profit goals. Okay, so. Where do owners get tripped up in this scenario of ramping up new staff members? Well, usually what happens is we hire a person and we assume that an overnight they're gonna be the. Booked out and busy, which is just not realistic. So what we really want to understand, and we can learn this from previous experience, how long on average does it take a team member to ramp up their schedule? I believe that if all of our processes are in place, our marketing, our sales, our operations, that a. New clinician or instructors should be ramped up within 90 days, generally speaking. Okay? So we have to understand that our new hires are not going to be profitable day one. That's just not a realistic expectation, and that's okay as long as we plan for it. So what I like to teach and what I used was a 30, 60, 90 day roadmap, and it was something that I delivered. To the new hire. I talked about it with them from day one of onboarding, even pre-hire, these are our expectations. And so really what I do is sit down with them on day one, and say, listen, and the first 30 days, here are my expectations of you. We wanna see you at 25 to 30% utilization by the end of 30 days. At the end of 60 days, we're expecting that you're gonna be closer to 50 or 60, and by the end of 90 days, you're gonna be between 60 and 70% utilize. I communicate this very clearly, even in a written format and show them what the expectation is, how they have to, what they have to do, and the step-by-step framework so they can get there. In a reasonable amount of time. We are also meeting weekly, so that we're talking about, yep, we're on track to hit this goal, we're off track. And why? So we cannot forget. That our job is to, as CEOs, is to make sure that there are enough clients coming through, through our marketing and our operations, not to solely burden that new hire to find clients. And if, if your expectation is that they're gonna be bringing their own clients in, I suggest that you make that very clear when you hire them. Okay. So how can we. Help our bottom line. How can we look at different types of pay structures while somebody is onboarding? Now, usually when we bring on in the Pilates yoga world and boutique fitness and wellness, usually the pay structures are like hourly, so people get paid when they work. People get paid when they teach, and so you're usually bringing them on as an hourly, even if it's an employee. They're getting paid when they work, when they teach. Now. For PTs, oftentimes it's a little different because PTs usually are paying off a lot of student loans and they're looking for more full-time stability. So there are a variety of different ways that you can approach a. Compensation package, especially as people are starting to ramp up. If you're interested in learning more about what I teach about different compensation models, you can go back and listen to episode 3 0 4, where I talked all about the variety of compensation models that are available for us in our business and in our industry. But. It can be scary when you're bringing on a new person and you're wow, how much do I have to put out before they're producing and adding to the bottom line? So one of the best models, I say, is usually giving someone a small hourly floor. This is something that we used for. Our PT hires people, our physical therapists that needed more stability, and were looking for more of kind of like a full-time or even a part-time, but more of a salary structure. We said, we are gonna guarantee you$25 an hour for, let's just make even numbers 10 hours a week. So you're going to guarantee$250 a week, and then we're gonna pay you an additional$20 every time you see a client. Okay, so a 2020$5 or$250 base salary, and again, I'm just using even numbers, right? So a base salary, you're gonna be guaranteed$250 a week, and every time you see a patient or teach a class or whatever their responsibility is, we're gonna give you an additional amount over that. So that would usually be for the first 30 days or the first 60 days. Okay. Then usually from 60 days to 90 days, what we would do is we would decrease their guaranteed and we would increase their hourly so that by the time we are on. 90 days, four months, five months, six months, depending on what works best for your, business and your studio, and your clinic, we would then get to a full hourly pay. All of my physical therapists and Pilates instructors were full, were hourly employees, so they didn't get paid.$20 an hour or$40 an hour no matter what. They got paid a a rate when they saw a client or when they taught a class, and then they got a very, very small. Administrative rate if they were not seeing someone. So that is just how we did it at Pilates in the Grove. there's other ways that you can also do it, where you're gonna say, we're gonna guarantee you a thousand dollars a week, and every time you see a patient, we're gonna give you an additional$20. Okay? and then as they grow that a thousand dollars a week maybe comes down to like$500 a week, right? Or. Eventually$100 a week and their per patient goes up. So maybe it's$50 per patient, right? So if someone's getting$50 per patient and they have a full schedule of 30, let's even put it on the down and they see 30 patients a week. So it's 50 times 30. Okay, that's$1,500 a week times 52 weeks a year. That's 78,000 plus they get a hundred dollars a week in additional administrative rate plus$5,200. That's an annual salary of about$83,000. Okay. So just so that you can kind of see the math. So that's a way to, that is also a way to do it. Now, I. The thought, and I hear your wheels turning. People are well, what if I'm paying'em a thousand dollars a week and they're seeing three people, I'm losing money. Well, I want you to reframe that. I really do. I want you to reframe that because I know many of you are thinking that I'm losing money on them. I need them to be productive. I want you to reframe that and think I'm just investing. In the lifetime value of a good employee. Okay, so the same way we might spend a thousand dollars a month on ads to get in. 20 new clients, you're gonna spend a thousand dollars, 2003, do thousand dollars to get and train and keep and retain a very high producing great employee. It's the same kind of thing. So the lifetime value of a good instructor or a good physical therapist far outweighs. The three to four to five month ramp up that you will be spending. So yes, we are spending on the front end, but if we really have our metrics right, our profit margins right on the back end, they will be producing. Great. Okay, so let me, let's me show you that math. So that math that we just had where we just had a PT that was making$83,000 a year. Okay. In order to make that work within a good profit margin, we want them to produce three times what they're bringing in. So if, so, that means if they produce basically$250,000 a year, they. Helping you stay in a healthy profit margin. All right, so let's see if that's even doable. So we divide that. I even say we divide. So if we get two weeks vacation, we divide that by 50 weeks. Okay? And then they're seeing 30 patients a week. We divide that by 30. As long as they're, you're charging 166 or so dollars per session, and they're seeing 30 sessions a week, they can do that. Okay, so if they go to 32 sessions one week, if they go to 28 another week, so on average, they should be seeing 30 sessions a week at$166. If they're generating 83, if they're earning$83,000 a year. Okay? So if you're charging over$200, then you're in a sweet spot. You're good. Okay, so I hope you understand that math. I know math sometimes makes people ooze outta their ears, their brains, but. It's important to understand that it's just important to understand and really have a solid objective understanding of how much it costs to bring on a new person. How much does it cost to ramp them up, and what eventually will be the long lifetime value of that employee. Moving forward. Okay. The other thing I say is, this is why it's important to have a profit margin in our business. Because if, if you know, you're going to hire, one of the things that you could do is you could start to create a new hire fund where you're saving 5, 6, 8,$10,000 to set aside for ramping up that employee for the first 90 days. So, you know, right. You know, I'm starting to hire, I wanna start putting this money away, which is why it's important to have profit so that you can prep for when this new person comes, that you're gonna be out of pocket a little bit. Alright, so now we talked about setting good expectations. Designing different pay structures, understanding that this will pay off in perpetuity on the backend. Now, what happens if they're falling short? What happens if they're not hit hitting their utilization targets? What happens if you're getting to 90 days and they're still only at 25% utilization? The next step is to take a step back and figure out what is the actual problem. Is the problem a marketing problem? Are you not getting enough people in the business and that's a you problem. Okay. You need to have a process as a business, as an owner of how you're getting leads into the business, how you're getting people into their classes, how you're getting them onto their schedule. So you need to have a solid marketing problem, a marketing funnel and process. So you wanna see is it a marketing problem, is it a, an operations problem? Is your front desk not. Converting the, new leads, on the phone or over an inquiry or not giving to the new clinician or the new instructor, or talking about going into that new class. Is it an operations problem? Right, a sales problem? Okay. Is it a, I don't wanna say performance, a service delivery problem. So is this new instructor or clinician not retaining people? Okay, are they struggling to keep people on their schedule? So if that's the case, what can you do to work with them on? Here are strategies to keep people coming back to your classes. Here are strategies to keep people on your one-on-one schedule. Here are strategies to, to convert people from an intro offer into coming to your classes. So it really is important, and this is why it's important that you're meeting with your new hires weekly. To let them know Hey, we're supposed to be at, you know, 10 patients this week, or 10 clients, or you're supposed to have 50% utilization in your classes and it's not happening. Where's that disconnect? So you shouldn't get to 90 days and have no plan in place for them. You should be meeting with them each and every week so they know what they need to be doing better. To keep people on their schedule. So if it's a marketing problem, that's a you problem as a business owner. If it's an operations problem, something with your front desk that's like you need training and if it's a retention problem, a service delivery problem, you need to talk to the clinician or the practitioner. So how can we now prepare for this kind of growth? So. I recommend once our schedules get to about 80% utilized and we're pushing closer between 80 and 85%, whether that's in classes or whether that's in, physical therapy services, then we start looking for growth. If we, if we want to grow, are we going to start looking for someone to come on our team? Are we gonna start saving? Some additional resources and capital so that when this new team member starts, we have the appropriate amount of funds to fund the ramp up period. Okay, this is where we want to keep the momentum going and keep the growth going. Once you start getting on a wait list, it's time to look to start hiring. And also hiring is difficult. So you want to plan for 30 or 60 days, sometimes even 90 days, to, advertise, promote. Interview, find the right person, check references, all of that stuff. So it is a process, but I hope that this takeaway shows you how to set clear expectations for your new hires as they ramp up to hopefully be 70% utilized between, three and four months after being hired, but also recognize that part of that. Is your responsibility as an owner? Okay. Utilization for a new team member isn't immediate, right? There's not an immediate ROI usually, it's about progress. Okay. Those new hires usually are not profitable day one, but if they're the right hires, they will be profitable in perpetuity going forward, setting clear expectations, having a structured pay model and shifting your mindset, you can build a team that grows sustainably and profitably. Okay. I want you to consider the next time you hire somebody, what are, what is that? 30, 60, 90 day. Check-in process, okay? So that you can make sure to have a clear roadmap for this person. Now, the other part of that is you holding them accountable and you meeting with them regular or having your manager meet with them regularly. Somebody that they report to should be giving them Hey, we're doing great, or We're a little bit off. How can we improve this? Or, we're way off. What can we do to get back on track? All right. It is totally doable, and I also created a nice, fun, free resource for you, which I love. I love giving people free resources, so I created this new hire utilization roadmap for all of you that you can download for free by visiting my website. All you have to do is go to christagurka.com/newhire and you'll be able to download this, benchmark this roadmap for you and use it in your own business. And as always, I love it when you all DM me over on Instagram. So I would love if you DM me and let me know what you think, if you have questions. or just to say hi. I love it. Maybe share this podcast with somebody that you know could use it. It really helps me get my message in front of more women so that we can create a powerhouse industry of amazing women owned businesses, and I'd love for you to help me in that mission. All right? All right, ladies. I hope you garnered some information from this episode that you can put into practice immediately. And until next time, my friends. Bye for now.