Many Dynamics NAV partners complain about, that the consultant wages have sky-rocketed the last ten years, and that might be true. As a consequence, the hourly rates have increased as well, but not quite as much as the salaries. This means that the Dynamics NAV partners have only one parameter to adjust: The number of billable hours. Often the billable hours are 70% but some partners increase this to 80% or even more.
Is that even realistic?
In Denmark, we have a calculation that looks like this:
- 12 months á 162 hours 1.944 hours
- 5 weeks of holiday (some even six) 187 hours
- Bank holidays (10 days) 75 hours
- Average number of sick days (8 days) 60 hours
- Further education (10 days) 75 hours
Already we are down to 1547 hours available. If we then consider end of December and July – August to be low-season where we are down to 50% effectivity then we can subtract another 162 hours which gives us 1385 hours all together to contribute to the company revenue. Given a invoiceable percentage of 70 the number of hours are only 969.
In Denmark, an average mid-level developer can have around €71.000 according to the Nigel Frank salary survey, but that’s not the complete cost:
Salary € 71.000
Holiday salary € 1.775
Pension € 3.550
Laptop € 2.000
Phone € 1.000
Other Exp. € 10.000
There can be many other costs but already here we have a total cost per employee of € 89.325 and with only 969 hours to earn that money our cost price is €92 per hour.
So why have the salaries sky-rocketed and what can we do about it?
As mentioned in the previous post Dynamics NAV partners have a tendency to hire seasoned consultants, that can contribute from day one.
But there is only one place to find those.
That is from the other Dynamics NAV partners, who then – urgently – need to find a replacement. From where? Also from the other Dynamics NAV partners. Since no one wants to switch job without getting better conditions, this will increase the general salaries in the Dynamics NAV community and by that, also increase the pressure to the consultants to perform better and earn more money to the Dynamics NAV partner.
This is a short-sited solution – and not to mention – not very nice to the colleagues in the market. Therefore, it is time to look a bit more forward and a little less on the bottom-line. In the nineties, there were a lot of unemployed engineers in Denmark. Therefore, Navision introduced, together with the local government job-centers, a program to retrain unemployed engineers to become Dynamics NAV consultants (then Navision). Many of the seasoned consultants and even managers at the Dynamics NAV partners today were recruited in those days.
Today, some local initiatives like the Readynez Academy program where brand-new college graduates are recruited to work with Dynamics NAV partners receiving a thorough training in everything from, “Introduction to ERP”, SureStep, Project Management, Dynamics NAV application or development depending of the student’s chosen consultant path.
If we are to keep a constant flow of new consultants, we need to have at least 10% new consultants on the way at any time.
Think about it – this is a win-win situation.
Firstly, you get consultants that can be billed at a lower rate for assignments that does not take the experience of a seasoned consultant/developer. Now, many seasoned spend hours doing tedious tasks at the customers maybe not even at full rate.
You get loyalty from the employee because you took a chance on them from the beginning. This of course depending on, if merit based salary increases have been given along the way. This is no other than the maintenance price you would pay for a machine to prevent is giving-up on you.
The price you have to pay is to allocate some time to coach the new consultants.
One of my previous bosses had a sign behind her desk saying:
Company work policy:
- We want to have fun.
- We want to make money.
- We don’t want to make so much money, that it is no longer fun and
- We don’t want to have so much fun, that we no longer make money
Maybe we need to go to work for work AND have fun.