Exploring the facilities
management effective rate as a
Iowa State University, Ames, Iowa, USA
Purpose – The purpose of this paper is to investigate the use of the effective rate as a useful metric.
Facilities management operations who function as re-charge organizations (public or private,
non-proﬁt or proﬁt) are able to track performance and do comparisons for expense recovery while
taking into account the organization’s unique environment.
Design/methodology/approach – After providing a deﬁnition of the effective rate, some of the
inﬂuences and the importance of measuring performance for facilities management operations are
discussed. The remainder of the paper focuses on the ﬁndings based on a qualitative single case study
that not only clariﬁes the use of the metric, but also conﬁrms the usefulness for a service-oriented
organization to measure and track performance.
Findings – Taking into account the unique environment of each organization along with the
differences for time not billed back to the customer (un-billable), the effective rate is offered as a
quantitative means to measure performance as it inﬂuences the organization’s billing labor rates.
Research limitations/implications – The single case study raises the issue of generalizability, but
points out that much can be gained from the research. In the spirit of true qualitative research, the
intent is to provide the ﬁndings allowing the reader to determine possible transferability where logic
and reality is justiﬁable.
Practical implications – The effective rate, once normalized for the particular environment, can be
used as a benchmark for both internal and external evaluations of performance for facilities
Originality/value – The effective rate, whether actually calculated or not, inﬂuences the
organization’s ﬁnances through the billing labor rate in its attempt to recover costs and can serve
as a performance tracking metric.
Keywords Performance measures, Benchmarking
Paper type Research paper
In the ongoing search for best in class process improvements metrics are needed upon
which to measure not only oneself, but to do benchmarking (Frei and Harker, 1999;
Maiga and Jacobs, 2004; Tsang et al., 1999). With an interest in process improvement,
Wauters (2005) suggests that benchmarking activities should concentrate on
identifying these best practices. Peschiera (2004) suggests that the act of measuring
can help in seeking ways of improvement. The importance and use of metrics is best
summarized by Robson (2004, p. 518) stating:
In order to be useful, measurement systems have to be an integral part of a set of effective
control systems that have been carefully and speciﬁcally designed to improve the overall
The current issue and full text archive of this journal is available at
Received June 2005
Accepted September 2005
Vol. 24 No. 1/2, 2006
q Emerald Group Publishing Limited