The costs of corporate burnout include $1.8 trillion in lost productivity in the U.S. alone – Forbes.
Issues like burnout, disengagement, etc., are rising among employees due to work overload, lack of better opportunities, improper use of talent, and more. This leads to lowered performance, high turnover rates, project delays, reduced profitability, and more.
So, the question is, how can organizations overcome these roadblocks?
They need to maximize the utilization of resources. It involves using resources effectively and efficiently to achieve project objectives and organizational goals. In addition, it also helps control budget overruns, ensure uniform work distribution, improve productivity and the overall health index of resources.
This article outlines the methods to calculate utilizationmetrics, ways to improve resource utilization, and how organizations can benefit from an advanced tool like SAVIOM.
Let’s get started!
How to calculate different types of resource utilization metrics?
Resource utilization is an essential KPI that measures the percentage of time an employee spends on billable or strategic tasks against their capacity and availability. It helps managers to assess over/underutilized resources and take appropriate measures.
Typically, resources are assigned to billableand non-billable tasks like BAU, admin, training, etc. Hence, to know the time a resource spends on each job, resourceutilization is further classified into overall, billable, non-billable, and strategic.
Here is how utilization is calculated:
For example, Steffi is a copywriter in an advertising agency. Her capacity is 40 hours a week (8hrs * 5 days). She spends 34 hours on billable tasks, 4on non-billable activities, and 2on strategic work.
Steffi’s overall utilization = (totalhours allotted/ total capacity) *100
= 40/40 *100= 100%
Billable utilization = (billable hours/total capacity) *100
= 34/40 *100 = 85%
Non-billable utilization = (non-billable hours/total capacity) *100
= 4/40 *100 = 10%
Strategic utilization = (strategic hours/total capacity) *100
= 2/40 *100 = 5%
Steffi’sis optimally utilized in this case, with100%rate.If thelevel is below 75%, it isunderutilized; if it is above 100%, it is overutilized.
Having discussed the calculation method for utilization, let’s see the techniques to improve resource utilization.
Ways to improve resource utilization in a workplace
To improve resource utilization, organizations can implement the following strategies.
Take resource availability into account during allocation
Before assigning resources to projects, managers must look into their availability to avoid over/underloading. Additionally, managers must consider the employees leaves, vacations, non-billable work, etc., before delegating work. For instance, a developer works on a billable project for 40% of his capacity and 20% on a training program.
With complete visibility into future projects and resource schedules, managers can check this developer’s availability and skill sets and book for another project. This will ensure competent allocation and optimal workforce utilization.
Track and monitor resource utilization levels regularly
Once resources are allocated to projects, managers must track and monitor them periodically. This will enable the managers to evaluate each employee’s time and effortto complete their tasks against the estimated hours.
For instance, in a software development project, the estimated weekly hours for the developers team are 500hrs, but the actual time they took is 550 hr. Based on the variance, the managers can proactively take measures to ensure the projects are completed on time. Apart from this, they can also ask for the reason behind a resource’s subpar performance and avoid such instances in the long haul.
Implement suitable optimization techniques
When project managers are unaware of the resources schedules, they assign more tasks to resources. Frequent overloading can cause excessive stress, burnout, and high turnover rates. To avoid this, managers should implement suitable resource optimization techniques like leveling and smoothing to ease their workload.
For instance, if the project is not time-sensitive, managers can implement resource leveling, where they can adjust the timelines as per the resource availability. Contrarily, for time-restrictedprojects, managers can leverage resource smoothing and assign additional resources tooptimizeschedules. This ensuresuniform distribution of workload and successful delivery of projects.
Mobilize resources from non-billable to billable tasks
When employees constantly work on non-billable projects, their performance will be negatively affected. For instance, a senior marketing officer isfrequently given tasks like preparing marketing proposals, training junior executives, internal meetings, admin tasks, etc.
This will lower their morale asthe skills are not appropriately utilized. Therefore, managers must regularly check the workforce schedules and mobilize them to billable/strategic tasks periodically. This way, organizations can enhance billable rates of the workforce and boost productivity and profitability.
Promote shared services model across matrix boundaries
According to a survey, 81% of companies measured productivity to be higher when followingthe shared service and outsourcing models.
A shared services modelenables firmsto maximize resource utilizationby leveraging interdepartmental resources for diverse projects. To facilitate this model, managers should havea completevisibility of resource information and foresight into pipeline projects.
Thisenablesmanagers to identify resources with matching skills and schedule them to projects from different verticals within the organization. In this way, organizations can enhance cross-functional collaboration, improve productivity and business efficiency.
Facilitate multiskilling for resources as appropriate
Emerging technologies, fierce competition,etc., have increased the demand for skilled employees. Hence, organizations must provide multi skilling programs to ensure optimal resource utilization. For this, managers need toforecastthe pipeline project demand to identify theskill gaps.
Accordingly, managers can take remedial measures like facilitating shadowing opportunities, coaching, mentoring, L&D programs, etc. Additionally, this helps reducethe bench time of resources as they are equipped with the skills to take up future projects. This will maximize billable utilization and boost their professional growth.
Knowingthe ways to improve resource utilization, let’ssee how resource management software benefits.
How canadvanced resource management software help improve utilization?
Estimating the accurate utilization levels of the resources can be challenging. However, modern resource management software like Saviom can enable organizations to track and maximize utilization effectively.
Firstly, the tool offers 360-degree visibility into resources profiles, including their competencies, skills, roles, availability, etc. Using the advanced filters, managers can identifyand allocatecompetent resourcesfor the projects, thus ensuring theiroptimalutilization.
Moreover, the capacity vs. demand reports will enable managers to identify the skills gaps and train/upskill the resources accordingly. Additionally, with the forecast/actual reports, managers can track the time variances and take corrective actions to improve the future utilization of resources.
The utilization reports enable managers to eliminate the over/underutilization of resources. Finally, the bench and vacancy reports help managers proactively assign underutilized resources to billable/strategic projects.
This is how resource management software helps improve workforce utilization with its advanced features and functionalities.
Resource utilization is crucial for organizations to know how well their workforce is utilizedin billable and strategic projects. Furthermore, itensures theresources are optimally used against their capacity. Combining the above best practices with a futuristic resourcemanagement tool will help organizations improve productivity, efficiency, and ROI.