As more experienced professionals retire and fewer graduates pursue careers in professional services, attracting and retaining the right skills is a growing challenge. With a shift in expectations and a greater priority placed on wellbeing at work, incoming generations are savvier about avoiding burnout, and may therefore be less inclined to work the traditionally long hours during busier periods. With this increasing pressure, how can organizations utilize and retain the resources necessary to deliver on profit and client service, without risking staff burnout? The answer lies in effective resource utilization.
Key points
- Resource utilization tracks and measures how efficiently resources are utilized across an organization, including for both billable and non-billable tasks
- Effective resource utilization is important for driving efficiency, productivity, and profitability
- Proven strategies to optimize resource utilization include embracing automated resource management technology, aligning resource allocation with team members’ career development goals, and harnessing utilization data to inform more accurate future capacity planning
- Resource managers are responsible for monitoring resource utilization metrics, including operational efficiency, productivity, and revenue generated
- Resource utilization can be calculated using simple formulae, while Dayshape’s automated resource management software provides businesses with detailed reports and insights into resource under or overutilization
Contents
1. What is resource utilization?
2. What’s the difference between resource utilization and resource allocation?
3. Why is effective resource utilization so important?
4. Types of resource utilization
5. What are the benefits of effective resource utilization?
6. How to calculate resource utilization
7. 5 strategies to improve resource utilization
8. Transform your organization’s resource utilization with Dayshape
What is resource utilization?
Resource utilization is the process of measuring the efficiency of resource usage across an organization. Efficient resource utilization ensures the resources that make up the core cost base of a business are being used to their full potential. It’s important for project and resource managers to measure how effectively resources - such as staff, contracts, specific skills, and budgets - are being utilized to inform data-driven resource allocation and capacity planning decisions.
What’s the difference between resource utilization and resource allocation?
- Resource allocation refers to the distribution of available resources to achieve business goals
- Resource utilization measures how efficiently resources are used across an organization
Resource utilization focuses on the optimization of resource allocation to ensure resources are being used as effectively as possible. Meanwhile, effective resource allocation will drive optimal resource utilization. The two processes need to work hand in hand to support efficiency, productivity, and profitability.
Why is effective resource utilization so important?
On the surface, the business risks of inefficient resource utilization may seem straightforward. If overall resource utilization is too low, your organization will be unable to make a positive return on your people’s time and expertise. On the other hand, if your workforce is overutilized, there is no spare capacity for additional work, leaving your firm unable to take advantage of new opportunities. In short, effective resource utilization is essential to the success and survival of your firm, but finding the right balance between under and overutilization requires strategic optimization.
Types of resource utilization
There are two main types of resource utilization that businesses can monitor: billable and non-billable. When assessed together, these provide an accurate insight into an organization’s overall resource utilization.
1. Billable resource utilization
Billable resource utilization measures how efficiently resources are used for tasks that are intended to drive profitability. Monitoring the utilization of billable resources means underutilized resources can be identified quickly, so resources can be adjusted to drive further revenue-generating activities.
2. Non-billable resource utilization
Non-billable resource utilization refers to resources that don’t directly impact revenue, and are not billed to clients; for example employee training and skills development, or time spent improving internal processes. While not revenue-driving, it’s still important for resource managers to track the utilization of non-billable resources to ensure all resources are allocated efficiently.
What are the benefits of effective resource utilization?
Efficient resource utilization can drive multiple benefits, from delivering cost savings to improving client satisfaction and brand reputation. The advantages of effective resource utilization include:
- Increased operational efficiency: optimizing resource utilization ensures staff time is allocated effectively, reducing wasted hours and improving productivity. This prevents staff being overworked or underutilized, which can lead to delays or reduced output
- Optimized performance: effective resource utilization maximizes productivity by ensuring resources are allocated efficiently, which could lead to higher output with the same - or potentially fewer - inputs
- Greater profitability: poor resource management can result in missed revenue opportunities, increased overheads, and reduced profitability. Optimized resource utilization ensures better allocation of resources to maximize billable hours and minimize unnecessary costs, boosting revenue
- Enhanced client satisfaction: with properly managed resources, projects are completed on time and to a high standard, strengthening client relationships and brand reputation
How to calculate resource utilization
The basic resource utilization rate formula is as follows:
Actual hours worked / total available hours x 100
To track billable resource utilization, use the following calculation:
Billable hours / total available hours x 100
5 strategies to improve resource utilization
Improve resource utilization across your organization with these tried-and-tested strategies:
1. Expand your resource pool
One of the biggest opportunities to optimize resource utilization is to schedule your resources across the widest pool of staff possible. By having all of your resources in one scheduling software, you have the option to expand beyond local resource assignment by looking at skills, expertise, and availability at a nationwide and global level. The larger the pool of possible resources, the easier it becomes to smooth out utilization peaks and troughs by assessing capacity, whether teams are office-based, remote or off-shore. On the individual level, a national or global approach to resourcing can also allow for more opportunities and exposure to projects based on preference or career development goals.
Consider the time and money saved on utilizing existing skills and resources from another division when compared to the cost of recruiting a new team member for a local market or upskilling the existing team. Using this insight also allows resource managers to be more flexible and responsive to changing client requirements.
To truly optimize resource utilization and the potential of your entire workforce, resource managers can use AI-powered resource management software to zoom out and take a holistic view of the available talent.
2. Align resource allocation with career development
Across the board, lack of career development is cited as a key driver for employee attrition in professional services industries. To reduce turnover, it is more important than ever that your firm aligns resource allocation with career development and employee engagement via effective resource utilization.
A key focus for resource managers is to ensure that clients are provided with the best teams possible, combining industry experience with the right skills and accreditations to ensure maximum quality and efficiency. Equally important, from a retention point of view, is to ensure that staff are fairly and appropriately matched to jobs that align with their motivations, interests, and career development goals.
Dayshape’s skills and traits tracking feature enables firms to keep track of when skills and accreditations were acquired or lost. As individuals are promoted or gain experience over time, these new traits are recorded and reflected in the type of engagement, tasks or industry they are assigned to. This feature can also be used to ensure the right mix of skills and experience on an engagement, providing junior team members with opportunities to learn, and allowing more senior members to pass on their knowledge.
Traits can also be used to highlight the types of work that individuals have an interest in, allowing them greater opportunity to be exposed to projects and industries that align with their career goals. By supporting learning and development opportunities, firms can:
- Optimize the value of existing resources
- Support both retention and succession
- Better compete in the current ‘candidate-led market’
3. Embrace automation
Although strides have been taken in recent years, many believe there is a long way to go to improve diversity in accounting and other professional services. The business benefits of a more diverse and inclusive workplace are far-reaching and have been shown to positively impact overall performance and productivity, staff engagement and retention, client relationships, and firm culture.
When it comes to resource allocation, eliminating the chance of human bias or favouritism when assigning work is key to supporting a more fair and inclusive workplace. By spreading the work in a more fair and even way, there is also less risk of certain individuals or areas being over or underutilized; a balance that will further benefit your business.
An automated resource allocation system can help to reduce the chance of human bias or favouritism by prioritizing capacity alongside the best match of skills required for the task. Dayshape’s automated resource allocation functionality allows resource managers to automatically identify the best match of available skills, knowledge, and expertise for an engagement.
4. Monitor resource utilization metrics
Resource utilization KPIs and metrics should drive key business decisions and provide insights into how well your firm is both deploying and enabling your resources overall. Dayshape provides in-depth reporting and utilization dashboards to monitor and measure metrics on current and forecast resource utilization, as well as forecast accuracy. With this insight, your firm can quickly identify and report on resource utilization issues, make critical staffing decisions, and drive greater efficiencies in the utilization of your most valuable resource.
The ability to effectively utilize the right resources on the right engagement, at the right time is at the core of every successful organization. By promoting a more efficient, fair, and accurate way of optimizing resource utilization, Dayshape enables your firm to bring your focus back to a people-first approach to resource management.
5. Data-driven capacity planning
Resource managers are ultimately responsible for the effective use of resources and will regularly review and communicate utilization information to understand overall resourcing requirements. Our capacity planning functionality makes it easier to pull this data, understand current and future resource requirements, and make more accurate capacity planning decisions. This visibility allows your firm to maintain a more realistic view of which areas they are over or underutilized, and where they need to recruit to determine true resource availability.
From the individual perspective, the more accurate the capacity plan is, the less likely they are to be overbooked or overloaded with work. This gives your team the confidence they need to get on with the job at hand, knowing that they'll have the right support at the right time.
Transform your organization’s resource utilization with Dayshape
Efficient resource utilization enables firms to enhance efficiency, retain top talent, and achieve sustainable growth. Dayshape’s automated resource management software enables organizations to improve resource utilization by:
- Implementing advanced tools
- Leveraging technology
- Aligning resources with career development
- Fostering a supportive culture
- Utilizing data-driven insights
Book a demo today, or contact us to find out more.
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