Balancing capacity

Industry-wide reports indicate yet another upturn in accounting professionals being overworked and understaffed. Subsequently, firms are being challenged to do more with less. It is therefore opportune to discuss the importance of resource capacity planning and how its optimisation can help your firm to mitigate these issues.

In this blog, we will explain the benefits and challenges of resource capacity planning, and provide a long-term, strategic, solution to tackle the capacity planning problem.

What is resource capacity planning?

Resource capacity planning is a balancing act. It’s the process of determining the amount of work that needs to be completed by resources at your firm, deciding what tasks and engagements can be completed by said resources, and matching the work to be done with available resources to meet the current and future demand for your firm’s services.

Given that the demand for services can be unpredictable, especially across advisory and tax work, capacity planning is not an easy task. However, its importance cannot be understated as inadequate capacity planning will negatively impact your people, clients, and ability to perform and compete long term.

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What are the business benefits of resource capacity planning?

Effective resource capacity planning can provide a multitude of benefits, with the right strategy and processes in place, firms can:

Maximise the utilisation of their workforce

This is especially important for professional service firms whose resource cost is one of, if not, the most expensive entry on their balance sheet. Hence, these firms must utilise their resources’ time efficiently to ensure profitability and sustainability of the firm.

Ensure suitable resources are allocated for successful engagement delivery

Having employees with the right availability, skills, experience, charge-out rates, and accreditations is crucial for an engagement to finish within the agreed time and budget. When capacity planning, the resource manager must identify and allocate competent resources based on their skills, experience, grade, location, and any other criteria the firm (and often client) deems necessary or valuable to the engagement. This reduces the chance of having under/over skilled resources on an engagement and subsequently lowers the risk of delivering a poor quality/cost inefficient engagement.

Forecast future capacity and identify skill gaps

Capacity planning can help firms to identify skill shortages ahead of time so that corrective action can be taken. For example, firms can avoid last-minute training or outsourcing by mapping project workload with workforce capabilities to ensure training is completed in advance, or new skilled staff are hired in time.

Align sales and delivery by forecasting pipeline opportunities

Capacity planning takes into account predicted and actual deals won in order to forecast for resources ahead of time. This helps in the engagement planning stage to ensure that the right resources are available at the right time when the delivery of work begins. With specific reference to accountancy firms, this can help to stabilise the peaks and troughs of “busy season”.

What are the business challenges of resource capacity planning?

In an ideal world, capacity would always equal demand. However, as this is rarely the case, firms must be equipped to make difficult resourcing decisions in the short term.

For example, imagine that you have a shortfall in capacity which has led to a struggle to meet your client’s deadlines and demands. Do you:

  1. Increase your workload for your teams – acknowledging the risk that this may result in exceeding the engagement budget and employee burnout, or
  2. Extend the client deadlines – acknowledging the risk of client dissatisfaction, or
  3. Decrease the scope of the work – acknowledging the risk of client dissatisfaction and engagement quality.

During our live webinar on capacity planning, 60% of respondents said 1. Increase the workload for teams – acknowledging the risk that this may result in exceeding the engagement budget and employee burnout.

Although this may seem like the best solution in the short term, increasing the workload for your teams can cause severe disruption in the long term, particularly when it comes to the causal relationship between capacity and retention and the vicious cycle which follows.

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As more work (and pressure) is loaded onto existing teams (with a shortfall in capacity) to meet client deadlines and demands, the wellbeing of those individuals can plummet causing a higher resignation of valuable people and skills, resulting in even heavier pressure on existing resources if these vacant positions are not filled. Sadly, this is reflected in reality as industry statistics show accountants are understaffed and stressed under heavy workloads.

What is a long-term solution to resource capacity planning?

To correct current problems, long-term solutions are often required.

Whilst many accounting firms are still relying on suboptimal methods of deploying resources via legacy systems and excel spreadsheets, others are transforming their practice by introducing AI-powered resource management software like Dayshape.

Dayshape was built for optimising capacity planning. The software minimises the challenges firms face by maximising the value of their existing skills and resources. Consequently, enabling a more fair, productive, and profitable resourcing strategy.

The Dayshape solution allows firms to:

Maximise utilisation with firm-wide visibility

AI-powered capacity planning software gives firms the option to go beyond local resource assignment and drive efficiencies by looking at skills and availability at a nationwide and/or global level. This visibility allows for the creation of more effective, bigger-picture capacity planning strategies whilst also adhering to the current working patterns of many staff who have chosen to work remotely since the pandemic.

Improve work life balance with utilisation scoring

When scheduling work it is crucial that the resources are selected not only for how suitable they are to complete a task, but also how available they are. Dayshape’s utilisation filters allow resource managers to quickly and easily determine which resources are under, over, or perfectly utilised when scheduling unassigned work. This helps firm to optimise utilisation, maximise profit, and prevent burnout of staff.

Fairly and effectively allocate resources with suitability scoring

A data-driven approach to capacity planning reduces job selection bias and allows work to be distributed more effectively and fairly across the firm. Dayshape automatically calculates a suitability score for every resource, allowing firms to ensure the best match for the task is found every time. This score considers elements such as skills, accreditations, work experience, as well as a resource’s preference to work on different types of jobs. This aims to positively impact staff happiness and retention, and supports diversity and career advancement within a firm. In addition, a flexible completion data can be entered when creating work in Dayshape. This optimises the opportunity for resource managers to find a suitable resource to complete the work.

Optimise demand forecasting and skill utilisation with reporting

With in-depth capacity and skill utilisation reporting, resource managers have the insight they need to fully utilise existing skills and better understand capacity risks alongside current and future demand. For example, a resource manager may find via reporting that there is a general shortage of resources compared to forecasted demand. Dayshape will not only highlight this but can also indicate which specific areas require additional resources e.g. which staff grades, which skills, which locations.

Provide a single source of truth by integrating with other software systems

Dedicated resource management software will integrate with other software systems to provide a single source of truth for key information. System requirements will vary by firm but may include: Human Resource Information System (HRIS), Customer Relationship Management (CRM), finance systems, and timesheet software. By integrating with HRIS, resource managers can be more flexible with staff who may request a last-minute holiday. This is because it’s much easier and quicker to assess and make decisions when there is only one source of truth unlike with siloed software. Similarly, by integrating with CRM systems, Dayshape can provide up-to-date information on incoming engagements to enable resources to be allocated ahead of the engagement beginning.

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Why choose a dedicated resource capacity planning tool?

To avoid situations where accountants are overworked and firms are understaffed, firms need to implement a long-term solution to manage their resource capacity planning.

Intelligent resource management software like Dayshape enables firms to achieve profitable engagements and outstanding client service without causing their accountants to burnout under heavy workloads.

By centralising resources in a firm-wide view, Dayshape helps to maximise a firm’s utilisation potential and resource managers can understand how much time and cost is incurred by resources per engagement. This then guides more accurate capacity planning and as a result leads to more profitable engagements. A higher level of accuracy will also allow firms to better assess and seize opportunities for new business and future growth.

By utilising reporting and other system integration, firms can finetune their capacity planning. By learning from past engagements via reporting, firms can understand where they have skills gaps and rectify this with training in advance. Similarly, by better forecasting engagements, firms can adequately allocate resources before the next engagement begins. Consequently, firms will be able to confidently deliver outstanding service for their clients.

By using capacity planning tools like Dayshape, firms have the ability to be more flexible in their approach to resource management. Suitability scoring allows work to be allocated more fairly whilst flexible completion dates empower individuals with more autonomy to decide their preferred work schedules. Ultimately, Dayshape helps firms to deliver a capacity planning strategy that is more flexible, strategic, and responsive to changing employee needs and client demands. By empowering resourcing teams in this way, Dayshape provides a solution to challenge the current capacity planning problems within accountancy.

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