How to Combat Signs of Resource Underutilization in a Firm?

Are your employees sitting idle for extended periods?

Failing to meet project deadlines despite having competent resources?

Is your firm witnessing high attrition rates?

If your organization is grappling with these challenges, it indicates underutilization of resources. If not addressed promptly, it can negatively impact the organization’s profitability and sustainability.

Therefore, firms must identify the telltale signs of resource underutilization and take appropriate measures to mitigate them proactively. This will help improve employee engagement, ensure timely project delivery, and maximize ROI.

This article covers some key signs of underutilization of resources, the strategies to combat them, and how the SAVIOM ERM tool can help.

Let’s begin!

2. Significance of optimal utilization of resources

Resource utilization is a critical KPI that helps firms measure how effectively the workforce is utilized against their availability or capacity. To ensure optimal workforce utilization, managers must gauge the available capacity of resources and assign them to tasks and projects accordingly.

Failure to do so can lead to sub-optimal resource utilization. For instance, if resources are over-utilized, it can lead to burnout, poor performance, etc., and reduce the work quality. Conversely, when resources are underutilized, it indicates that their skills are not leveraged appropriately, resulting in low morale, disengagement, demotivation, etc.

As a result, managers must ensure optimal workforce utilization, which will enhance productivity and ensure that the resources are used to their maximum potential. Furthermore, as the right resources are utilized for the right jobs, it will ensure the timely delivery of quality projects, improving the profit margins.

Now,let’s look into some signs and best strategies to overcome underutilization.

3. 5 signs of underutilization and ways to overcome them

Resource underutilization occurs when the employees are not utilized to their full potential. This can negatively impact the organization’s performance, lead to client dissatisfaction, and hinder the business’s success.

Here are some critical signs of resource underutilization to look for and how modern resource management software can help overcome these challenges:

3.1 Extended bench time of employees

According to a Business Today report, there was a 20% increase in bench size in IT companies and an 80% decline in utilization.

An increase in the bench size indicates that a significant number of employees are not working on billable projects, resulting in revenue losses for the organization. This happens when managers lack the foresight into ramp-down activities and cannot assign employees to suitable work before they are released from their current projects. Besides, when these resources are on the bench for a prolonged period, it dampens their morale and may lead to attrition.

How to resolve this issue?

With the forecasting capability of an advanced resource management tool, managers can foresee the ramp-down activities and assign the rolled-off resources to appropriate work before they hit the bench. In addition, with the help of project vacancy reports, managers can identify opportunities within the pipeline projects and allocate resources from the bench accordingly. Besides, if the employees lack the required skills, firms can provide the necessary training and development programs to enhance theirbillability.

3.2 Failure to meet project deadlines

When managers fail to assess the resources’ skills and competencies before assigning them to tasks, it leads to a skill mismatch and incompetent allocation. Further, this lowers their productivity and morale, eventually leading to their underutilization. As a result, it can hamper the project’s progress and lead to budget/schedule overruns.

How to mitigate this sign?

Managers should leverage a robust ERM software’s chart view and the multi-dimensional scheduler to gain comprehensive visibility into resources’ skills, capacity, availability, bookings, allocations, etc. This enables managers to match resources with suitable opportunities effectively, ensuring projects stay on course and achieve all milestones as per the predetermined timeline.

3.3 Poor employee productivity and engagement

Imagine a scenario of an IT firm where the manager hastily assigns a resource with basic Java skills to a high-priority pipeline web development project. As the resource lacks appropriate proficiency, it results in decreased productivity, leading to work inefficiencies and potential setbacks in project execution.

How to avoid such situations?

For this, managers can use ERM forecasting and capacity planning capabilities to foresee upcoming project resource demands and skills in advance. As a result, they will be able to identify skill gaps and implement necessary resourcing treatments proactively. This will help allocate resources to productive work based on their skills, competencies, capacity, etc., thereby improving their engagement and job satisfaction.

3.4 Sub-optimal billable utilization of resources

When team members are constantly deployed to non-billable/admin tasks for a prolonged period, they may feel their skills and competencies are not being fully utilized. This will decrease their motivation, leading to disengagement and increasing the likelihood of them exiting the firm.

How to combat this?

Here, managers can leverage BI-enabled utilization reports and color-coded heatmaps to assess the percentage of time resources are spending on non-billable tasks. Accordingly, they can mobilize them from non-billable to revenue-generating activities. This will help improve the profitable utilization of the workforce and enhance their productivity.

3.5 Surge in unplanned absences and attrition

Sometimes, even when employees are competently skilled, they get overlooked because managers do not have complete visibility into the workforce. As their skills go untapped, employees become dissatisfied, which can lower their morale. This can cause a surge in frequent employee absenteeism, eventually leading to unplanned attrition.

How to resolve this issue?

With a real-time competency matrix, managers can easily gain insight into the skills of the workforce. This will help them assign the right resource to the right task based on their skills and interests, ensuring optimal workforce utilization. As a result, it can improve the retention rate of employees.

These are some crucial signs of underutilization to watch out for and how implementing an ideal ERM tool can provide effective solutions.

5. Conclusion

People are an organization’s success drivers. If they feel that their skills are not appropriately utilized or given opportunities to advance in their careers, they may feel unappreciated and discouraged. This can hamper their performance and productivity. Therefore, firms must proactively identify the signs of underutilization and adopt a futuristic resource management tool to address these issues and improve overall business efficiency and profitability.

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