For many businesses, labor is considered the most critical resource. That’s why wages and salaries comprise the main line-item expenses for the bulk of small and mid-size enterprises. Being the greatest and most expensive asset, human resources should be the principal differentiator between profits and losses. Although this is widely understood and accepted, most businesses only utilize standard statistics in employee management.
It’s almost impossible to assess and strategize on human resource management if your organization doesn’t break down the time statistics into the simplest, most essential foundational structures of productivity. Employee utilization, for instance, should be one of the core informers of an organization’s decision making process.
According to the Business Dictionary, employee utilization refers to the ratio of the total number of billable hours worked, to the expected output. Most full time employees are expected to work for about 40 hours a week. Therefore, an individual who only puts in 30 hours in such a structure has a utilization rate of 75%.
Of course this may not seem like a problem at all for most companies- until you catch the gist of the actual figures. The AE Clarity Report published by Deltek places the average employee utilization rate at 59.8%. In other words, organizations are operating at almost half their capabilities. This has serious consequences for organizational efficiency and profitability.
The only way to reverse this is ensuring optimal efficiency by boosting overall employee utilization. Here are some useful pointers on how to effectively achieve this:
Set Realistic Employee Utilization Targets
Of course we all wish employees had the efficiency of a robot. Never stopping, just pushing on, and on. But, as science has informed us, human beings have a shorter attention span than a goldfish. So expect your workers to zoom out of their tasks once a while. Maintaining a consistent 100% work rate for hours without taking a break is humanly impossible. Do your best to satisfy the demand within each person's target utilization range. This is a really important point to remember!
Engage your employees and consult them to come up with a realistic shift schedule and, subsequent expected utilization. Make time logging easy, empower your employees with the knowledge and encourage all of them to participate in time keeping. This will not only give them higher morale for their jobs, but also grant them sufficient flexibility to focus on other non-production (yet still essential) initiatives like team building, staff development, and business development.
Allocate Resources Accordingly
All project tasks require resource utilization to some extent. For maximum productivity, you should delegate an optimal number of team members with sufficient availability and skills to the variety of projects both live and due to begin soon.
That’s fairly obvious - the harder questions to answer is how does one do that? There are a variety of resource planning tools available. It’s up to you to find the one with the feature set that you think satisfies the demands of your organization. (Allocate has one coming soon!)
Train Employees Adequately
Even crowned Olympic champions keep training to continually improve their performances. As a matter of fact, most champions have been documented as training much harder than their weaker opponents. Similarly, all employees, including executives with senior credentials, should occasionally undergo training to boost their overall productivity.
Consider paying for training courses for your employees on websites like Coursera and LinkedIn’s Lynda. Not only will this help employees gain new skills and deliver higher quality work more efficiently, it will also show that you care about your employees’ professional growth.
A study by the International Journal of Science and Research found that strategic employee training is greatly beneficial to both organizations and trainees. So encourage them to actively participate in the process, as part of their individual career development goals.
Leverage Real-Time Time Keeping Software
First things first- it’s impossible to understand employee utilization without the backing of a solid time keeping system. And not just any system. It should be real-time, automated software that is able to grant you instant tracking of projects and tasks as they occur. That way, rather than knowing employee utilization figures after the information is relevant, you’ll have such data when you can still take action on it.
Unfortunately, an overwhelming majority of organizations are still yet to leverage the latest, most refined tech tools- at least according to Staples. Apologize for the seemingly bizarre source, but their report states that 75% of employees in the U.S don’t believe they have access to the right efficiency boosting tech. That’s rather surprising, since most of these tools are conveniently available through the web.
Finally, as the age old phrase goes, “you can’t manage what you can’t measure”. Only by understanding something like utilization, can you actually work to improve it. We think we can help with this at Allocate. Drop us a line at email@example.com if you want to chat!