Guide: Resource management [4 things you need to get right first]
For consultancies, resource management is often desired for the ability to maximise utilisation. But what is resource management? And are you ready for it?
Full insight and control over your company, more sales and maximum profit for your work.
If somebody offered these benefits to you without conditions, you would probably say yes. And when we talk about resource management these are the three main benefits.
And it can transform your company if you get it just right.
At the same time, resource management has become a buzz word among hopeful leaders. And few are really aware what it’s about and what it demands from your organisation.
In this guide, we take you through resource management and the benefits you can gain from it. But most important of all: You will learn what processes your company needs to have in place before you can reap the benefits and turn it into a positive ROI.
Let’s start with Adam and Eve.
What is resource management – in simple terms?
Resource management is your company’s Tetris game.
It’s the game you play to ensure that your consultants have enough tasks. And to ensure they have time to perform them.
With resource management, you can see what the consultants do, when they do it, and (maybe most important of all) when they don’t have anything to do.
Once you have that overview, you can sell new projects, when you have available consultants in the calendar, and have your sales team back down, whenever they are overloaded. Like in Tetris, it’s all about avoiding empty spaces in the calendar. Or avoid stacking too many projects and tasks on top of each other, so employees can’t keep up with the flow.
If you play the game right, it’ll be a genuine turning point for your company.
What’s my payoff?
The biggest and most immediate gain from efficient resource management comes from your ability to invoice more of your consultants’ hours.
Because you know when there are available spaces in their calendars, you can allocate them to customer projects in idle periods. This lets you increase the billing rate on your hours.
If you can increase the number of billable hours in a company with 20 consultants with 5%, you can invoice an additional 160 hours every month.
How much you increase revenue and profit depends on your hourly rate.
At the same time, you avoid having your salespeople say no to tasks because they think the consultants are overloaded. And they won’t say yes to tasks, the consultants don’t have time to execute on. This last issue could give your company a reputation for not delivering.
Finally, it lowers the stress level for your consultants, because the workload is realistic. If you can match the consultants’ capacity with the allocated tasks, they’re better equipped to deliver on customer projects.
This improves their job satisfaction since they don’t constantly underperform due to a paralysing workload.
Is it relevant for my company?
Whenever we talk to companies with 3-8 colleagues who is considering to use resource management, we almost always advise them not to.
If your company has less than 15 consultants, the coordination is more efficient, if you simply consult with each other. In this scenario, resource management is a bad investment.
Exceptions are accountancy firms, where each accountant balances up to 60-100 customers and have a lot of minor recurring tasks. Or agencies selling subscriptions on SEO work where they track time consumption for every single task and have made qualified time estimates.
As a rule, resource management starts to make sense, if your company has grown to 15-20 consultants or above.
If you’re wondering, whether your company is big enough, you should ask yourself: Do we have so many projects, customers and tasks that I am losing overview of time consumption, projects, tasks and budgets?
If the answer is yes, your company could benefit from resource management.
Sounds good - but are we ready?
It depends. Have you got your fundamentals in order?
Even though your company is large enough and the payoff is appealing, you need to get four fundamental things right if you want any kind of good result with resource management.
We have identified the four fundamentals for you and provide specific guidance on how to get started if you’re not quite ready yet.
1) Your company must fully commit to serious resource management
When talking about resource management, the saying “quality in, quality out” is spot on.
Resource management is only as good as the work you put into it. If the entire company is not committed, resource management will lose its value. And if you don’t maintain it, it doesn’t matter either way.
So if you’re in a company where you and half of the board would like to get better at resource management, but the other half and a large part of the consultants don’t see the meaning of it, it just won’t work.
If you implement it regardless without agreement and commitment from the entire organisation, you will never know for sure, if your consultants have time when you need them. Maybe a colleague has claimed their time outside of the resource management.
It is crucial that everyone in the company recognises the value in bulletproof and consistently used resource management.
Tips to secure commitment in your organisation
- Decide and agree with your leadership team that resource management is what you want. Build a good business case so everyone understands the purpose of the investment. Don’t start before you have reached 100% agreement.
- Involve all relevant employees in the decision making process and the implementation process. Make sure that employees who are not actively coordinating the resource management sees the exact value of it (you will see why later in the article).
- Find a level you can agree upon and don’t start out micro managing. If you start managing every single hour, the administration will be too much for many colleagues in your organisation. Agree to start on a weekly basis, so everyone can participate and gets the basic idea.
2) You need to invest
Besides investment in attitude throughout your company, resource management demands resources.
Specifically an investment in time.
If you have around 15 employees, the project managers can coordinate with each other, as long as they are using a shared system. If your company is larger than that, you should invest in a dedicated employee to coordinate tasks across consultants and departments.
In medium-sized companies, this can often be done by a part-time employee. But it requires you to allocate time to this job.
The benefits of a dedicated employee controlling the consultants time is a complete and updated overview of your company’s capacity. This means that you can always see, if you need to take in more tasks, or if your resources are too few compared to the number of tasks.
If you don’t invest the time to do this properly, you’ll put more pressure on your organisation. This is because project managers and salespeople can’t trust that the resource management system is up to date and maintained.
Tips – How do I figure out what to invest?
- Start by seeking guidance, if you haven’t done this before. There are a lot of consultants and suppliers who can get you started. By doing this you save time on hard lessons and avoid having projects collapse.
- Put it into a formula. As a minimum, well-functioning resource management will increase the number of invoiced hours with 5%. If you are 20 employees, this equals an additional 160 invoiced hours per month. How big a share of your hours can you invoice today?
3) You need to know the time consumption for tasks
In other words: You need to track time on tasks and projects. And you need to have done it over a longer period of time.
In a scenario where you plan your consultants’ time without knowing how much time tasks take to perform, you’ll constantly be pushing deadlines into the future. And when you constantly push deadlines, you can’t be sure that the available spaces in your consultants’ calendars are anything but wishful thinking.
If you constantly under-estimate time consumption by 20%, you cut off 20% of your revenue. And you constantly have to postpone new projects. If you over-estimate time consumption, you will be saying no to projects you are actually able to take in.
This is why you need to build an experience base on how much time you can expect different tasks types and projects to take. When doing this it isn’t enough to go with your gut feeling as it will be off 9 out of 10 times.
But if you get your consultants to track time on projects and task types, and you collect the time registrations in a structured way (!), you create a catalogue of realistic time estimates.
It varies from company to company how long you need to gather experiences. And it also depends on how detailed you’d like your resource management to be. But start now and evaluate in six months to see, if you can determine time estimates for your tasks and projects.
Besides giving you an overview that lets you optimise the way you execute on projects, you now have a database of time consumption that can provide you with the ammunition you need to do detailed and exact resource management.
Get it right and your customer deliverances will be more timely, your budgets will be more realistic, and the consultants can execute to their own satisfaction within the given framework.
Tips – How do I gain an overview of the time consumption?
- Start your time tracking today. Get the consultants on board so they understand why it makes sense to them.
- Invest in a time tracking system. TimeLog offers free time tracking, which allows you to get started right away.
- USE the time tracking and gather your experiences. It’s the fuel for your resource management, and it provides valuable feedback for the pricing of projects and to the consultants.
- Start now and evaluate in six months.
4) – Use a dedicated resource management tool
Excel is good for many things. But not for resource management.
The problem with managing time and resources in Excel almost always appear when your overview crumbles beneath you. That’s because there is no coherence between time tracking, the consultants’ workload, budgets and invoicing of customers.
In Excel your challenge is; how do you link your consultants’ time tracking with the resource management in a way that prevents errors from happening, and provides you with an effective overview?
In reality, it never works.
But if you work in a system built specifically for resource management, you get coherence between all the elements. You save money on hard lessons learned building your own system based on Excel sheets. And you get a system which you and your consultants can trust and provides your management team with a good overview of every employee.
Tips – How do I find a resource management system that matches my company?
- Read articles online about resource management or use software portals like Capterra. Often associated systems will be mentioned, and at Capterra you also get user reviews.
- Be critical towards the suppliers and investigate whether the system matches your organisation. All systems are different. And if you invest in a system that doesn’t match your company, it may do you more harm than good.
- Seek guidance. There are many consultants with experience and other companies using different systems. You could also simply ask your LinkedIn network.
4 x yes – let’s get started!
If you have your four fundamentals covered, resource management will boost your company with better planning, higher profit, more satisfied customers and better dialogues. And you’ll have more satisfied consultants delivering satisfactorily within realistic expectations.
You can learn more about TimeLog’s resource management here.
If you’re still a bit in doubt about if it makes sense to your company, then just start getting 3 and 4 right in preparation for resource management by e.g. using time tracking and getting better insights on your projects and tasks.
This has several benefits in its own right.