Many companies are currently looking for cost optimization ideas in response to the global pandemic and its economic consequences. When trying to minimize HR costs, teams decide to implement hiring freezes or using their HR technology more effectively, all in order to stay profitable and avoid layoffs. In the spirit of making better use of available technology, we want to show you how businesses can cut business costs with resource management.
Our tips will work for many different verticals, but companies that work for multiple clients at a time (agencies, consultancies, software houses) will perhaps find them to be especially helpful. It’s the case because when you juggle several projects simultaneously, planning and managing resources is very challenging.
First, let’s define resource management.
What is resource management?
In our guide to resource management, we defined it as making the most efficient use of finite resources given at your disposal. What kind of resources are we talking about? People, of course, but also pieces of equipment, rooms, vehicles, or something else depending on the nature of your business. In this blog post, however, we’ll focus on human resource management.
Making the most efficient use of your resources means that you utilize them efficiently, allocate the right people to the right projects, and analyze your team’s work to find optimization opportunities. These steps are crucial to cutting business costs, as you will see in the next couple of paragraphs.
Using a good resource management tool will help you tremendously. Of course, the app won’t do all of your work for you, but it will allow you to do things efficiently, saving time and money in the process. In this blog post, you’ll see screens from Teamdeck, an app used by teams worldwide.
How will effective resource management help you save money?
Developing Teamdeck, a complete resource management app, we often talk with our clients about the effect resource management has on their budgets.
Apptension was one of the first companies that used Teamdeck to plan and manage their employees’ work. Piotr Bandosz, Apptension’s Head of Finances and People, told us:
Without Teamdeck, we’ve been wasting $11,130 in employees’ time monthly to deal with common managerial struggles. Teamdeck helped us to reduce this waste to $1,249.50, which saves us $9,880.50 a month.
Apptension is a 50-people team, so if you’re running a larger company, you can expect even more savings. How is that possible? Let’s jump into details – how do you save money when you implement resource management?
Improved resource utilization
Why is resource utilization so crucial? In short: it benefits both the employer and employees. Think about underutilization, for example. People waiting on tasks generate costs for the company but may also become very frustrated themselves. On the other hand, overutilization may lead to employee burnout and extra costs for the employer if you pay more for overtime. It’s quite simple: with optimal utilization, you don’t generate unnecessary costs, and your team members can enjoy a balanced workload.
Resource management is key to maintaining good resource utilization. It requires you to pay attention to resource planning and assigning work to employees that can take on more tasks. When you see all of your team members’ bookings in the resource calendar, it’s much easier to spot people who are under- or overutilized.
Better project profitability
One of the reasons why resource management affects projects’ profitability is that it helps you to pick the best people for a given task. It seems easy enough when your team is, say, ten people. But what if you’re managing 200+ employees?
Resource management apps like Teamdeck give you a good overview of the talent pool. You see who is available to join a new project, but you can also filter your team members by skills, job seniority, or location. When the best possible people are working on a project, it’s more likely to be successful.
Still, even if your top talents manage to deliver the project within the deadline and budget, it may turn out that it’s barely profitable. It all boils down to the budget you agree on with the client and the billing method.
For instance, when you bill by the hour (time & material), it’s worth analyzing your team’s billable and non-billable time. Time tracking is an important aspect of resource management. It allows you to make improvements on the personal level (e.g., readjusting one’s workload) and on the project or even organization level.
Go into your team’s timesheet report and see what’s the breakdown of billable vs. non-billable hours. Then, take a moment to think about how you can improve the ratio to your favor. For example, you may notice that your project teams spend a lot of time in lengthy all-hands meetings or on admin tasks like project reporting. You’ll literally see where you’re losing money.
How can you fix this? Improving your company’s internal processes is one idea. Another one would be to approach future budgets differently and, for instance, allocate a bigger buffer.
Eliminating unnecessary communication
Communication is critical, especially for companies that made a switch to remote work. If you’re in this situation, you might want to check our blog post on effective communication for remote teams.
However, it’s also true that communication can be frustrating and time-consuming. Example? Imagine that you’re in charge of a team and have the following conversation with your colleague:
- Can I take a day off next week?
- Let’s see. How much time off allowance do you have?
- No idea, but I had already taken some sick leave last month. Am I still ok with taking a personal day?
- Let me ask the HR team and get back to you.
Yet another example is when people aren’t sure what they should focus on in a given day. It may sound surprising, but this is not a rare occurrence, especially for roles that support multiple projects in a week (e.g., illustrators, DevOps specialists).
It seems innocent enough, but similar conversations can take up hours from your employees’ weeks. Wouldn’t it be great to eliminate these back-and-forths and instead have efficient systems for planning and managing work or vacation time? That’s where resource management tools come in handy.
When your team is committed to resource management, it’s easy for employees to check their priorities for upcoming days. Vacation allowances and requests can also be handled in a frictionless way. You save money as a company, and your team member can focus on communication that matters to them.
Accurate resource forecasting
Have you ever gone through an expensive recruitment process only to hire an employee that didn’t have that much to do after all? Or perhaps you secured a couple of projects only to realize that you don’t have enough capacity to deliver them and had to hire freelancers or outsource teams for an extra cost? Both scenarios could have been avoided with resource forecasting. It means that you try to predict how many resources you will need and when.
How can resource management help you with human resource forecasting?
First of all, your managers have better visibility into your team’s capacity and current workload, so they can plan the production pipeline accordingly. Secondly, you can analyze historical data from your team’s timesheets to identify patterns. For instance, many agencies experience a seasonal resource demand: there are months when there simply is more work. Knowing this in advance allows you to prepare for a resource shortage and start a recruitment process or negotiate a better deal with an outsourcing company. This way, you’ll optimize your spendings and be able to plan finances better.
Is resource management expensive?
When facing a crisis, your first instinct might be to put a cap on spending. Investing in a resource management app might seem counterintuitive when you desperately want to save money, right? In reality, as long as your managerial team is committed to effective resource planning and management, the return on investment should be high.
Take Apptension, the company that estimated they save $10k every month thanks to Teamdeck. How much do they spend on it? A license for one person costs $3.99, so a 50-person team pays $199.50 each month. As you can see, it’s just a fraction of the savings they’re able to generate because of the effective management of their resources.
Wondering what would the return on investment be like for your company? Let’s chat about it! Book a consultation with us: we’ll discuss your resource management needs and show you how Teamdeck can help you cut business costs.