Utilization is a loaded term in the professional services sector. Decision-makers get excited when discussing utilization because they often face demand to maximize every bit of resourcing they have available to improve the bottom line. We talk about strategies for maximizing resource utilization a lot on this blog (because it is what we do every day), but there really are two sides to the story. A discussion about utilization management in the service industry must also address the human factor. Companies that want to take their efficiency gains to another level should ensure their management efforts emphasize employee engagement, not just resource optimization.
The Human Resource Problem
Professional services firms face a simple issue when it comes to getting the most value possible out of their staff – project demand can fluctuate based on a variety of factors, whereas staff availability and productivity remains fairly constant. Sure, hiring some freelancers is always an option, but that is a stopgap that creates its own set of problems. Organizations that want to avoid discrepancies between capacity and contracted work need visibility into every phase of operations.
The highest performing professional services firms have this process figured out. In a recent professional services benchmark report from analyst firm SPI Research, the best firms enjoyed billable utilization rates 14% higher than their peers did. At the same time, these professional services firms experienced voluntary attrition at rates 10% lower than their peers did. The highest performing firms all use their professional services management software as the foundation for their operational success. These strategic tools give leaders:
- A clear view of supply and demand – Understanding how many hours have been contracted and how much capacity the firm has to deliver allows managers to level the burden across team members to avoid burnout.
- A platform for people and project matching – Integrating skills, abilities, and preferences with the scheduling process promotes the staffing decisions from focusing on who’s available to focusing on who would thrive by performing the work.
- A real-time view into profitability – Don’t forget the numbers! Visibility into mid-project profitability arms managers with the information they need to adjust the staffing mix. This ultimately results in more successful projects and happier project teams.
These types of utilization management capabilities give professional services firms the top-down visibility they need to manage resources effectively. Taking these benefits to another level then becomes possible as utilization management tools enable leaders to not only maximize efficiency, but align the right projects to the right people to drive employee engagement. Balancing these quantitative and qualitative aspects of resource scheduling can have a dramatic impact on employee performance. A worker who is motivated and productive will be much more valuable on a project than somebody who is just clocking in, getting the job done and clocking out.
Using Utilization Management Tools to Foster Employee Engagement
Resource utilization is a key topic in the employee engagement conversation because how workers are deployed on a day-to-day basis can have a huge impact on their job satisfaction and performance. Business strategy expert Lisa Lai contests that leaders in many organizations are still in a situation in which they need to either use rewards or fear as their primary ways to motivate employees. These tools can be effective, but they also turn the management team into compliance officers, something that can quickly derail productivity and engagement. Showing employees that you are tracking their efficiency with greater scrutiny, for example, may sound good from a utilization and motivation standpoint, but it may not actually help with engagement.
Instead of using the carrot or the stick, Lai recommends that managers find ways to make employees feel great about their work. This can be done in a few key ways including:
- Keep workers connected to the greater context and relevance of the projects they are working on –Communicate information about project or team performance through dashboards specifically designed for professional services firms. These dashboards, which can provide a strategic view at multiple levels of the organization, help connect employees with their work and that of their colleagues.
- Anticipate the kinds of problems that workers can expect and work to get ahead – For example, a talented employee who has to spend the better part of a month working on non-billable projects can feel slighted and disgruntled. Managers with a top down view into employee activities can identify workers that are operating in such a situation and reassure them of the importance of their project.
- Consistently identify positive contributions – Managers looking at utilization-related data can take the time to see which workers are consistently coming ahead of schedule or under budget on projects and take time to recognize those employees.
Using professional services utilization management tools to gain a greater understanding of employee circumstances and responding accordingly can be invaluable in engagement efforts. Ryan Fuller and Nina Shikaloff, in a recent Harvard Business Review article, explain that many organizations simply define engagement in a broad sense and work toward it, setting themselves up for lost value. However, the organizations that can measure what an engaged, productive worker looks like can identify the relationship between work satisfaction and productivity in their specific operational setting. The utilization management tools available within a professional service management platform help organizations understand the correlation between utilization and engagement and adjust their management strategies in response.
How Engagement Provides a Competitive Edge
The core idea of employee engagement is simple. When workers feel like they are utilized appropriately based on their skills, resources and goals, they are likely to be more productive. Businesses that find success utilizing and engaging workers may end up with a greater competitive advantage than they expect.
Inspired workers tend to be three times more productive than dissatisfied employees. However, only one in eight workers in a typical company is inspired. Furthermore, businesses are in a war for talent as most companies would only consider 15 percent of their workers to be difference makers.
The competitive edge that organizations gain by having an engaged workforce manifests itself in a myriad of different ways. A few of the most measurable benefits include:
- Increased cross-selling – Disengaged employees will often perform as little work needed to complete the job. Passionate and engaged employees will not pass up opportunities to help the company succeed.
- Greater client satisfaction – Client satisfaction is not just a measure of the outcome of a project. Clients will also be measuring how responsive and easy the project team was to work with. A team of engaged employees will tend to take more ownership over there work, respond faster and with more detail to clients, and ultimately be easier to work with.
- Lower employee attrition rates – Engaged employees tend to stay with a firm longer, resulting in lower attrition rates. The obvious result of this is lower hiring and training costs for the firm. While lower costs do contribute to a competitive edge, the retention of domain knowledge is what differentiates a firm from its competition.
In essence, engaged employees are more productive – creating opportunities for a stronger bottom line.
Failing to optimize utilization within the workforce isn’t just a problem of resourcing, it is also a problem of people management. Organizations that invest in tools to maximize the value and engagement of their workers can set themselves apart in the battle for top talent and glean greater results from the workforce as a whole.