What is under-utilization and how can it be avoided?

What is underutilization, and why do we seek to avoid it? We’ve got some answers for you, as well as tips on how to put an end to underutilization in your organization.

It’s likely that some of your staff are complaining about their heavy workload. On the other hand, others are simply not up to the task. If you see such an imbalance in resource use, it’s likely that you’re not making the most of the work capacity of some of your employees, and adding too much work to others. And if you don’t, customer work will eventually suffer, some staff will burn out and others will become demotivated. Not sure how to identify the culprit and start controlling performance and its negative effects? This guide outlines the signs of underutilization and how to reduce it.

What is underutilization in a service company?

As the word suggests, it is the inefficient utilization of resources in a service business, resulting in reduced profits.

Essentially, these resources include both human resources and the tools used to manage the business. However, the main focus is on human resources.

In other words, when employees have more free time, they are not reaching their full potential. For service companies, this is a problem, because staff are their most valuable asset, and exploiting them to their full potential is essential to achieving a return on investment.

 

The problem of under-utilization

In that, employees’ unique skills and working hours are not fully exploited to achieve company objectives. As a result, it has a negative impact on sales.

But that’s not all. Underutilization also has an impact on the staff themselves. A worker who spends more time on the bench, for example, ends up demotivated and bored. Productivity levels also end up suffering.

If this underutilization of capacity continues, your chances of retaining workers will also diminish.

3 signs of under-utilization

Now that you know the definition of underutilization and its impact on the company and employees, let’s look at how you can identify it in your agency using the following signs:

• Deadlines not met

One of the key benefits of optimal resource utilization is that it allows timelines to be met in a consistent and predictable way.

But if you don’t, missed deadlines are often one of the first signs you’ll start to see, potentially damaging your organization’s reputation and reducing customer satisfaction.

Members of staff are not assigned to tasks according to their skills. This not only results in projects not being delivered on time, but also in lower productivity levels and budget overruns.

• Reduced employee morale

It often occurs when a handful of team members are permanently assigned tasks, while others remain underutilized.

As a result, you’ll begin to see burnout among certain employees, teams, or departments. Conversely, underutilized staff and teams will be dissatisfied with their daily workload. Lack of concentration and enthusiasm are also common;

All this leads to a drop in employee satisfaction, which, if left unchecked, can have repercussions for your company;

It’s also worth mentioning here that the same problems arise when work is not distributed according to skills. Or when team members are entrusted with similar projects that do not involve them to any great extent, which ultimately undermines the quality of the work.

• Reduced profit margins

When each employee is properly utilized, more hours are devoted to project completion.

What’s more, employees are also more committed. In other words, they deliver better quality work—often in fewer hours. This enables the company to increase customer satisfaction

How to avoid under-utilization?

Whether it’s a matter of resource management or understanding workers’ capabilities and filling gaps in skill sets, there are many elements that can help you avoid underutilizing your resources.

Let’s unpack these tactics:

1. Thorough resource planning and management

First of all, effective project planning is essential to prevent and reduce underutilization. You need to determine precisely what work needs to be done on each project, what competencies are required to complete those tasks, and what resources will best accomplish the job.

 

Fortunately, using Teambook for capacity management gives you an overview of your resource pool. It gives you an overview of current objectives and available resources.

What’s more, by noting each worker’s capability and adding relevant tags to the software, you can easily assign objectives based on competencies.

In fact, Teambook can easily provide you with in-depth information on each worker – from their workload to their utilization, to help you allocate work  accordingly.

What’s more, the group utilization chart gives you an overview of everyone’s schedule. So you can see who’s working on what, and for how long.

The best part? This resource calendar is modifiable.

In other words, you can use the board in real time to create new assignments and modify workers’ schedules according to the latest projects in progress, making it easier to deliver the project on time and manage resources optimally.

2. Track time to understand how your employees spend their time

In addition to planning to optimize utilization, it is also important to monitor how your team actually spends its time.

In this sense, integrating tracking software into your workflow will provide you with accurate information. However, manual  tracking can be difficult. It’s therefore important to put in place the operational procedures for doing so, and also to facilitate timesheet entry, for example, by copying planned data as a baseline to actual hours, as Teambook enables. In this way, you and your team will only have to modify the slots for which the actual involvement is different from what had been planned.

You’ll know not only what tasks members are working on, but also how long it took them to complete them.  ;

What’s more, Teambook lets you easily capture and track billable and non-billable work. 

3. Use time reports to track resource utilization rates

Advanced tracking software comes with reporting functions. These reports give an overview of how each resource’s userate is compared with their expenses and revenues generated.

With Teambook’s reports, you can also view and compare the planned utilization rate of your staff, with the rate actually achieved.

In addition, you can use the report to predict when team members will have free time and how best to manage it. Use this information to accept new customers, plan training sessions for workers, and understand who is overutilized.

 

4. Get feedback from employees to improve engagement

Use employee satisfaction and engagement surveys and one-to-one interviews to get their views on their workload and responsibilities. From there, identify areas for improvement. Practice what you learn to redistribute responsibilities.

Also, use the forecasting capabilities of your resource management tool to block off time for employee development. This will fill expertise gaps, reducing the employment rate of a few high-performing employees.

Indeed, add the results of your employee surveys to better identify skill gaps and employees in need of training.

Ready to reduce underutilization in your company?

 

In short, the optimal use of resources is essential to the success of your business and the satisfaction of your customers. It also plays a key role in increasing your profits and building a solid reputation for your agency.

To control underutilization, start by tracking time to create a employment report that will enable you to identify areas for improvement. Find out how Teambook can help you improve the performance of your project resources and increase the profitability of your business!