December 19, 2022
General
10 minutes
Iryna Viter

9 Golden Rules for Effective Resource Management

Looking to get more value out of your resources and drive greater success for your business? Aim at effective resource management.

Effective resource management is critical for any professional services business that wants to achieve long-term success. By carefully managing and allocating its resources, a business can reduce costs, increase efficiency, improve the quality of its products or services, and become more agile and competitive.

In this article, we will delve into the key principles of effective resource management and explore some practical strategies that businesses can use to manage their resources more effectively.

What is effective resource management?

Effective resource management, simply put, is all about using your people right to deliver the best ROI outcomes for your business. After all, your resources are the ultimate generator of income for the company, but they can also be the biggest expense, especially if you don't manage them right. Approaching your resources intelligently is, therefore, about striking the optimal balance between what resources cost and how much revenue they generate. 

It's like playing chess, in a way. An effective resource manager will have taken into account all possible ramifications of any given move before making it, so that they can make smart decisions off the bat and avoid headaches later on.

Why is effective resource management important?

Effective resource management can help a business achieve a number of goals, including:

  1. Cost savings: By carefully managing resources such as materials, labor, and equipment, a business can reduce waste and lower costs.
  2. Increased efficiency: When resources are managed effectively, it can help a business operate more efficiently and get more done with fewer resources.
  3. Improved quality: By allocating resources appropriately, a business can improve the quality of its products or services.
  4. Greater agility: Effective resource management can help a business respond more quickly to changes in the market or the competitive environment.
  5. Enhanced competitiveness: By managing resources effectively, a business can gain a competitive advantage over its rivals.

Overall, resource management can help a business improve its bottom line and become more successful in the long term.

Whether with one employee or a hundred, an effective resource manager will make sure that no resource is wasted and every aspect of their operation can be maximized.

According to a recent report by Professional Services Maturity Benchmark, the bigger the firm, the more they focus on effective resource management to increase their billable utilization and make sure employees don't waste time working on non-billable tasks.

What are the key elements of effective resource management?

There are a lot of resource management principles that can help you improve the way you handle resources. When considering how to manage resources in the most effective way, it's easy to get bogged down in details and lose sight of the big picture. But in order to keep things as simple and as organized as possible, try to keep these key elements in mind, as they make the building blocks of good resource management.

1) Prioritization

To successfully manage resources, you need to make sure that there's always a clear understanding of what comes first and what comes second. In project resource management, you need to set clear priorities on what projects are more important or have shorter deadlines, what resources are in high demand, what experts need to be hired, etc.

Having a plan B, which largely relies on prioritization, is the best way you can avoid scope creep and protect your projects from running over budget or getting finished late.

A research by McKinsey found that companies focusing on and investing in strategic prioritization tend to deliver 40% more value. Knowing where your priorities lie is, therefore, the recipe for effective resource management tactics.

Recommended reading: How to Prioritize Projects (When You’re Understaffed)

2) Transparency

It is important that everyone within your organization understands exactly how resources are limited and why decisions are made regarding their use. Transparency builds trust and confidence among team members allowing them to work together more efficiently.

Also, transparency creates an opportunity for those working with or for your company to provide valuable input about the allocation of resources which will improve the effectiveness of resource use overall.

3) Technology

Resource management tools generally aim to give you more visibility into your resources and take guesswork out of the picture. And above anything else, resource management is a lot easier to do when you use good tools.

effective resource management
Runn is a dynamic resource allocation tool that provides an overview of everyone's workload on projects. Track time, utilization, and forecast capacity in one tool.

It's possible to get by without resource management software, but then you risk forgetting about a project and leaving someone hanging, or you might grow frustrated with how much time it takes to track everything.

Hint: Why Resource Planning in Excel Isn't Sustainable

9 rules to master effective resource management

Now that you know the key elements that hold the foundation of effective resource management, here are some of the most effective rules resource managers employ.

1) Don't expect resource management to have a finish line

Resource management is not a time-bound project you can hand in at the end of the month. In fact, it is a never-ending process.

Whenever you're finished with one thing, another will come up to take its place. The truth is that effective resource management doesn't have much of an end goal — it's something you need to be doing consistently so that you're always on top of your game. With the right processes in place, it becomes second nature, which means you can spend more time on the big picture and less time dealing with the smaller details.

2) Identify your 80/20

This rule has already taken many shapes. But in resource management speak, it means that 80% of resource constraints come from 20% of your overall resource pool. This usually happens because those 20% are in high demand, their skill sets are most relevant to your projects, and their availability can disqualify your resource management process in a matter of a few days.

So how do you work around this?

By accurately pinpointing those 20%, you can identify the most appropriate resources to hire and expand your options there. That way you will ease their workload and avoid many project lifecycle risks.

3) Streamline resource planning and scheduling

Resource planning and scheduling can be a tricky job, especially when you're working with a team to get things done. And the bigger the team, the harder the job.

Frequent changes will be made to the schedule, which has an impact on all the stakeholders involved — the people in charge of making sure the schedule is running smoothly, and the people who are waiting for updates to stay on schedule. Unfortunately, the only way to make sure that the schedule runs as smoothly as possible is to just keep updating it until it does.

A good resource management system can really cut down on the need for frequent updates, however. The idea is simple here: you have everything you need whenever you need it.

4) Never forget about the power of proper resource allocation

Too many businesses focus on just filling holes with whoever is around or whatever is at hand— they don’t have time to plan out what resources they need and when they need them, which leaves gaps open. This often leads to overworked teams because people are still being asked for things even when it looks like they can’t get it together.

Having visibility over all the resources at your disposal is a tremendous tool for project and resource management. Using this power properly allows you to see when you might be missing people; For example, if a deadline is looming and you know there’s going to be a crunch time where you don’t have enough engineers or designers available to meet the demand, or if a certain product is lagging behind because there aren’t enough salespeople to reach out and make connections.

5) Know your resource utilization

optimize resource utilization with resource management software

A key element of effective resource management is monitoring resource utilization, which is one of the top resource management KPIs.

What does that mean? Simply put, it’s taking note of how much time and effort your team members are spending on your projects. Whether they are working on billable or non-billable time, and identifying planned vs actual utilization.

Going into a project without knowing your team’s capacity is like trying to drive a car without knowing how many gallons of fuel you have in the gas tank — you might be able to get started, but you won’t know when you run out.

6) Account for non-billable time

billable vs non-billable helps when managing resources

When it comes to managing projects, there’s no such thing as an “extra” minute. Your team members will always be doing relevant tasks, but not all of those tasks are going to be billable.

Non-billable time is any time spent on project work that does not result in an invoice. Effective resource management requires an understanding of where your resources are spending their time, especially those that aren't being billed.

To optimize resource allocation and utilization, it's important to make sure your people are delivering maximum value through billable work. Don't let them waste time on admin duties or become overworked because of a heavy workload.

7) Develop a prioritization plan

Effective resource management needs a bottom-up prioritization plan.

To ensure that tasks are addressed in a timely manner and that you are able to meet deadlines, it's important to prioritize various requests, special needs, organizational goals, and final deliverables.

When you are developing this plan, it's important to think about how much effort any particular request or task will take and whether it is urgent or important enough to be addressed immediately.

Many people think that a certain project will take only a few minutes to complete, but these requests end up eating into your schedule and becoming obstacles for effective resource management. By prioritizing your tasks and scheduling in an organized manner, you can allocate resources more effectively.

8) Stay ahead of your resource availability

project managers forecast their resource availability

When it comes to resource management, it’s key to have an accurate and reliable resource forecast available. Otherwise, you might find yourself in a position where your resources aren’t being used as effectively as they could be. For example, if one of your employees is in high demand, but this isn’t reflected in their diary, you might find that you're using them less than efficiently.

In this case, it's also important to remember that all resources are not created equal. There may be certain people whose skills and talents are so valuable that you need to go out of your way to ensure that they're properly utilized.

9) Value your resources

To ensure effective resource management, it is important to value your resources. When people feel passionate about the work they do and are given opportunities to learn new skills, they are likely to perform well.

You should find out what your team members enjoy doing, what kind of projects they are interested in, and their skill levels. By doing so, you can match team members with the right projects and tasks.

Rewarding people for a job well done is also important; it lets them know that their efforts are valuable to the project. So don't forget to credit where it's due!

Final thoughts

Resource management is essential for survival.

In fact, the success of your organization depends on it. We are surrounded by a world full of resources that we need to manage effectively in order to survive. When we look at the business environment, resources are the lifeblood of organizations and if you don’t have enough or control them effectively you won’t succeed.

It's important to learn effective resource management because the resources are often limited, and what you do with them matters.

Ready to see what you could do to lead the game? Book a demo with Runn today!

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