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Overutilization: Know the Dangers of Overworking Your Team

Is "going the extra mile" all the time pushing your team a bit too far? Learn about the dangers of staff overutilization, and smart ways to avoid it.

Employees are the most critical resource in your organization, so it pays to treat them well. Yet, in the culture of many businesses, team members are often expected to go the extra mile to help get a project complete. And there's nothing wrong with that, right?

Well, it turns out that's not always such a profitable strategy. While the occasional challenging project might boost team morale as a mutual achievement, routinely overutilizing your staff has a negative impact on your business.

In this article, we explore how employee overutilization occurs, the dangers it presents to your team, and how to prevent it.

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What is overutilization?

Overutilization refers to a situation where an employee's workload exceeds their capacity, based on the hours they are contracted to work. Depending on the time period you're looking at, overutilization could relate to one unusually busy day, or indicate an ongoing pattern of unsustainable heavy workload.

An employee's utilization rate is a crucial metric for project managers to monitor, to ensure effective resource management. However, a high utilization rate consistently approaching or even exceeding 100% indicates that the employees are overworked.

Overutilization has become standard due to the "always-on" digital mentality, and many employees face difficulties in attaining a healthy work-life balance. Overutilized employees are more susceptible to burnout, and the company can suffer when a feeling of fatigue creeps into work processes, reducing productivity and compromising quality of outputs.

How does overutilization happen?

While companies want to get the most out of their staff, few set out intending to overload their employees. So how does overutilization creep into an otherwise well-planned project?

One of the biggest reasons overutilization can become routine in an organization is a lack of planning. When a project manager fails to adequately map out the skilled resources needed to complete a project, or underestimates the time each task will take, it's likely the team will face an unpleasant surprise during project execution.

However, a lack of planning is not the only cause of employee overwork. Staffing problems, such as understaffing, reactive hiring, and a high staff turnover, also contribute to overutilization. Whether in relation to a specific employee whose skills are in high demand, or a team that is under-resourced on all sides, these staffing issues tend to lead to long-term overutilization of overstretched employees.

Of course, unexpected changes can also impact employee utilization. From ad-hoc projects to an unavoidable change of scope, these changes lead to disruption of the established work plan, and can result in employees facing pressure to work beyond their optimum capacity.

The dangers of overutilization

Overutilization can be problematic for the organization's profitability, project performance, and employee wellbeing.

Negative effects on employees

Employees suffer from decreased engagement as they experience high anxiety and stress levels created by an excessive workload. If they're in a constant state of overwork, they will eventually suffer from mental and physical exhaustion.

Since employees constantly face demanding work schedules, they may feel they are not doing valuable work in the organization, and start to disengage. Overutilized employees experience high levels of dissatisfaction in their work, feel devalued, and may resort to quiet quitting, where employees show up to work but put in minimal effort.

Negative effects on the company

Demanding work schedules can hurt business processes, as overworked employees may lack the motivation to complete their tasks effectively. This can lead to reduced productivity levels, disrupted workflow, and missed deadlines. The quality of work also suffers, which, along with project delays, impacts the company's profitability and reputation for the services it offers.

Overworked employees may leave the organization, searching for sustainable job opportunities that match their needs. High turnover rates create additional challenges in replacing talent, especially in the current business environment with increased competition for high-skilled employees.

In this way, overutilization can become a vicious cycle - it drives high employee turnover, which in turn leads to understaffing, causing a heavier workload for the remaining employees.

How can you avoid overutilizing your staff?

Optimal resource utilization is crucial to unlocking your employees' potential. Managers must find the right balance in resource utilization by avoiding overutilizing staff, an ensuring that everyone, as far as possible, has a reasonable workload - not too much, but also not too little (underutilization causes a whole host of other problems).

To achieve optimal, balanced resource utilization, we recommend paying attention to four key areas:

1. Track utilization rates (AKA: you can't manage what you don't measure)

If you're not sure where to start with tackling overutilization in your team, tracking utilization rates is most definitely the first step in creating an objective assessment.

Monitor how long your team spends on different projects, and use this data to assess what percentage of their working hours were used effectively. As well as helping you assess utilization rates, the process provides concrete data on how long certain tasks take, which can feed into future project planning.

Time tracking software can be a game-changer when it comes to tracking employee activities. If you are using resource management software like Runn, it can convert this data into utilization metrics automatically, so you can easily track the utilization of your teams and staff.

➡️ Check our guide on how to build a resource utilization report here. 📖

2. Adequate staffing

The next area to tackle is your staffing. Adequate staffing, both in terms of quantity and quality, is essential because it guarantees you have competent personnel to tackle high-pressure projects.

When your team is adequately staffed, you are in a position to optimize your human resources. Rather than overallocating resources beyond their capacity or skill set, you can ensure the right person is assigned to the right tasks at the right time.

Adequate staffing also has a positive impact on the service quality offered by employees to the customers. By staffing your project adequately, the pressure on employees is reduced, and employee engagement rises.

If you want to learn more about how to create a staffing plan, we've got you covered ➡️

3. Fairly distributed workloads

Overutilization isn't always a team-wide event. Sometimes, unequal workloads leave one person overloaded, while others have a lighter ride. As well as placing that individual on the path to burnout, uneven workload distribution sparks resentment within your staff, which disrupts effective teamwork.

To achieve a fairer distribution, consider allocating critical tasks and those that require specific skills first, before sharing out more generalist tasks that other members of the team can also do. Use your utilization rates to guide you to ensure the distribution is fair. To ensure fairly distributed workloads, managers must work hand-in-hand with employees to create the optimum work schedules.

4. Capacity planning and forecasting

Forecasting and planning are crucial to prevent the organization from running into key issues in the future. Through forecasting, a company can make educated predictions about the resources that will be needed to handle upcoming projects. This allows management to make preparations for adequate staffing.

Capacity planning is another forward-thinking strategy, which involves assessing the current and upcoming workload of each team member, and assigning them tasks that fit their capacity.

Resource management tools can help simplify the forecasting and capacity planning process, by analyzing existing data and practice patterns that have been established in the organization. By taking the heavy lifting out of forecasting, these tools help you plan for your future projects more effectively.

Sometimes, you might want to take a break from utilization. Our CEO Tim Copeland has shared this inspiring story with us:

A few months back, I engaged in a conversation with the CFO of a considerably large company. During our discussion, he recounted an experience where the company had shifted its focus from staff utilization. This change came after two decades of operating as a well-established organization. For about 20 years, utilization was their North Star, getting the most out of their staff's time. It was all about making sure everyone's busy and that supposedly drove their success.

However, they’ve come to realize that the skill set possessed by their workforce wasn't necessarily the most sought-after in the market. Consequently, they chose to temporarily step back from focusing on utilization and redirect their efforts towards comprehensive staff training and development, with a particular focus on their sales team. The company even sought projects aligned with the evolving skill set they were cultivating.

This strategic shift wasn't without its challenges. It involved a six-month period of significant adjustments, entailing substantial costs for the transformative process. The result, upon reevaluation, was a scenario in which their staff's utilization was lower than before, yet the work they were undertaking held greater value for their clients.

This transition yielded an intriguing synergy: the company's profitability increased while the workforce experienced reduced stress levels.

Operating under the premise that allocating 100% of staff time solely to work tasks left little room for creativity, and even practical considerations like sick leave, they recalibrated their approach. By targeting, for instance, 80% of planned work, they allowed space for spontaneity and creativity to flourish. Instead of aiming for that elusive 100% utilization, they dialed it down to 80%.

Ultimately, this balance facilitated a more productive and innovative work environment. Entrusting employees to manage their time effectively eliminated the need for micromanagement on an hourly basis.

Protect your staff from overutilization

Despite the dangers posed by overutilization, companies have plenty of opportunities to rebalance workloads and create a healthy work environment for their employees. When staff are protected from overutilization, they are likely to be more efficient and contribute towards the company's productivity.

While the process of quantifying overutilization can involve a lot of data, technological tools can simplify the process, providing key metrics at the click of a button. All that's left is to decide what to do with that data, and the right changes to improve your team's sustainability and resilience.

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