Editor's Note: Take a look at our featured best practice, Objectives and Key Results (OKR) (23-slide PowerPoint presentation). Successful organizations are using Objectives and Key Results (OKR) now. OKRs are efficient way to track company and team goals and measure their progress. It helps every organization's success by cutting out unimportant goals and focusing on what truly is important within the organization. OKR [read more]
4 Effective Ways to Manage Resources More Efficiently
Also, if you are interested in becoming an expert on Performance Management, take a look at Flevy's Performance Management Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.
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What Is Resource Management?
Resource Management is the management discipline of efficiently and effectively deploying and managing resources in order to achieve our organizational goals (e.g. improve revenues, maximize shareholder value, enter a certain market, etc.). Resources can take the form of financial capital, human capital & talent, production resources & raw materials, inventory, technology, business capabilities, network & ecosystems, real estate, natural resources, and so forth.
All organizations have finite, limited resources. Therefore, effective managers who are able to make the best strategic decisions around resource allocation to maximize the productivity of the organization’s resources will outcompete their competition–even those competitors with greater pools of resources at hand.
It is also important to differentiate between key, critical resources and non-critical resources. In fact, the pioneer of Disruptive Innovation, Clayton Christensen, defines “Key Resources” as one of the 4 core components of a successful business model–with the other components being the Customer Value Proposition, Profit Formula, and Key Processes (see PowerPoint slide below).
Key Resources are assets, such as people, technology, products, facilities, equipment, channels, partners & alliances, and brand, required to deliver the Value Proposition to the target customers. Effective Resource Management focuses on those key elements that create value for the customer and our organization.
How to Manage Resources
All workplaces are an integration of numerous departments working together as one to ensure the business runs smoothly. Almost every sector is reliant on other departments and cannot function at its full potential without the rest putting in their best as well. One reason why companies end up compromising their profits is due to the inefficient use of the resources at hand.
Through efficient utilization of resources, businesses can reach new heights of success. On the other hand, inefficient utilization will lead to bigger losses. You will not be able to get any value out of your investments unless you know how to make the most out of them.
The tips mentioned below on how to manage resources will do wonders for your corporation if implemented in the correct manner.
1. Plan to Plan
Planning is important when it comes to being efficient. Time is money and it is best to plan for effective resource management from the very beginning of projects. When starting a project, planning should be first on your to-do list. It is via planning that you will be able to fully gauge the types and amount of resources you will be requiring. Many projects fail because businesses end up investing in too many or too few resources.
After figuring out what you will need, you can then plan their use by dividing the project up into stages.
- Identify resources that are needed for completion of the project. Add to the list any resources you will be requiring, whether it is in the first stage of completion or the last.
- Analyze and put up an estimate of the time each resource needs and its role in completion of a particular task.
- Go through the outline of the entire project and ensure that no resource is left out.
- Finalize the list of resources and their details before the project can officially begin. It is essential to have the list ready for everyone to see so that the details are clear in everyone’s minds and the risks of confusion are reduced.
2. Take a Systematic Approach
One of the most effective ways of using resources and minimizing their use at work when possible is by adopting a systematic approach. This can be achieved by:
- Setting a baseline – Using your previous performance as a base for improvement will help pave the path for productivity.
- Benchmarking your performance – Comparing your own performance against that of similar companies (preferably your competitors).
- Forming an action strategy – Once the prospective improvements have been highlighted, it is time to form an action scheme about how to accomplish them.
- Fixing targets and responsibilities – While setting targets ensure that they are achievable in the allocated time by the employees.
- Observing and reporting – Set up reporting procedures and measure your performance at regular intervals to ensure that you are on track.
- Reviewing actions and performance – This step will ensure that you keep learning and improving.
3. Use Technology Where Possible
The use of technology goes a long way in speeding and easing up processes significantly. Any feature of the project that can be completed using technology should be automated. This will in turn minimize the risk of mistakes occurring and free up manpower that can then be reallocated to other projects.
Using technology ensures efficient allocation of resources. There is less wastage and more effective usage of resources. Technology will show you exactly what’s needed so you use specific resources, leaving others free to be utilized for the completion of other projects.
The implementation of automated procedures will revolutionize the running of projects and provide a more streamlined approach to resource planning and management. Any automated processes must be initially tried and tested to ensure that there are no glitches, as slip-ups will add a heavy cost down the road.
The balance between technology and business resource management is a key part of business development. The use of technology will make the running of the company much more efficient and allow several projects to run at the same time due to the resources that free up when technology is used instead of the assets.
4. Use Resource Management Software
Resource management software is a useful tool to significantly enhance the operations of your business. Invest in resource management software that offers a long list of features tailored to boost the management of resources and improve the overall performance and productivity. One popular example is the Timewax resource software which allows managers to share the resource planning with their employees via the company’s calendar system or mobile application. The following are some of the features you should look for in the software you are investing in.
Scheduling the Projects
Efficient time management includes adding every little task to your schedule. Create a schedule if you don’t want to be nagged by the problems you face. If the project has a long deadline, then adding a rough outline of the task until you can add to it in detail will help plan resources and steps out accordingly and more competently.
Generating a Work Schedule
Resourceful allocation includes assigning employees to projects and tasks within those projects. Operational schedules should be implemented for the upcoming stages of the project. Projects that run longer than two weeks must be broken down into parts and resources must be assigned and allocated accordingly.
Producing a Weekly Schedule
Organizing work on a weekly basis allows companies to set a clear cut off point. A new schedule is created at the end of every week using employees that can then perform their tasks and be ready beforehand. Scheduling on a daily basis is also feasible, especially for those companies that have to deal with technical breakdowns that appear without any prior notice.
Resource management software makes use of a convenient planning board to give clients instant overview of all the ventures and resources. The planning board has features like multiple views, time scale, resource requests and alerts, and emails that set it aside from other resource management tools.
Resource management can be a real hassle if not done properly. The drawbacks of an insufficient resource management system include failure to utilize the potential of your existing resources, making the entire organization suffer.
Inadequate resource management will lead to resources being under-utilized or over exhausted. It can also result in wastage of assets that could have been utilized to generate revenues if a proper management system was implemented.
These tips, if implemented properly will go a long way in assisting companies in revolutionizing their resource management and utilization. Focus on the importance of planning and invest in smarter resource management software.
Bonus Tip: Utilize the Balanced Scorecard (or Similar Performance Management Methodology)
The Balanced Scorecard (BSC) is a strategy performance management tool—a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. The BSC methodology was developed by Robert Kaplan and David Norton.
BSC relies on 4 key management processes to tie short-term activities with long-term objectives:
- Translating the Vision
- Communication and Linking
- Business Planning
- Feedback and Learning
Let’s dig deeper into the 3rd management process, Business Planning. Most organizations have separate processes for Strategic Planning, Resource Allocation, and Budgeting. This third process enables companies to integrate their business and financial plans
A separate Resource Allocation and Budgeting process run by Finance sets financial numbers that generally bear little relation to the targets in the strategic plan. When implementing the Balanced Scorecard’s measures as the basis for Resource Allocation and priority setting, management can undertake and coordinate only those initiatives that the company toward its long-term strategic objectives. This ensures the allocation and management of resources is efficient, as resources ties directly to driving the business towards its organizational goals and strategic objectives.
To familiarize yourself with other Performance Management frameworks, take a look at these materials available on Flevy (and those listed at the end of this article):
Caveat: Key Resources vs. Disruptive Innovations
As aforementioned, Clayton Christensen defined key resources as the critical assets and capabilities that a company possesses to maintain its competitive advantage in a given market. These resources are often essential for the company’s current success and play a significant role in serving existing customers and meeting their needs.
However, the very same key resources that contribute to a company’s success can also be a liability when facing “Disruptive Innovations.” Disruptive Innovations often emerge from new technologies or approaches that initially target underserved or overlooked customer segments. These innovations may not require the same level of sophistication or features as the existing solutions, which means they do not rely on the same key resources.
The dilemma arises when established companies focus too much on protecting and optimizing their existing key resources to serve their current customers better. In doing so, they may miss out on the potential of disruptive innovations that target emerging markets or new customer segments. Eventually, these Disruptive Innovations can surpass the established incumbent organizations, leading to their decline or even failure.
According to Christensen, it is essential for organizations to be aware of the distinction between sustaining innovations that build on existing key resources and Disruptive Innovations that often require new and different resources. To address this dilemma, organizations may need to explore separate units or divisions that can focus on disruptive opportunities without being constrained by existing key resources and processes.
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Most organizations only realize 60% of their strategies’ potential value due to issues in strategy development and/or execution. This gap between the strategic plan and actual performance results is known as the Strategy-to-Performance Gap.
This presentation explains the [read more]
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Performance Management (also known as Strategic Performance Management, Performance Measurement, Business Performance Management, Enterprise Performance Management, or Corporate Performance Management) is a strategic management approach for monitoring how a business is performing. It describes the methodologies, metrics, processes, systems, and software that are used for monitoring and managing the business performance of an organization.
As Peter Drucker famously said, "If you can't measure it, you can't improve it."
Having a structured and robust Strategic Performance Management system (e.g. the Balanced Scorecard) is critical to the sustainable success of any organization; and affects all areas of our organization.
Learn about our Performance Management Best Practice Frameworks here.
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About Shane Avron
Shane Avron is a freelance writer, specializing in business, general management, enterprise software, and digital technologies. In addition to Flevy, Shane's articles have appeared in Huffington Post, Forbes Magazine, among other business journals.
