The management of human resources in the field of services or the implementation of projects is a separate discipline that has little to do with the resource management of goods. Modern tools and methods create new design options.
When resource management is talked about, functions that fall under the heading of “Enterprise Resource Planning” (ERP), such as personnel management or the procurement of physical resources such as desks, are usually referred to. In a service company, however, this term has a different meaning, requiring its tools and methods. Services are more about the management of the allocation of human resources – that is, of putting employees in the right place at the right time. If this is done correctly, the employees’ time is used effectively in related projects. This also improves customer engagement and increases the profitability of the company.
If the resource management fails, many problems
arise: → The employees’ time is not fully utilized.
→ Projects are delayed.
→ Employees with insufficient skills are assigned to demanding tasks.
→ Contractors are hired at the last minute, which results in a reduction in the margin.
→ Customer satisfaction is impaired.
Technology is changing the discipline of resource management in terms of resource allocation and utilization. In the past, manual processes and strict dividing lines between teams with valuable resources made it difficult to accurately determine the incoming demand and the utilization rate of individual employees. The assignment of employees was mostly done reactively, shortly before the start of the project, and within specific teams or areas.
In the future, resource managers will be supported by special software for professional services to work more proactively and make decisions that directly impact sales and profits. Just as cloud-based ERP has changed the way human resources and finance manage business administration, the automation of services has changed the service landscape, which has opened up new possibilities in planning processes for the provision of resources.
Professional Services Automation (PSA) software uses new, powerful techniques such as augmented intelligence to help resource managers assemble teams of people with different skills and experience levels. In addition, PSA software provides access to accurate, up-to-date information – the basis for good business decisions. This enables resource managers to work across borders and use data to plan more effectively.
Also Read: What Is A Workflow? Workflow Management At A Glance
“Resource delivery is the most important task in a service company, “The market was on the move. We needed the right people in the right place at the right time, and we had to know where to recruit. “
It is essential to understand who is making the resource allocation decisions in your company. Is it people or groups? Are our employees managed within teams and departments or flexibly throughout the company? Do the people in charge understand the latest methods of resource management? Do you know how to use business intelligence to facilitate and improve resource allocation?
An optimal allocation of resources requires that the following is known:
→ What skills do employees have;
→ their availability now and for the next six months.
For a resource manager to truly understand which employees are available, they need easy access to a knowledge base that includes the availability, limitations, skills, and location in an enterprise resource pool. Such a knowledge base – rather than separate pools divided by team, department, or geography – increases the likelihood that resource managers will assemble the best team, a mix of people with different skills and experience.
The global provision of resources in the company probably increases the billable workload in management, as it reveals time windows for employees that were hidden in the management structure. The increase in capacity utilization in a service company has a direct impact on sales. Randy Mysliviec of the Resource Management Institute argues, “Resource delivery across the organization is better, but it often requires a culture change. Managers can still be responsible for looking after their team – but they no longer control how they use their time daily. “
Managing your resource pool in line with market demand requires a constant review process that assesses whether the company still has the right combination of skills to meet customer and prospect demand. This includes asking the following questions:
→ Which skills are becoming valuable, which are becoming less relevant?
→ What are the trends – where is the market headed?
→ Is your company undergoing adequate training and professional development to acquire and refine skills?
→ Is everyone in the company encouraged to update the knowledge base with new experiences, skills, courses, and qualifications?
→ Do automation tools like a PSA solution have a function to prompt the company to update information more regularly?
Using technology to remind employees to document their skills and continually track lessons fosters a culture focused on skills and talent development. This is rewarded by assigning employees to the projects that best match their skills. These practices help build and maintain a high-performing team.
Another benefit of PSA solutions is their ability to unlock the business potential that the company could not access due to a lack of skills. The software can provide a picture of which skills are in demand on the market and demanded by potential customers. This information is valuable as it enables you to identify critical skill gaps based on current market demand and trending skills. Trends can then determine which skills will be needed six months from now and develop an action plan to address the expected skill gaps.
Most service companies use a mix of contractors, partners, and freelancers to award contracts – a diverse pool of suppliers that strengthens the talent pool. It is vital that resource managers fully understand the consequences of using suppliers. When do we use externals? Why do we use them? How does this affect the profit margin?
Too much dependency on external workers could be a sign that the procurement of resources is too reactive. For example, the company has carried out a project scheduled for two weeks, but the necessary employees are not available. This forces you to find expensive contractors to provide these services. Detecting demand early and sourcing the resources can help and ensure that contractors are deployed strategically.
There are situations in which suppliers could be the most cost-effective solution – for example, when things have to be done quickly or when additional skills are required that are not part of the company’s core offering. If so, a PSA tool will help measure the real-time impact of assigning contractors rather than employees on profit margins. The right end-to-end solution also makes time & attendance, billing, and invoicing easier for suppliers by maintaining a single record-keeping system that keeps track of work done and associated costs for both contractors and employees.
Human capital is not created overnight. Finding, hiring, and training the right person takes time. In a service company, hiring people is the most important means of growth. However, companies do not want to use the start-stop method of recruiting. Summarizing the demand from the forecast and using that demand as a guide to hiring decisions provides a solid foundation for recruiting.
A forward-looking hiring process based on an accurate forecast also means that when highly skilled people join the company, they can be quickly deployed on suitable projects – which in turn means they will pay off sooner.
In a service company, the sales team sells employees’ time. It is therefore imperative that sales and resource procurement communicates with one another. Resource procurement knows about the upcoming demand for resources from the incoming inquiries and orders – when which skills are required.
It is often overlooked that the collaboration between sales and resource procurement must be bidirectional. When the sales team receives updates from the resource managers and has insight into resource planning, they can focus on areas where employees are freely available or underutilized. If, based on current forecasts, it seems likely that, for example, several employees will be “on the reserve bench” in two months without having to work on any projects, resource procurement can control sales and encourage the relevant employees to sell this availability, possibly using appropriate incentives actively.
The collaboration between sales and resource procurement also helps to change the established practice, according to which employees are only assigned to projects when the orders are already in place. Because employees are only given at this stage, an opportunity is missed to be more proactive – orders are usually on the radar weeks before the contracts are signed. This time could be used to make progress in recruiting.
Resource managers can then plan and build well-functioning teams by striking the best balance between more experienced and less experienced members. In this way, resource utilization and the profit margin can be maximized, and at the same time, junior members can be trained in the teams. This comes in handy for team members as well – service professionals usually appreciate working in a more planned environment where they can see what projects they are likely to be working on.
When the start date of projects keeps shifting, it is tough to assign employees effectively. If it is postponed by a month, the employees assigned to this project will likely no longer be available. Recruiting must then be done reactively by filling the void with whatever available manpower, even bringing inexpensive contractors.
The start date of a project is linked to the date of receipt of the order. The latter is crucial as it is the milestone in the sales pipeline on which much more depends. This includes the time allotted to employees. If the order date shifts, employees will not be able to bill hours, which means that utilization and revenue will likely shift.
Managing directors should insist on a fixed order entry and start date and perhaps bind this to financial conditions. Sellers should be aware of the importance of this date – it is an essential thing in the sales cycle, and it needs to be predictable. If it shifts, the customer may not get the assigned employees.
New jobs don’t necessarily come from recent projects. Existing projects will be continued, or their scope will be expanded, milestones will be postponed, and additional employees will be involved. Is there a repeatable business process to capture other demand for employees for ongoing projects as soon as it arises? When assigning employees to new projects, resource managers must be aware of the possibility that the end date of a steady job could change.
The only way resource managers can track demand from existing projects while keeping track of potential markets from new projects is to see total order in a single view. This is one area where a PSA solution is beneficial, especially one that combines customer relationship management (CRM) with sales and delivery.
Effective resource management depends on consistent, reliable information from multiple people and teams across the company. The time recording needs to be accurate and up-to-date to get an overview of what has been done and assess what still needs to be done.
So how does the approval of time go? It’s essential that it is about more than ticking off to-dos on a list and that the project leader and staff work together to understand how much work is put into a project. It may seem like half the hours on an 80-hour project are used up by submitting the time and cost for the week – but has half of the expected progress been achieved? It may turn out that while 40 hours of work have been done, there are 60 hours left to complete the project. This is essential information that needs to be captured and updated.
When employees across the company have a consistent and disciplined process for entering and approving information, the whole company benefits, resource managers in particular benefit from this, as they have access to an exact data source in real-time, with the help of which they can assign the best possible teams to the individual projects and consequently achieve a high level of customer satisfaction.
Also Read: The Most Critical CRM Trends For 2021