To run a smooth operation, your company needs more than a plan. Without resources, a business can’t turn those ideas into reality. A company’s resources can include anything from technology to cash to employees. And making the most of them is necessary for successful performance, whether that’s by internal or external definitions.
Unfortunately, optimal resource management isn’t something all leaders grasp right away. Even for seasoned managers, allocating and utilizing assets to their fullest presents challenges. Sometimes it takes trial and error to determine the right mix. Other times, you don’t know how far your resources can stretch until demands exceed capacity. Below we’ll discuss four ways to stay ahead of the curve by using sensible resource management practices.
Table of Contents
1. Set Priorities With Strategic Alignment
As all business leaders know, a company’s resources aren’t unlimited. Human and non-human capital reaches capacity at some point. Plus, market forces may restrict the availability of resources for organizations. The labor market is an example. Even if a firm can offer competitive wages, an abundance of employment opportunities may make staffing difficult.
In such scenarios, the number of employees companies can hire and retain becomes more limited. Yet client demands remain high. Faced with constraints, leaders must prioritize how to use their human resources so customer and staff needs are met. Push teams to the brink, and you risk the chance of additional turnover. Simultaneously, the company must serve clients well enough to sustain revenue.
With strategy alignment techniques, leaders can prioritize limited resources so they don’t become compromised. Through strategic alignment, the company’s overarching business goals determine how the firm allocates its assets. The strategy might be to concentrate on a market niche, narrowing the business’s client base. By highlighting the strategy, there will be an increase in employee engagement, allowing smaller teams to focus on fewer customers who can maintain or grow the company’s revenue.
2. Take Inventory
You can’t improve how your company uses its resources if you don’t know what you’ve got. It also helps to identify utilization gaps. Say you have old computer equipment in storage. Do you really need to stockpile as much as you have? Maybe it’s better to sell it or scrap the machines for parts.
However, “taking inventory” also includes less tangible resources. Your company might have intellectual property in addition to human capital. Skill sets and knowledge may be recognized through indicators like advanced degrees. But some know-how could be informal and unique to a business role. Asking your employees about those intangibles can help determine whether you have opportunities for better resource management.
With 95% of HR leaders saying employee burnout hurts retention rates, involving staff in decisions can make a difference. They know what it takes to do their jobs, what resources are missing, and which allocation gaps create obstacles. Giving them more control while mitigating work demands will go a long way toward preventing stress-related breakdowns.
3. Practice Budget Forecasting
Companies can fail because short-term and long-term planning isn’t happening behind the scenes. It’s not unusual for leaders to neglect to look forward and use the data they have to make better decisions. A failure to plan may be why 50% of Fortune 500 companies that existed 20 years ago no longer do.
Leveraging data to forecast reasonable budgets can prevent misallocation. Good budgeting ensures you know how much is coming in and going out. You can also track whether there’s misuse of the company’s finances. For instance, you might continue to spend too much on an unused software application.
When that’s the case, the company could direct those dollars toward expanding licenses for in-demand apps. Maybe you only have 30 licenses for a program, but 50 employees need to use it. Gathering information like this enables the company to allocate its financial resources more wisely. Data such as sales estimates can show whether the business can acquire additional resources — new facilities, equipment, and/or staff members — to meet its goals.
4. Reallocate When There’s a Need
Inevitably, resources become imbalanced. A few get overused, while others collect dust in the corner. When this happens, reallocating assets can restore balance. Take, for example, teams with different workloads. One group has too much on its plate, and another sits around twiddling its thumbs most of the day.
In this scenario, the company doesn’t use either team’s talents well. Both groups will likely grow dissatisfied because of over- or underutilization. Reallocation takes some of the load from the overworked group and gives it to the underworked one. This way, the business reaps the rewards of every employee’s skills more equally. Satisfaction and productivity go up since there’s less risk of burnout.
Leaders can practice reallocation with more than human resources. Take the previous example of unused tech equipment. Organizations with limited technology budgets may want to keep a certain percentage of retired assets in inventory. These machines are still operable but may require a few updates to go back into service.
Maintaining an acceptable percentage of backstock lets the company repurpose these machines in a pinch. If someone’s computer goes down, a replacement is readily available. With a fine-tuned refresh plan, a business extends the life of tech assets rather than resorting to more expensive purchases.
Effective Resource Management
All businesses rely on a variety of resources. But learning to efficiently manage them takes practice and critical thinking. Since every organization’s needs are unique, what works for a startup may not go over well in a large multinational. Even so, practices like establishing strategic priorities and budget forecasting can make the most of what a company has. Achieving optimal resource management may take time, but eventually you’ll master it.
