2. Manpower Utilization is a business
concept that describes how effectively a
business uses its manpower employees.
Businesses commonly use the concept of
manpower utilization to evaluate output in
relation to labor costs.
3. Manpower Utilization focuses on improving staffing and
talent utilization by concentrating on both work activities
and the employees who perform these activities.
Staffing Utilization techniques attempt to realign,
streamline and reduce staffing requirements.
Talent utilization techniques seek to apply employee’s
current skills more effectively to her current or an
alternate role and develop hidden potential needed to
improve utilization.
4. Manpower Utilization and HR Planning
Utilization is an integral part of each step in a comprehensive
Human Resource Plan. An HR plan starts by gathering current
staffing and talent data, including the number of departments, the
number of employees in each department and the current skill set
and undeveloped potential of each employee. Realignment,
streamlining roles and duties and employee training and
development are the most common methods small businesses use
for meeting long term needs internally.
5. EFFECTIVE UTILIZATION OF
HUMAN RESOURCE
Effective and efficient managing of staff requires a broad process called known as
human resource planning. It constitutes one of the major strategies to enhance and
improve work performance, this it does by removing deficiencies and preventing
deficiencies from occurring.
Human resource planning helps the organization to tap efficiently talents which will
help to integrate both the individual and organizational goal. This will consequently
minimize some of the problems associated with low productivity, absenteeism and
labor turn-over. These reasons have made human resource planning to become a
major arrangement preoccupation in organizations.
6. Advantages of Manpower Planning
a. Key to managerial functions: the four managerial functions, i.e. planning,
organizing, directing and controlling are based upon the manpower. Human
resources help in the implementation of these managerial activities.
Therefore, staffing became a key to all managerial function.
b. Efficient utilization: efficient managerial personnel became an important
function in the industrialization world of today setting of large scale
enterprises requires management of large scale manpower. It can be
effectively done through staffing function,
7. c. Motivation: staffing function not only includes putting right men or right job, but
it only or also comprises of motivation programmes, i.e. incentives plans to be
framed for further participation and employment of employees in a concern.
d. Better human relation: a concern can stabilize itself if human relation develop
and are strong. Human relations became strong through effective control, clear
communication, effective supervision, and leadership in a concern. Staffing
function also looks after training and development of the force which lead to
cooperation and better human relation.
e. Higher productivity: productivity level increase when resources are utilized in
best possible manner. Higher productivity as a of result of minimum wastage of
time, money, efforts and energies. This is possible through the staffing and its
related activities (performance appraised, training and development,
remuneration).
8. Important Factors in Planning
When a company evaluates its manpower utilization, there are key
factors that it must take into account. These include the prevalence
of absenteeism, the level of education and skilled labor within the
organization and any overtime paid or required by management.
Once upper management understands these factors in
combination with the manpower utilization study, the business can
look for places to improve the way it uses its workforce.
9. Conducting a Manpower Utilization Study
Businesses sometimes commission a manpower utilization
study to determine the percentage of their workforce that is
being utilized effectively. A company can generate a
manpower utilization study internally or hire an outside
company to conduct the study. Businesses use the results of
the study to determine wages, technology purchases and
ongoing efforts to modernize production lines.
10. The Role of Technology
Technology plays a vital role in manpower utilization and often becomes a
less expensive alternative to investing in manpower for an organization.
But technology also allows the business to more effectively evaluate the
levels of utilization within the company by compiling and updating
information about employees. This can take the form of a general
company database or some other means of tracking individual employees'
output on a regular basis. It is then up to the upper management to make
decisions about how to act on the utilization information.
11. Why Manpower Utilization is Important
In business, the employees are an important contributing factor to the
organization and also one of the most expensive contributing factors.
Not only does a company pay wages to its employees, but it typically
invests in employees by paying for their training and benefits, such as
health and life insurance and retirement accounts. Thus, for a company
to maximize its chances of success, it needs not only to understand its
manpower utilization but also to work toward achieving optimal use of
its workforce.
12. Utilization
• Utilization is defined as the amount of an employee's available time that's
used for productive, billable work, expressed as a percentage.
• An employee's utilization rate is a critical metric for organizations to track.
It’s a measure of billing efficiency that helps the company understand if it's
billing enough to cover its cost plus overhead.
• When it comes to resource management, utilization rates help in
forecasting, resource optimization, and many other essential business
functions. It's a simple measurement that has powerful effects on how your
business runs.
13. Utilization Rate Formula
Utilization Rate = Total Billable Hours / Total Hours Available
Let’s say we want to find the utilization rate for Leslie, a front-end developer
at a web design firm. In a given week, she has 40 available hours. That works
out to 2,080 hours a year. Assuming she takes two weeks of vacation, her total
available hours for the year is 2,000.
Now let's say she bills 1,500 hours to various client projects throughout the
year. Using this utilization ratio, we can calculate her utilization rate as:
1,500 / 2,000 = .75
14. Her utilization rate was 75%. This means that last year Leslie was 75% billable.
Had she billed all 2,000 of her available hours to billable client work, her
utilization rate would have been 100%, but that almost never happens and it
isn't desirable.
Why not? Because realistically, employees have other job responsibilities
that aren't billable to clients, and optimal utilization rates need to account for
non-billable time.
Leslie is the head of her department, so she's tasked with training junior
department members. She's responsible for helping with project estimates.
And she takes time for lunch and (much-needed) coffee breaks. None of these
functions are billable, so Leslie's optimal utilization rate should account for
the time she spends on these activities.
15. For this reason, most organizations set target utilization rates for their
employees that factor in how many of their available hours they need to spend
doing non-billable work and how many hours they need to bill for the
company to maintain profitability.
Target utilization rates vary from person to person and between positions.
Managers generally have lower target utilization rates, while front-line
personnel have higher rates.
In Leslie's case, her target utilization rate is 75%. This means that at least 75%
of her available time should be spent on billable work, while no more than 25%
should be non-billable administrative, unbillable revisions, or pro bono work.
As long as she stays at, or better than, these percentages, she's considered to
be utilized efficiently.
16. 5 Steps to Improve Employee Utilization
and Productivity
1. Implement some form of time recording – “You can’t manage what you can’t measure”, by
capturing timesheets you can understandyour current utilizationand productivity
2. Define Appropriate Variables – if you sell services you will want to measure chargeable
utilization, ensure you define variables that enable you to measure utilization and productivity
that is applicable to your business.
3. Improve your planning – improving your resource deployment upfront should not only
improve your future resource productivity and utilization, it will also give you a more realistic
view of the health of the organizationby comparingplanned versus actual.
17. 4. Manage Customer Expectations – communicate to your entire team
the importance of managing the customer’s expectation from initial
enquiry all the way through to project delivery. In the long run you will
have more happy customers resulting in your employees having to
perform less un-productive tasks.
5. Encourage Collaboration – boost your productivity by creating an
environment where your team members can easily share knowledge, ideas
and lessons learned. This will not only improve individual productivity it
will help improve project standards and service delivery.
