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by Catherine Rozyczko on March 1, 2023
Project managers and business owners need their teams run efficiently, both for profits and for peace of mind. Nobody wants to lose sleep wondering if deadlines will be met or if people on the team are as productive as they should be.
Tracking and understanding resource utilization is an effective way to help managers and owners sleep a bit better.
Managing resource utilization –how much your resources work/bill versus their capacity– can help you stay on top of both productivity and the profitability of your projects. All good things.
But resource utilization data can tell other stories if you read between the lines.
Turns out, you can experience a big intersection of empathy and resource utilization when it comes to project management.
First off, empathy can go a long way in the project management field at-large.
Beyond motivating employees and consultants, empathetic managers can more easily anticipate stakeholder angst, run better meetings, and keep creatives focused.
With smaller teams especially, resource utilization data can sometimes provide unexpected insights into the personal lives of individual resources, giving you clues as to ways to better incentivize them.
But while empathy is all the rage in company cultures today, empathy is not limitless. That’s why we want to explore the intersection of resource utilization and empathy in project management, including its benefits and limitations.
What is resource utilization in project management?
How productive are your resources? How billable is your team? Resource utilization metrics are the hard-data way to answer those questions.
Also known as employee utilization rate, resource utilization describes how much a resource works or bills versus their capacity, expressed as a percentage.
Project managers and owners generally calculate resource utilization in a couple ways.
1. The first is to measure overall work hours versus capacity. For example, if person A works 20 hours with a capacity of 40 hours, that resource utilization is 50%, since 20/40 equals 0.5.
Work Hours / Capacity = Resource Utilization %
2. The second way to calculate resource utilization is with billable hours. This is also called billability or billable utilization. This calculation measures what the resource bills versus their total capacity. For example, let’s say person B bills 30 hours against a capacity of 40 hours. Their resource utilization is 75%, since 30/40 equals 0.75.
Billed Hours / Capacity = Resource Billable Utilization %
Putting the #s together
Both of these calculations for resource utilization are useful to gain insights into how efficient and productive your team is within any given time frame.
However, to get the full story, it’s better to run both resource utilization calculations. Here’s an example: Person C has a total capacity of 100 hours in the lifecycle of a project. Person C works a total of 85 hours and bills 60 hours toward project-related tasks. The resource utilization for Person C will look like this:
Resource Utilization: 85%
Resource Billable Utilization: 60%
As you can see here, this team member has a fantastic utilization rate at 85%, but that doesn’t give the full story. That’s because Person C’s billable utilization, in contrast, is dismal at 60%.
Something is going on here with Person C, whether it’s excessive admin tasks or other reasons their non-billable time is so high.
Where empathy comes in
Sometimes, a low billable utilization rate can indicate that the person is drowning in admin that can be automated by software (something we see a lot). Other times, it can indicate that something personal may be going on in the background.
When you run your resource utilization metrics, anything glaring like with person C will probably warrant a conversation. This is where project managers need to turn on their empathetic skills and perhaps, figure out ways to motivate and support Person C.
On the flip side, your team’s overall resource utilization, including both calculations, might be fantastic and on-point. This requires managers to put on their empathy hats as well, in order to understand what’s going right and how to continue to motivate the team.
Another thing we haven’t discussed yet with resource utilization is burnout. It’s common in startups and small teams who get overworked as the business scales. Your resource utilization numbers can help alert you to burnout, so that if someone’s utilization rate is continuously crazy-high, it might warrant a discussion, an award, or even a little time off for that person.
Ultimately, your resource utilization numbers are more than profitability metrics: they can provide insights into the emotional lives of your team.
Empathy is critical to resource management, and we can see its obvious intersection with the data-driven reports on employee utilization.
Limitations
Empathy has been a big buzzword now for almost a decade, especially in relation to company cultures. However, few people talk about its drawbacks, save for this fantastic article from Harvard Business Review Magazine: The Limits of Empathy.
In the research-backed discussion, the author explains that empathy is obviously a key element in motivating workers.
And that’s something resource utilization can definitely help managers achieve.
Empathy can help you understand the performance of your team when you have a bit of insight into their inner lives.
But excessive empathy can actually inhibit performance and drain managers unnecessarily. For example, a low billable utilization rate may not indicate anything beyond that the person is not being productive. Or that administrative tasks are taking up too much time.
Therefore, although resource utilization management necessitates a certain amount of empathy, it shouldn’t entirely overtake what the cold-hard numbers are telling you.
A measured approach
At the end of the day, experience and research suggest a balanced approach to empathy for managing resource utilization. First, you’ll need to calculate resource utilization rate to see what the real numbers are. Make sure you’re getting an accurate depiction of your resource’s billable hours with software to account for time tracking and invoicing.
Next, take a look at your utilization report that should include both employee utilization and billable utilization. Look for gaps, inefficiencies, and stand-out achievers.
Then, employ your empathetic skills in order to help you understand why inconsistencies or red flags may be occurring. This will often warrant a discussion with individual team members or the team as a whole.
And finally, remember to keep empathy in check when you review your resource utilization. Empathy is not without limits and may actually hinder the performance of your team if left untamed.
