3 Ways To Plan Resource Levels

ways to plan your staff

3 Resource Planning Methods to Help Predict Staffing Needs

Most businesses and organizations go through an annual headcount planning process for the upcoming year.  We all know that such activities are important to running a productive organization.  And yet, while resource management is critical, doing it well and doing it right is easier said than done. There are a number of methods to go about making staffing plans, each of which has its benefits and its weaknesses.  Let’s explore three common ways you can estimate and predict your resource needs, and see which one might work for you.

FREE DOWNLOAD: Resource Planning Methods Examples

Key Tips for Making a Resource Plan

No need to beat around the bush: the reason that headcount and resource forecasting is so important is because human resources often represent the single largest cost for any company.

Under-hiring leads to excessive workloads, missed deadlines, an inability to adjust quickly when changes happen, and an unhappy workforce that may feel taken advantage of.

Over-hiring, by contrast, stresses the organization if there is not enough cash flow or income to support the staff.  Ultimately, having too much staff can put the business in jeopardy or lead to emotional layoffs and downsizing.

RELATED: Behind the Scenes of a Layoff

Getting it just right, well, is far from easy and takes a lot of work and close watch.

Here are 6 key tips for your resource planning:

  1. Always plan for some level of Administration or ‘lost time.’  There is no such thing as an 8-hour work day.
  2. Review your resource plans each month for accuracy and changes.
  3. Use historical data to help calibrate your work planning estimates.
  4. Get input from your ‘front line’ staff to make sure your assumptions are reasonable.  They are the experts.
  5. Hiring takes time.  Start the recruiting process before you need the people.
  6. Be REAL about what you need. Don’t try to fit a plan into a pre-defined box.  Don’t try to reach for the stars.

 

Here are three resource planning strategies that might work for you.  We’ll look at the pros and cons of each.

1. The Bottoms Up Approach

The most common form of labor estimating is to build your estimate from the ground up.  What does this mean?  Go across your array of projects and activities, estimate what each one will take for the next period, and tally them up.

Resource Plan Bottoms up

How To Do It:

Step 1:  List each project or activity that is currently in work, as well as those high-likely new projects you expect for the next period.

Step 2:  Estimate the total amount of labor hours required for each project you identified for the next period

Step 3:  Sum the total hours across all projects.  This is your resource plan!

Why it Works:

This method helps you compile a labor plan that treats projects and work independently, and forces you to evaluate the work you see on the horizon. It’s a forward-looking strategy that ultimately helps you plan for what’s coming, regardless of what’s happened previously, and tends to be a bit conservative.

Who It’s For:

Businesses that have a number of short-term projects and activities which change regularly.  Since the bottoms up approach places more emphasis on the individual projects, it allows you to tally up the total effort across multiple activities.

Who It’s NOT For:

Companies with longer cycle business models and who have many projects that typically last a longer period of time.  Why?  Trying to estimate the portion of a 5-year project that will take place in the next 12-months can be difficult, given the number of variables and possible changes that can occur.

Words of Caution:

The challenge with using the bottoms up approach is it can give you the tendency to try to include everything.  More often than not, when I’ve used this method, it results in a lot more hours and work than will actually be needed.  If you include items that are only potential for the next budget planning cycle, you may be faced with ‘trimming’ projects to get the resource plan to a manageable level – but how do you choose?  Be sure to include a realistic set of projects and activities.

 

MRH Poll: Please Answer This Question in Support of our Management Research!

(Results Will Display After You Answer)

 

Which of the following best describes your resource contraints?
  • It's simply about people, and I just do not have enough of them.
  • I have enough people, but I personally do not have enough time to be everywhere at once.
  • Mostly financial. I cannot get funds for new software, supplies, training, etc.
  • We take on too much, and do not have the discipline to say 'NO' to anything.
  • It's hard to predict what resources we need until it is too late.
  • Not many. I generally get the resources whenever I need them.

2. The Bridge Approach (Planning Based on Variance)

The second method is known as bridging. This approach to resource planning centers around the change between one planning period and the next.  The net result of this is the resource plan for the next period.  In other words, if for a given project this year it took 5 people to work on a project, but you expect more next year, you would reflect the incremental change in your plan.  Equally, if you had a project that required 3 people this year, but expect that effort to decline, you would show that reduction.

Bridging Resource Estimate

How To Do It:

Step 1:  List each project or initiative that is currently in work, as well as those high-likely new projects you expect for the next period.

Step 2:  Estimate the change in the labor hours required for each project for the next period (increases and decreases)

Step 3: Compile a graphical “walk” that shown the incremental progress of staffing level.  Start with the actual, current-period capacity.

Step 4:  Add the incremental additions, from largest to smallest, on your graph.

Step 5:  Add the incremental reductions, from largest to smallest, on your graph.  The net result is your new resource plan!

Why it Works:

Bridging is a simplified approach that helps you focus on changes, from period to period.  It is a method that allows you to evaluate what you expect over the next 12 months when compared to what actually happened in the prior period.  Further, it helps you compare future work to what actually took place, always giving you a recent, realistic basis for estimating.

Who It’s For:

The Bridging method is helpful when your business has limited projects and activities that extend over longer periods of time.

Who It’s NOT For:

Organizations that have shorter-term projects or significant differences and uniqueness from project to project.  Additionally, if you have many project proposals on the table at any given time, this method is not likely to be very effective.

Words of Caution:

The bridging method is particularly advantageous when you operate with a select few projects and activities, that carry over from one period to the next.  If you have a shorter cycle business, or one that has many starts and stops, this method is not likely to work very well.  Make sure that when you establish your change in hours (Step 2), you base your estimate for the next period on what actually happened in the prior period.  Do not use last year’s plan, as it may have changed, or have been incorrect.

 

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3. Weight By Probability (Expected Value)

If your business has a number of proposals and possible projects on the table at any given time, this might be a good method for you.  The third way to plan your resources is to plan work and assign a probability.  In statistics, it’s know as expected value, or the probability weighting of a given number.  To compute the expected value of work, multiply your total level of effort by the likelihood you expect the work or project will become real.

Expected Value Resource Method

How To Do It:

Step 1:  List each project or initiative that is currently in work, proposed, or being considered for the next period.

Step 2:  Generate the labor hours required for each project for the next year or specified planning period.

Step 3:  For each project or initiative in your list, define a probability they will become real and actually happen.  NOTE: For projects currently in work, the probability should be 100%, since it is already in progress.

Step 4:  Multiply each estimate of hours by the associated probability.

Step 5:  Tally up the total value of hours across all projects.  This is your resource plan!

Why it Works:

This method is particularly good for planning future projects and business opportunities that have not yet been awarded, or are being considered for the future.

Who It’s For:

Companies an organizations that have a number of activities on the table at any given time and need a plan that can activity be adjusted and modified as things change and evolve.  This is also for companies that have the ability to change resourcing levels quickly.

Who It’s NOT For:

Companies and organizations who are limited in abilities to change staffing plans midstream, or are governed by rigid cost cycles.  Because probabilities can change at any time, if your organization is not setup to act quickly, you may not realize the benefits this resource planning method offers.

Words of Caution:

The expected value approach is an effective way to plan and map our your labor needs, but requires that you actively maintain and adjust it.  Make it a point to review the labor plan monthly with your various team leaders to regularly evaluate the status of projects and programs.  Also, there should be no end target, or total number you’re trying to achieve.  if you try to set all probabilities such that your resource plan stays the same, you’re not planning, you’re just playing with numbers.

 

Sizing your staff and planning resources is not an easy task and you should expect to put some time into it to get it right.  But with a little effort, realistic expectations and good planning, you can get it right.

What methods do you use?  Leave a Comment below and share with the MRH Community!

 

Looking for More on Resource Planning?  You Might Like…

1. The Strategy to Help You Hire More People
2. How to Visualize Workload and Plane Better (Download)
3. Budget Planning Tips for Managers
4. Sample Justification for More Resources (Download)
5. Example Business Case Calculations for Hiring More Staff (Download)
6. Demystify Project Estimating in 3 Steps
7. How to Justify Hiring a Specialist

 

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