How To Avoid Layoffs With Smart Resource Allocation

Headshot Chealsea
By Chelsea Williams
Senior Copywriter
Jan 6 2023 read
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It’s hard to ignore the buzz about widespread job loss no matter your role. And the worry many are feeling is not unfounded: Statistics show that post-pandemic labor force upsets continue. 

Some sectors took a hard hit in the final quarter of 2022. The Bureau of Labor Statistics reports that overall involuntary job turnover affected 0.9% of the workforce in November 2022, and that number is likely to have risen in December following a wave of recent layoffs in tech, real estate and finance.

News about layoffs is tough on workers, but it can also complicate things for business owners and leaders. You’re trying to provide your employees with a sense of security while simultaneously considering whether you need to make hard decisions to protect your business.

Staff reduction can be helpful to your bottom line, but it can also set you back by reducing the breadth of internal skillsets you can access and weakening existing client relationships — a particular concern in professional services. Luckily, letting people go isn’t the only way to cut costs and increase efficiency.  

If you’re looking to sustain or improve profitability and hold on to as much talent as possible despite the global economic downturn, try exploring the following strategies:

Understand Your Team’s True Capacity

You may feel you have a handle on how many team members you need to successfully manage your current workload, but you could be surprised when you quantify their capacity. A simple operational capacity calculation isn’t a realistic reflection of what your team can accomplish. 

True capacity is more nuanced than the total number of hours available to work. 

It’s best to get granular — determine capacity to complete projects and tasks, generate deliverables, conduct client meetings or any other parameter that applies to your business. You’ll also want to consider variation in time off and account for administrative work.

It could be that your team can do more with their current time allowance. Once you identify any gap between what they can do and what they’ve been doing, you can feel confident about staffing decisions. 

To learn more about capacity planning for a lean team, read our latest guide.

Optimize Utilization — and Efficiency 

There’s a metric that can help you bridge the gap between knowing what’s theoretically possible and making it happen: employee utilization. Your current team could have excess capacity, but how much of that can realistically be allocated to billable work? And how much is each person utilized compared to the team as a whole?

Before you make any big changes to your team, you’ll want to see where your utilization rates land. Use some simple calculations to determine your individual and average utilization rates, which should ideally be around 80% according to The Academy to Innovate HR

If your billable utilization is too low, you might want to revamp employee training or shift roles around to better match skills. And if it’s too far above that 80% mark, it may be a good time to give your busiest people a break or provide them with professional development opportunities and additional benefits. Both high and low utilization can be calibrated by more streamlined workflows.

These kinds of data-driven adjustments can make each employee more engaged and efficient, reducing the likelihood that you’ll need to turn to drastic measures like layoffs as compensation for misutilization.

 

TIP: Improve client retention to prevent revenue loss and hold on to your team.
Optimizing internal efficiency is certainly key, but you can also help your business weather the storm by taking intentional steps to retain clients

 

Measure Profitability With Automated Reports

When your team utilization lands in the ideal range and you’ve reduced inefficiencies, you’re more likely to see profits increase. But you’ll need a reliable mode of data collection to know for sure whether any of your internal changes are making a difference.

Just as capacity and utilization metrics are more meaningful when they’re detailed, profitability is more easily understood in a service business environment when it’s broken down by client, project and type of work. Our favorite way to achieve this is with as little effort as possible — via automated report generation!

When you have time tracking and project management integrated with your other client work functions in a smart platform like Accelo, keeping tabs on profitability is as easy as pulling up a real-time dashboard. Seeing how your business is performing daily can give you the vital information you need to build and keep the exact team size you need, rather than giving in to panic and making rash decisions like some business owners do in tough times.

“My favorite feature is without a doubt the real-time profitability dashboard for projects and retainers. With Accelo we were able to get a birds-eye view of projects and retainers and see how well you're performing as people report time or expenses.” - Lucas E., G2 User 

Consolidate Tech To Cut Costs

Even if you can’t impact utilization or profitability quickly enough, you probably have a major opportunity to cut costs without any personnel changes: Consolidate your tech stack

The majority of businesses rely on technology to help them solve problems, and 87% of small business owners believe technology has supported their growth in difficult conditions. Still, perfecting your tech stack may not be the first thing that comes to mind as a strategy to avoid layoffs.

Chances are, though, you’ll uncover many ways to save money when you conduct an inventory of your unused and underutilized software. Once you cut out all of the miscellaneous applications you’ve been paying for that aren’t generating results, you’ll be ready to move to a client work management solution.

Accelo is helping you offset the blow of a down economy. We’ve created a guide to help you apply capacity planning, utilization metrics and smart tech to make the most of your current resources.

The Lean Team Strategy: A Guide to Thriving for Under-Resourced Service Businesses - Download Now

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About the Author

Headshot Chealsea

Chelsea Williams is Senior Copywriter at Accelo, where she shares unique insights with service professionals and tells user stories via blogs, eBooks, industry reports and more. She has over 15 years of B2B and B2C writing experience — primarily in tech, sales, education and healthcare. Chelsea is an AWAI-certified Master Copywriter trained in brand storytelling and microcopy.

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