Simple steps for effective capacity planning in your agency

It’s the first day of a new month. You wake up and brew coffee. At 08.01, the CFO pings you about last month's numbers. They’re lower than expected. You have a quick meeting with the team, and everyone is equally surprised. You wonder: "Is this a chronic issue or just a temporary slump?" Looking at future projections, the numbers suggest the company will be bankrupt in three months. You're used to that—it's not reality, just outdated planning and allocations. You brush off the panic and ask everyone to go the extra mile this month. Until next month arrives...

Everyone is in Charge of Resource Planning

It's possible to run a profitable agency and maintain accurate business forecasts while creating an environment where consultants feel integral to the company's success. Poorly timed recruitment decisions can severely impact consultant utilization. To build effective teams, aligning people with suitable projects is essential. Accurate resource planning is fundamental.

Clear visibility of future opportunities, both tentative and confirmed, is crucial. Few agencies get this right, often settling for uncertainty. Consultants must actively participate since they're closest to the work. Regular updates from project and account teams are essential, and management needs to foster a culture that motivates consultants to keep planning accurate.

Consultants should easily update short-term plans and highlight longer-term opportunities at client accounts. Everyone, from sales to project teams, contributes to resource allocation.

Example 1: a vacation that had a surprising business impact

Bob and his wife, Allison, decide to spend all of June in Europe with a camper van. Bob's Summer vacation reveals in the timeline that there's an opportunity for Caroline to step in to do some of his work in May and June, get onboarded to the project, and when most of the team is away in July, Bob has nice pile of work waiting for him. The Product Owner had actually been a little bit worried if there will be a completely unproductive break. No sir!

Both Caroline and Bob make most of the Summer months and the client is pleased to know that they have the option to welcome Caroline full-time to the team in August/September if necessary.

Forward-looking scheduling and proactive account management unlocked 2+ months of new billable work. Thanks for the idea, Allison!

Example 2: a lucky discussion that determines next year's game plan

Denny is enjoying some Glühwein with the client-side project manager Mikaela and her boss Holly. The ladies discuss the big news that were shared internally: in addition to the webshop, their company is going to invest in building a cross-platform mobile application, using some of the webshop APIs. They don't exactly know how those APIs work and how much work is required from the webshop team – and what will be the new mobile team's responsibility.

Denny hears them out and asks if it would be OK for him to suggest a rough timeline for the architecture work and follow through with a little bit of concept design. After all, Denny's colleagues are incredibly talented at all of these things, and his experience in the webshop project gives him the knowledge required to explain the technical constraints.

Mikaela and Holly had not thought of this. Denny truly is the ideal primus motor here. Even if they choose to buy the mobile project from another vendor, it would be foolish to start from scratch rather than hearing Denny's and his colleagues thinking first.

Denny picks up the tab from the bar, wishes everyone a good evening, heads home and adds the roadmap items to the system so that they can discuss them tomorrow with the account team. Architecture/API design sprint asap; design phase in a month or so; implementation phase later next year. This may be huge.

Motivating Consultants: Why Keep Resource Plans Updated?

Motivating consultants to keep resource plans current can be challenging. Consider three approaches: rational explanations, rewards, and incentives.

Rational arguments – the pep talk

Imagine the whole team sharing the same big picture: the consultant, talent acquisition, sales, leadership. Everyone can look at the data and act on it. At a glance you see how the company is doing, and you're able to find the right person to help you get unblocked with a technical issue in your client work.

Having a clear outlook helps you in many ways:

1. Talent acquisition hires the right people at the right time: less overworked and underutilised consultants
2. Salespeople and staffing are able to build dream teams: they see the availabilities, skills and feelings in the staffing tool
3. Less of a disconnect between different departments, less miscommunication, more time to focus on what matters
4. Management can make the right budgets, plans, and lead the company with more than just their gut feeling resulting in a more profitable business

All of this results into a well functioning, more profitable company where consultants can happily focus on client work.

Rewards

Get playful about this! Perhaps you run a friendly competition on who has added the most new roadmap items to account plans during the past quarter and reward them with a bottle of sparkling. Alternatively, you might just want to highlight them in a weekly meeting and make people feel good about the good work they’ve been doing. Reward people for focusing on the right things, and don't be too serious about it. Give credit where it is due.

Incentivizing

The most direct way to motivate people is with financial rewards. There are different ways to incentivize consultants to do their best – including keeping their plans up-to-date:

1. A partner structure: If a consultant has equity in the company, they’re likely interested in helping the company succeed both short- and long-term
2. Bonus model: Set up a bonus structure for all employees that’s based on the targets you set up
3. Give people a tiny slice of the new revenue that they bring in. If someone logs a new roadmap item for an existing customer, give them a share of that if eventually you’ll close the deal. Give them even a bigger share, if they help in closing the deal.

Keep resource planning simple

Make it clear that it belongs to the weekly routine of a consultant to update their working situation for the next months. The tool where your consultants update their allocations should also enable some way to bring in new opportunities at existing clients. Communicate to your people that you want them to bring these ideas in, and have a monthly process in every account to curate these ideas and assign responsibilities. After all, this is a big part of their job as trusted advisors for your clients.

Resource manager oversees the allocation process

People know best how their future plans will look like, so our suggestion is to always have people update their own future plans. However, for larger companies, you might need people to make sure "planning goes as planned". Resource managers oversee the resource management process on a higher level. The responsibility for resource allocation shifts over time as companies grow, first being the job of the founders and later transitioning to multiple people being focused solely on that task.

Summary

In order for you to make better decisions about the future, you should have an up-to-date view of your project portfolio: both tentative and confirmed plans. Involving everyone in the team to the capacity planning process is a task that sounds simple but can feel daunting day in, day out. To succeed, make sure you have the right tools, culture, and incentivization practices in place. Changing the culture from top-down to bottom-up doesn't happen overnight.

Operating is quite a good tool to make this a reality, although there are other tools, too. Whether you run this with an ERP, dozens of spreadsheets, or something modern, remember to have the culture and structures in place.

In the next part of the series, we'll focus on building a budget and backtracking them so you'll have realistic targets that motivate your people.