Organizational resources are the assets that are available to the organization during its functioning and in its operational activities. Organization utilizes its available resources to pursue its objectives and goals. Organizational management is responsible for acquiring and managing the resources for the accomplishment of the goals.
Organizational resources are combined, used and transformed into finished products during the production process as shown in Fig 1.
Fig 1 Organizational resources and production process
Organizations rich in resources are better able to survive external and environmental turbulence. Resources positively influence performance and sufficient resources are essential for successful performance and organizational change. The role and the importance of resources in achieving organizational goals cannot be undermined. Distinctive organizational resources generate a sustainable competitive advantage and lead to better performance.
Resource management is an important aspect in managing the efficient and effective deployment and allocation of the organizational resources when and where they are needed. Resource management needs to be systematized for keeping a close eye on the resources. This process of systematization maximizes the efficiency of the available resources as well as minimizing of the wastage of the resources.
Effective, proactive resource management delivers the utmost level of optimization and efficiency by enabling proactive allocation of resources based on organizational policies. At this level, implementation of organizational policy oriented resource allocation ensures that resources are provisioned in advance of organizational needs and in alignment with overall organizational priorities and objectives. This drives the highest possible resource utilization rates, while simultaneously minimizing organizational risk.
Organizations must normally have a defined resource management process which mainly guarantees that resources are never over allocated across multiple needs. According to Peter Drucker, there is need to focus on resources in the organization in order to abandon a less promising initiative for every new need coming up, since fragmentation inhibits results.
Organization uses a variety of resources in managing its functions and operation, pursuing its organizational goals, and implementing its policies or programs. The knowledge about what kinds of resources exist, whether various resources really contribute to organizational performance, which resources are more important than others is helpful in the management of resources.
Resource management includes planning, allocating and scheduling of resources to tasks for fulfillment of objectives and targets. In short, conceptually and empirically, resources are the foundation for attaining and sustaining competitive advantage and eventually superior organizational performance. Resource management has an impact on schedules and budgets as well as resource leveling and smoothing.
Types and classification of resources
Resources include all assets, capabilities, organizational processes, organizational attributes, information, knowledge, etc. controlled by the organization that enable the organization to conceive of and implement strategies that improve its efficiency and effectiveness. Resources are the tangible and intangible assets organization uses to develop and implement its strategies. Tangible resources are normally classified as physical assets and technologies, human resources and organizational capabilities while the intangible resources are reputation and political acumen.
There is a significant positive relationship between organizational resources and competitive advantage. Out of the categories of resources cited above, human resources and intangible resources are deemed to be the more important and critical ones in attaining and sustaining a competitive advantage position because of their natures, which are not only valuable but also hard-to-copy relative to the other types of tangible resources (namely physical and financial).
Certain types of resources the organization owns and controls have the potential and promise to generate competitive advantage, which eventually leads to superior organizational performance. Physical resources such as the plant, machinery, equipment, production technology and capacity contribute positively towards organizational competitive advantage and eventually result in superior organizational performance. In addition, financial resources such as cash-in-hand, bank deposits and/or savings and financial capital (e.g., stocks and shares) also help explain the level of organizational competitive advantage and performance. Furthermore, experiential resources such as product reputation, manufacturing experience and brand name can account for the variation in organizational competitive advantage and performance. Human resources such as top and middle management, and administrative and production employees were also able to elucidate the extent of organizational competitive advantage and the resulting organizational performance. In short, organizational resources are the foundation for attaining and sustaining competitive advantage.
Resources are also classified as productive resources (which are needed for achieving goals) and administrative resources (which govern the use of productive resources). The growth of the organization is limited by the bundle of productive resources controlled by the organization and by the administrative framework used to organize the use of these productive resources.
As per other classification, organizational resources are usually divided into administrative (structural) resources, human resources, financial resources, physical resources, political resources, and reputation resources. Human resources, financial resources, and physical resources are traditional inputs in any organization. Administrative resources serve as leadership structures for governing and managing these traditional resources. Political resources are keys to have proper relationship with the statutory agencies. Reputation is also an important intangible resource.
Financial resources are basic resources that can be used to acquire other resources such as purchasing equipment, paying salaries to the workmen, and buying raw materials etc. Ample funding is indispensable to provide agencies with the administrative and technical capacity to make sure that they achieve statutory objectives.
Managing financial resources is about getting the most from the available resources in the organization. It involves implementing resource management procedures and controls and can include managing costs and maximizing opportunities.
Ideas and intentions can often outweigh the availability of resources within an organization. Reviewing the ‘wish list’ against financial and strategic plans enables the organization to the following.
- Identify what financial resources are available now and required in the future
- Prioritize these resources against objectives and goals
- Implement evaluation procedures to ensure resources are maximized
- Plan for potential changes that may lay ahead; e.g. change of staff, access to funding, beneficiary need, organizational growth
This process ensures that strategic goals and budgets are realistic and achievable whilst maintaining some flexibility. As with any process, this also must involve a range of people in the organization.
Physical resources include the physical technology used in the organization, the organizational equipment, its geographic location, and raw materials. Physical resources include fixed assets (such as land, building, and equipment), raw materials that are used in creating products, and general supplies used in the operation of the organization. While financial resources can be used flexibly, physical resources are relatively inflexible in that they are more directly connected with the operation of an organization and the achievement of organizational goals than financial resources.
Variety of resources shows relatively different impacts on the organizational effectiveness. Some resources have positive and significant influences on the organizational effectiveness while some others have negative or insignificant relationships with the organizational performance.
In order to effectively manage resources, organizations must have data on resource demands forecasted by time period into the future, the resource configurations that will be required to meet those demands and the supply of resources, again forecasted into the future. Forecasts should be as far out as is reasonable.
One resource management technique is resource leveling. It aims at smoothing the stock of resources on hand, reducing both excess inventories and shortages. Resource leveling, as it relates to inventory, is a resource management technique aimed at keeping the stock of resources on hand level, reducing both excess inventories and shortages. In task management, resource leveling is scheduling decisions, which are driven by resource management concerns, such as limited resource availability. As opposed to leveling, resource smoothing may not delay the task completion date, only particular activities within their float.
The required data are namely the demands for various resources, forecast by time period into the future as far as is reasonable, as well as the resources configurations required in those demands, and the supply of the resources, again forecast by time period into the future as far as is reasonable.
The goal is to achieve 100 % utilization but that is very unlikely, when weighted by important metrics and subject to constraints, for example: meeting a minimum service level, but otherwise minimizing cost.
The principle is to invest in resources as stored capabilities, and then unleash the capabilities as demanded.
A dimension of resource development is included in resource management by which investment in resources can be retained by a smaller additional investment to develop a new capability that is demanded, at a lower investment than disposing of the current resource and replacing it with another that has the demanded capability.
In conservation, resource management is a set of practices pertaining to maintaining natural systems integrity. Examples of this form of management are air resource management, and water resource management. The broad term for this type of resource management is natural resource management (NRM).
Resource plans enable organizations to maximize resource utilization, balance supply and demand and plan resources over the entire period needed for the completion of the planned tasks. Organizations may also use resource plans to identify resources, which could include human, capital, time, or technological equipment needed to achieve strategic goals.
Resource plans are used to express resource requirements in terms of resources needed over a period of time. The resource planning provides the organizations the following abilities.
- To increase resource utilization by aligning the right resources to the highest priority work
- To link mission, strategy, work and resources to quickly address changes in budget, mission or environment
- To identify quickly the actions needed to reduce risk and increase performance
- To conduct more efficient analysis and make better decisions based on current, accurate, integrated, and actionable information
Resource planning measures what the organization is expected to do with its resources and how well it does it. The difference between the required capability and current output identifies a performance gap. This quantifiable gap measure allows management to better understand how changes to organizational structure, work performance, and resource mix and levels impact the overall performance of the organization. More importantly, it allows leadership to understand the current alignment of the organizational resources to the work that supports the highest priority missions. Leaders can more effectively govern their resources in response to anticipated or emergent changes. Resource planning delivers an enhanced level of transparency for the organization by directly linking mission, strategy, and key success factors to the work, workforce, and workload.