HR MANAGEMENT - What Is Manpower Utilization?

What Is Manpower Utilization?

by Brian Bass, Demand Media

Manpower utilization is a business concept that describes how effectively a business uses its manpower or employees. Businesses commonly use the concept of manpower utilization to evaluate output in relation to labor costs. Additionally, businesses use this concept to find new ways to more effectively harness the output of labor.

Conducting a Manpower Utilization Study

Businesses sometimes commission a manpower utilization study to determine the percentage of their workforce that is being utilized effectively. A company can generate a manpower utilization study internally or hire an outside company to conduct the study. Businesses use the results of the study to determine wages, technology purchases and ongoing efforts to modernize production lines.

Important Factors in Planning

When a company evaluates its manpower utilization, there are key factors that it must take into account. These include the prevalence of absenteeism, the level of education and skilled labor within the organization and any overtime paid or required by management. Once upper management understands these factors in combination with the manpower utilization study, the business can look for places to improve the way it uses its workforce.

The Role of Technology

Technology plays a vital role in manpower utilization and often becomes a less expensive alternative to investing in manpower for an organization. But technology also allows the business to more effectively evaluate the levels of utilization within the company by compiling and updating information about employees. This can take the form of a general company database or some other means of tracking individual employees' output on a regular basis. It is then up to the upper management to make decisions about how to act on the utilization information.

Why Manpower Utilization is Important

In business, the employees are an important contributing factor to the organization and also one of the most expensive contributing factors. Not only does a company pay wages to its employees, but it typically invests in employees by paying for their training and benefits, such as health and life insurance and retirement accounts. Thus, for a company to maximize its chances of success, it needs not only to understand its manpower utilization but also to work toward achieving optimal use of its workforce.