Resource allocation is simply the art and science of parceling out the various resources available to an organization.
We use resource allocation in our everyday lives-we have to choose how to divide our time, money, and energy. How do we decide? At home, we do it very informally. We often use gut feelings to decide if we want a new TV more than a trip to the tropics. Resource allocation, though, even when done informally, is based on goals.
At work, a big part of leaders’ jobs is the allocation of scarce resources. Capital is not unlimited, so they have to decide whether to invest in a new facility, or renovate an old one. Time is not infinite, so they have to decide whether to schedule some time to work on their budget, or visit the shop floor.
And resource allocation is not limited to just leaders. Employees often have many things on their plate, and have to use resource allocation methods for their own time.
Operational metrics and corporate goals should be the guiding lights for resource allocation. Those are the things that the company’s leaders have deemed important. When two different tasks both require resources, the one most closely linked to the company’s goals should win out.
Resource allocation has the potential to create hard feelings due to its inherent inequity. A metric that is critical to quality or an area that is having problems may get a disproportionate share of Master Black Belt time, for example.