10 Nov

Workforce Stability is a Key Performance Indicator

How many of you reading this have experienced a layoff?  Not enough work and BOOM, laid off.  Discontinuing a product or service line and BOOM, laid off.  It is painful as an employee and painful as a business.  Further, the cycle of hire and layoff can be damaging to a businesses Brand and future recruiting efforts.  After all, who wants to take a job when you know in a few months you will most likely be laid off.  There is a way to eliminate or significantly reduce this practice for most businesses.  It takes work, you have to be patient and persevering, you have to use math, but it is proven time and again to help businesses succeed.  It has been proven to drive business success in such a way that staffing the workforce becomes less of a problem.  What is this process?

As you wonder about the process lets examine the experience of many businesses in the US.  Too many open positions, turnover because employees are going to other businesses who pay more, work being declined, slowed down because the workers aren’t there to produce or provide your product or service.  Waste and error have increased because the workforce is tired.  Workers are experiencing increased overtime adding cost to your labor.  Your Cost of Goods sold is feeling the pinch of all of these labor issues while having a negative impact on your business’s Gross Profit (Margin).

The solution is simple, challenging in scope and requires both a strategy and the execution of that strategy.  The solution is Workforce Planning (WP).    Jack Welch, former CEO of GE said, “Talent Management deserves as much focus as financial capital management.”  That is the bottom line when considering your workforce.  How do you plan for and manage your workforce needs?

There are two types of Workforce Planning, and your business needs both.  These are:

Operational Workforce Planning (OWP) – this is how Managers, using the skills and workforce available, plans and schedules work.  It ensures that talent is distributed among your operating areas and it identifies your talent needs by the number of employees, the types and the needed skills.  More often than not HR Departments are reactive in this area and are not addressing the issue with a strategic view.

Strategic Workforce Planning (SWP) – addresses the broader issues that impact months and years while including ultimately the entire business workforce.  This provides needed workforce information that impacts business performance, productivity, profitability, and shareholder value.  Effective workforce planning enables the business to:

  • Align workforce requirements directly to the business’s strategic and annual business plans
  • Develop a comprehensive picture of where gaps exist between skills the workforce currently has and future skill needs.
  • Identify talent gaps and implement reduction strategies
  • Make decisions about how best to structure the organization and deploy the workforce
  • Identify and overcome internal and external barriers to accomplishing strategic workforce goals.

“Talent Management deserves as much focus as financial capital management.” Jack Welch

The availability of key skills is identified by 73% of CEO’s surveyed by Price Waterhouse Cooper as one of the top threats to their business.  Further over half of the CEO’s surveyed state, they do not have the information needed on positions and skills to meet business objectives; they don’t know what is happening within their talent management processes nor do they fully understand how the workforce contributes to the success of the business plan.  SWP reduces or eliminates those threats.

SWP takes effort.  It is a multi-step process that includes:

Step 1: Set Strategic Direction – Links the workforce planning process with the business’s strategic plan and the activities required to carry out the goals and objectives of the Business Strategic and Operational Plans.

Step 2: Analyze the Workforce, Identify Skill Gaps, and Conduct Workforce Analysis – This step involves:

  • Determining what the current workforce bench strength are and how it will evolve through turnover, etc.
  • Developing specifics for the type, volume, and location of workers and managers needed to accomplish the business’s strategic requirements
  • Determining what gaps exist between the current and projected talent needs

Step 3: Develop Action Plan – Involves the identification of strategies to close gaps, plans to execute the strategies, and measures for assessing strategic progress.

Step 4: Implement Action Plan – Involves ensuring that human and fiscal resources are in place, roles are understood, and the necessary communication, marketing, and coordination is occurring to execute the plan and achieve the strategic objectives.

Step 5: Monitor, Evaluate, and Revise – Involves monitoring progress against goals, assessing for continuous improvement purposes, and adjusting the plan to make course corrections.

It takes time to develop workforce strategies that are focused on business outcomes.  It takes cross-functional involvement that is data-driven.  Beginning now makes the profitable return on investment outcome happen sooner.  Starting now begins the elimination of the hire and layoff cycle.  Now is the time to begin this process.

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