2011-10-06

Workforce planning improves productivity

Drake Editorial Team

Employees add value to an organization in a number of ways: Some possess critical skills; some hold jobs pivotal to their organization’s success; and some are simply more productive than others in whatever they do. It’s vital for organizations to consider these differences when making human capital decisions, especially in this period of economic uncertainty. Managers face significant pressure to cut costs through layoffs, restructuring, benefit changes, and other mechanisms; but doing so without analyzing the impact on current and future productivity, through workforce planning, can weaken or even negate desired outcomes.

 

Fewer people, more work

With layoffs, organizations often reduce head count but not workload. If the remaining employees lack the right skills, occupy the wrong positions, or are too extended or disengaged to meet customer needs, gains expected from the layoffs disappear.

Layoff decisions shouldn’t be based on head count but rather on what those heads provide, including profits, continuity, and risk management. Managers who know which positions and people produce the most value, can better determine whom to keep and how best to retain them. When incorporated into strategic business decision making from the outset, workforce planning moves organizations away from expensive quick-fix solutions, such as across-the-board layoffs, by helping them adopt more strategic and cost-effective approaches.

Thorough workforce analyses and forecasting information help organizations avoid the costly mistake of unwittingly getting rid of the very employees they need for short- and long-term success.

 

Inefficiencies are costly

Preventing layoff mistakes isn’t the only productivity-related benefit of workforce planning. Effective workforce planning also mitigates less visible issues that are just as detrimental to productivity, such as inefficiency and/or inappropriate staffing.

Consider this example: A large professional organization required certain employees to acquire and maintain an expensive specialized certification, at the organization’s expense. Through the workforce planning process, the organization discovered certification was required only a few times in its business processes. Now the organization can consider job redesign, process changes, and new staffing models. This reduces the number of costly certifications it funds and supports.

Inefficiencies also arise when leaders fail to foster employee engagement. Disengaged employees typically produce less, so it is vital to offer rewards and programs that support and motivate critical and top-performing talent. Workforce analyses and planning help organizations understand the drivers of engagement and their link to employee behaviour, including retention and performance. This, in turn, helps them invest in the tools that best enhance engagement and productivity.

 

Reaping the benefits of workforce planning

These are some ways for organizations to boost productivity through workforce planning:

  • Integrate workforce and business planning. Workforce planning analysis can be invaluable in identifying how significant business changes affect employees. This works only if the HR business partners and others responsible for workforce planning are sitting at the table when business decisions are made. Notably, Towers Watson’s recent Workforce Planning Challenges and Opportunities Survey found that 85% of CEOs and 74% of senior managers are concerned about workforce planning issues.
  • Conduct targeted analyses. Every workforce planning initiative should include analyses that focus on productivity. Examples of questions to ask are: How often are specific skills really used? What is the workforce cost structure? Can lower value-added responsibilities be shifted between positions to maximize productivity and reduce costs? How hard would it be to respond to potential business changes with the current structure? What is the change in the cost structure relative to changes in the business output? How does this vary by job?
  • Use the right measures. Too often organizations focus their measurement activities on elements with low value, such as average age and service, and overlook high-value measures, such as productivity and costs. Nearly three-quarters (74%) of the participants in Towers Watson’s workforce planning survey who have workforce planning processes consider productivity a priority, but only 43% measure it. Important productivity metrics such as revenue or output per employee are extremely rare.
  • Make it a habit. Workforce planning shouldn’t be a one-time exercise. Instead, it should be conducted on a cyclical basis that is frequent enough to reflect changing business needs and workforce characteristics. Up-to-date workforce planning information allows organizations to respond quickly to rapid or unexpected changes without starting from scratch. By closely monitoring productivity trends, organizations can respond quickly when trends show a downward trajectory.

 

The bottom line

In difficult economic times, businesses tend to scale back efforts in response to tighter or declining budgets. With so many organizations considering major changes, such as restructuring or layoffs, effective workforce planning is essential. The good news is that senior management is listening. The challenge is to provide them with the information they need to generate superior performance through effective cost management and improved productivity. This will go a long way as companies position themselves to remain profitable during any downturns and to take advantage of opportunities that arise as the economy recovers.


Reprinted with permission of Towers Watson. All rights reserved, Towers Watson. For more information, visit www.towerswatson.com.

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