Making the Right Moves
Posted On Thursday 23 June 2011 at at 00:40 by Sri Lankan Human Resources Portal
[Note: This article Captured from Workforce Solutions Review Online, March 2011]
During the recession, many companies faced extraordinary organizational and productivity disruption as they devolved in a matter of months, sometimes even weeks, from a heavily staffed, money-making machine to a very lean organization where every staff position had to contribute directly to revenue production.
Organizational Optimization
The answer lies in developing greater corporate agility through the discipline of “organizational optimization.” Many organizations today use a one-off approach to handling re-orgs, attrition and workforce reductions — they perceive a sudden need and quickly take a best-guess action. With organizational optimization, however, managers regularly pinpoint gaps and weaknesses in the current organization and then identify the changes, dates and financial impacts that will lead to an optimal state. Such changes might include increasing or decreasing head count, redeploying or replacing low performers, acquiring new skill sets, and even developing new training programs to increase the competencies of the current team.
The concept of ongoing business optimization isn’t new. All organizations do some level of financial planning. Managers rely on accounting software packages to help them forecast revenue, expenses and budgets, and they have contingency plans in the event their forecasts are wrong. In organizational optimization, managers follow a similar process for workforce planning. They use software to create a plan that includes new hires, layoffs, promotions, redeployments, and salary increases, along with all the financial impacts. They also have contingency plans in the event the business reality changes.
The goal with organizational optimization is to evaluate the cost and impact of each scenario, find the optimal solution given the current business reality, establish the right time frame for implementing the plan, then adjust the plan incrementally as necessary. The “gap” between business results and staffing levels is minimized for an improved overall outcome.
For example, let’s say an organization is launching a new product, yet it is unsure whether the adoption will be swift or the market will follow a more gradual trajectory. The organization has a few options — it could staff up to support the best case scenario or wait and try to hire as demand requires. The first option could get very expensive as it forces the organization to take on significant cost that may not be offset by revenue for months. Staffing just-in-time to meet the growth would better align cost to revenue. In order to do so, however, managers need the ability to plan scenarios for different growth trajectories in advance, and need access to accurate current information to understand how they are tracking to their plan. These scenarios would include plans for redeploying employees from other departments, bringing on part-time or contract employees, hiring full-time staff, or even separating employees from other groups as this new product displaces revenue. The net result is that by optimizing the supporting organization, bottom-line results for the new product are significantly better. Unnecessary staffing cost is eliminated while the product is still supported in a proactive, high quality way.
To do this, executives must be able to track the actual impacts and costs over a defined period, continuously compare actual expenses to plan, and adjust the plan as needed. The first step in being able to do this is acquiring the right tools.
Visibility and Analysis
Today, software solutions can provide human resource managers the information they need to achieve organizational optimization. Typically, this software would include a current organization chart, a future organization chart, and a listing of potential next moves for each member of the team, as well as new skill-sets that need to be acquired. This information, presented along with date and net cost to the organization, creates the baseline for optimization. A monthly or quarterly review lets the organization realign the future chart and next moves with any changing requirements.
When looking for a software package for organizational optimization, make sure it provides visibility into key metrics and supports the required analysis for:
• Alignment between the number of employees in each function and business objectives,
• Total cost of the workforce and the impact of plan changes,
• Depth and distribution of skill-sets,
• Ratio of full-time to contingent labor,
• Scenario planning, and
• Key job positions and related succession plans.
This information and analysis is critical to gaining an understanding of the relationships that exist between HR, financial plans, and other business goals and metrics. The ability to analyze this information also accelerates the information-analysis-action cycle, shrinking a quarterly or monthly cycle time down to near zero, so managers can rapidly make decisions, iterate, observe progress toward the goal, and make course corrections along the way. Finally, this information supports improved process management, facilitating better collaboration, faster change implementation, and more accurate results tracking.
Rigorous Processes
Software is critical to organizational optimization because it is the only way to analyze multiple what-if scenarios. Without this capability, an organization cannot hope to arrive at the best configuration and action plan for coping with changing conditions. But software is also important because it brings objectivity to the process. This is especially important during times of intense change — such as concentrated business growth, rapidly changing economic conditions, and business emergencies — when actions based solely on emotion can do long-term damage.
In addition to software, organizational optimization requires discipline. The reviews must take place at regular intervals. Managers must maintain a tight link between their incremental adjustments and the current business plan. And adjustments to the workforce must be implemented as indicated in the plan.
By using technology to constantly analyze the relationship between the workforce and the business plan, and by establishing rigorous processes to ensure the workforce is regularly and optimally adjusted to meet current business goals, organizations can maximize the productivity of their workforces, position themselves to take advantage of every business opportunity, and avoid making strategic mistakes when the next crisis occurs.
