HR professionals can play a pivotal role in the profitable growth of their organisations with the adoption of human capital management tools, but only if they learn to collaborate more effectively with colleagues in operations and information technology.[1]
In an increasingly service-orientated economy, more and more organisations have large numbers of employees working in frontline roles on a 24/7 basis and for most, the workforce accounts for a large proportion of their costs. The way this resource is managed and deployed is a critical success factor and fundamental to profitability and growth.
Deployment headaches
Managers in these companies say their biggest headache is getting the right people working at the right time to meet customer needs. Even when people are contracted to work shifts, it can be difficult to cover certain times, such as weekends and school holidays.
This was evident in a recent Government speech by Theresa May who highlighted that, despite the demands of the job, there are more police officers on duty on a Monday morning than on a Friday night.
Until now, one of the main problems has been in scheduling hundreds, sometimes thousands of staff. The sheer complexity has tended to result in a ‘keep it simple’ approach with all staff scheduled to cover all times of the day on a rotation or roster basis.
This produces a situation where employees have different start and finish times every week. While suiting some, it causes difficulties for a great number of people, such as parents who end up requiring highly flexible childcare provision.[2]
Even when employees are scheduled to cover the necessary work time, late notice absences (calling in sick) can impact service levels; a major problem in some industries. Spare resources can be scheduled to provide contingency, but it costs a lot of money to pay people just in case they are needed.
The role of technology
Fortunately, a new breed of workforce management applications, that enable organisations to up their game, is now available. Paper-based systems, still used by many organisations for scheduling and allocating staff, can be replaced with software that allows more complex work patterns to be managed.[3]
The software integrates seamlessly with finance and payroll systems, providing a comprehensive and data-rich picture of human resources. This enables organisations to take a more holistic approach to the way they contract with and optimise the time of their employees. This is known as human capital management.
Surprisingly, many organisations already have much of this functionality, or at least the potential to develop it, within their existing systems. However, they are not taking advantage of it. The main reason is poor internal collaboration, especially between the HR, operations and IT functions of the organisation.
Here is a typical scenario. The organisation invests in a new HR and payroll system. The project is led by finance or HR with limited involvement from operations. The emphasis is, understandably, on achieving a system that pays people accurately. The system is also developed to provide basic HR reporting, such as headcount, employee profile and turnover. Once these two objectives are achieved the project basically ends, or runs out of money.
As a result, the organisation is left with an extremely valuable but under-utilised asset; a system that contains all of the information needed optimise the workforce. However, because of the way it has been introduced, no-one in the organisation has a full understanding of what it can do. As a consequence, the full potential of the system remains unexploited.
A cross-discipline approach
Good technology creates a perfect opportunity for HR professionals to utilise their expertise in getting the best from this asset which, in turn, supports the profitability and growth of the organisation. But they can only succeed by collaborating closely with their colleagues in operations and Information technology.
The first step is to achieve the most efficient and economic deployment of people, often described as ‘workforce management’. Efficiency and economy are not necessarily the same thing. Having the right number of people working is one aspect. When individual work patterns attract different pay enhancements, achieving the most economic allocation of people is a further consideration.
The key is to get the cross-functional team working on the way labour costs are measured and controlled. Take a look at how this is done at present. If your organisation is still using budget variance reports then you have a problem! Just because a department is below budget, does not mean that the workforce is being managed as effectively as possible.
A more sophisticated approach requires information in the payroll system, such as time and attendance records[4] and wage payments, to be combined with information in operational systems, such as service requirements. This enables a more comprehensive analysis of planned and actual expenditure and the ability to drill-down and discover reasons for overspending.
Even well-managed organisations have achieved savings of 1 or 2% of labour costs with this approach. That may not seem much, but in the current climate it can mean the difference between profit and loss for labour-intensive companies.
Workforce optimisation
Once the organisation understands the dynamics of its labour expenditure and is controlling the cost of the existing workforce, it is time to consider the next phase. Often described as ‘workforce optimisation’. This is a more strategic challenge and requires a greater input from the HR function.[5]
Armed with the data from the first phase and using knowledge of the labour market, the workforce and alternative employment contracts, HR professionals can facilitate even more substantial improvements. These are not just limited to cost savings. Changes can be made that lead to a more flexible, satisfied workforce and resulting improvements in service performance.
For example, many organisations do not accurately know what their optimum workforce is. They may think they know, but a quick look below the surface often reveals spurious assumptions based on outdated ‘rules of thumb’” about resourcing levels
It is not just about the number of employees. Depending on the service objectives, benefits can be achieved by introducing different employment models, such as part-time working. Terms and conditions can also be tailored to better meet service requirements.
[1] See also Philip Whiteley’s ‘Less equal human capital’ in The People Bulletin, 8 October 2009.
[2] See www.daycaretrust.org.uk/pages/research-reveals-childcare-gap-for-shift-workers.html
[3] See Steven Hunt’s ‘The role of technology in the evolution of HR’, in The People Bulletin, 12 January 2011
[4] See also Dennis Keeling’s article ‘Shortage of integrated systems’ in The People Bulletin, 23 March 2011.
[5] This was something covered in Hugh Mitchell’s talk at the recent Economist Talent Summit when the chief HR office of Royal Dutch Shell told delegates: “If you win the work you need the people in place to respond to it. This means having a globalised, solid, central HR function”, said Mitchell. “We also need to be clever about how we transition people from one project to the next. It would be a disaster to waste skills if there wasn’t a job to go to after one had finished.” http://www.apbusinesscontacts.com/the_people_bulletin-pb_5/new_frontiers.aspx