How do companies use information about their workforces to generate a competitive advantage? Can they align their employees to meet their global business strategies? These are important questions because a company’s workforce is just as important an asset as its technology.
Convergys wanted to find out the answers to these questions. It commissioned Saratoga/PricewaterhouseCoopers to conduct a study on workforce agility–the ability to quickly flex, leverage, and apply the diverse capabilities of its workforce. The supplier also worked with Dr. Richard Beatty, a professor at both Rutgers University and the University of Michigan who is publishing a book on workforce score carding.
“Companies recognize they need to drive competitive advantage through their workforces by being able to quickly align them with company strategies, which can change from day to day,” explains Bonnie Tichman, Vice President, Marketing, Convergys Employee Care.
However, the study’s most telling finding was that most companies are not able to do this. Only 16 percent polled rated their companies as agile at reallocating resources based on strategic need. Forty-six percent of the executives told researchers their companies were “too rigid” to react quickly.
Overspending Yet Underperforming
Even worse, the study found companies are “overspending yet underperforming,” according to Tichman. The wasted amounts are significant. Tichman says companies are overspending by as much as 10 percent on such workforce-related costs as compensation and benefits, inappropriate training, turnover and excessive headcount. In addition, companies in the study estimate that they are under performing by as much as 10 percent because of unfilled positions, poor scheduling, poor job performance and slow response to market, customer and strategic imperatives. “If a company has $10 billion in annual revenues, not being agile could cost the company’s bottom line $1.25 billion a year,” she explains.
Tichman says in many cases employees are underperforming by 10 percent “due to misalignment and misuse.” Organizations may do a poor job of scheduling or may deploy too few or too many workers for critical operations. In many cases the employees on the job are not multi-skilled, “which is often necessary for optimal performance,” explains the Convergys executive.
Tichman says the companies fall into this trap because they have not been able to figure out how to measure their workforces. Almost 70 percent of the respondents said they “had a hard time” assessing the workforce data they had.
The Importance of Learning
In addition, employers admitted they did a poor job of developing their employees’ skills. Tichman says employees realize they don’t have the skills they need to do the job well and know their employers do not have the learning channels in place to educate them. “One of the major reasons people leave voluntarily is because they are not growing,” Tichman points out.
Companies must customize their learning sessions and integrate learning into work. She suggests self-service types of learning applications that are always there when employees need them. “Companies can avoid this economic hole by using learning tools to promote the external brand internally, to teach company values, and instill the corporate culture,” says Tichman.
The Convergys executive says employees need to be learning “continuously” because the business climate changes so quickly in our new, global economy. “Where do employees need to go tomorrow? What technologies will they need? What will be the new, different marketing plans they will have to execute?” asks Tichman. The learning function keeps the forcework agile.
Look at Employee Skills Not Their Position
Tichman says employers typically look at employees based on the jobs they do instead of noting the skills they have. Lost opportunities occur, for example, when a company wants to produce a new product. The leadership is unable to easily determine who would be the best fit for the new job or if they need to hire someone outside the firm. Tichman says there are often lags when a company tries to introduce a new product because it doesn’t have the proper people in place to get the job done–or doesn’t know it has the proper people to tap.
Companies can stop under performing if they focus on what Tichman calls “the A jobs”–those positions that clearly contribute to a company’s bottom line. “There may be only 20 of these jobs in the whole organization,” she says. These are people who generate revenue, deal with customers, or drive the strategic value of the organization. The company’s leadership has to manage these crucial employees differently from the rest of the organization, she explains.
They also need different types of learning and skills development programs which must be aligned to the company’s business strategies. Skills tracking is a requirement. “Companies must analyze the learning impact to see if revenue and productivity increase,” she explains.
The Need for Diversity
The study found companies need to make talent diversity the bedrock of their workforce agility strategy. But this entails more than cultural, racial, and gender diversity. What’s more important is having someone who has more than one skill and a wide range of experience.
Finally, Tichman says companies “don’t understand the real cost of an employee. They are spending more money than they have to.” For example, companies must assess their benefits to make sure the offerings meet the company’s recruiting needs but go no further. “Does a company need to offer more than one benefit plan? Some do and some don’t. Companies could be more analytical if they had more information,” she says.
She adds companies must do “a better job” of using business intelligence to understand trends and do a better job of predicting the future. “This is the only way to produce a truly agile workforce,” says Tichman.
How the study was done: Saratoga/PricewaterhouseCoopers conducted 300 phone interviews during 2004. Forty percent of the interviewees came from the HR department; 30 percent worked for the finance department; and the remainder were general managers.
Note: Tichman and Beatty will discuss this topic at an HRO World session on Wednesday April 13 entitled “Driving Competitive Advantage through Global Workforce Agility.” Companies will be able to rate their workforce agility during the workshop, which runs from 11 am-noon. The speakers will also discuss how companies can create a better alignment between goals and their workers.