Prepare For The Marathon

Posted on February 2, 2012 by Lori Morgan

Right before Christmas, I decided to start running and made a goal to run a half marathon by the end of the fall. Really, I am not as excited about the half marathon as I am about The Spartan Race that is 10-12 miles with obstacles. I did another mud race this past December and it was a lot of fun. Side note: it was a 5k and I walked most of it.

I have never been much of a runner as I enjoy exercise that involves more distraction from the exercise itself—kickboxing, soccer, etc—but I set a big goal nonetheless, and I decided to do the Couch to 5k program.  This is week 4.

Walk.

It got me thinking this morning, it is often touted that workforce planning is more like running a marathon than a sprint.’ In my experience with both, I’d say it’s more like preparing for a marathon. In my running program, I didn’t just jump in on week 1, day 1 and go 26.2 miles, rather I walked a lot and ran a little, in week 2 I ran a little more. Now on week 4, I am learning a few form techniques that seem to work and I can go a lot farther. The little tweaks allow me to do better. They will help me to eventually reach my goal.

Likewise with workforce planning, week 1, get help aggregating all of your data into one place so you can actually see it. Use information that is available to you, usually HRIS or payroll data that is mostly accurate because it has to be. Then you go through it and using what you know to be true and make adjustments (in your core system of record preferably). Next, begin identify trends that could or are having a negative effect on your business. Look at basic metrics such as areas of high turnover or transfer rates, elongated time to fill rates or an area with a high number of foreseeable retirements. And then when you get to “week 4”, use the information you have gleaned to make tweaks in talent management practices that will help you reach your goal.

Then run.

Once I complete the Couch to 5k program, I’ll move to the Bridge to 10k and I’ll be ready. I’ll have the basics down and I’ll be ready to add more. In Workforce Planning, the foundation will be laid. You’ll have identified triggers and costs for basic metrics and you’ll be ready to look at other business factors. In manufacturing, it could be efficiencies or accidents, in healthcare it could be HCAHPS scores or procedure costs, in other environments it could be logistical statistics. The opportunities are endless, but you have to start with the basics.

And just like I can get off the couch and begin training for a marathon today, you can start meeting your workforce planning goals too.

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You Have Data, Now What?

Posted on January 23, 2012 by admin

Happy New Year to you from the OrcaEyes family. I hope all of our readers had a splendid holiday season.

Where do we go from here?

The OrcaEyes’ team has been working diligently with our clients and prospects in recent months in great anticipation of our newest product release. It is a completely revamped Enterprise Suite for Workforce Planning and Analytics. The official release will be later in the month, but we have several beta clients in the system now and we are looking forward to sharing their stories and successes with you. So, this is just a little inside information to let you know it’s COMING SOON!! Keep an eye out.

In other news…in recent months, we have been very busy implementing new programs with our clients. There have been so many questions surrounding the actual use of the analytic results. From a broader market perspective, we have seen many professionals working diligently to build out knowledge centers that act as a hub for workforce-business intelligence. And many are doing an outstanding job…at THAT. But the question that many of these professionals are struggling with is what to do with the data once they have it.  And the answer is always “it depends.” On what? What your pain points are as a business?

To be successful at workforce planning, you have to go talk to people managing the day to day business, trying to achieve revenue results, manage cost containment, headcount budgets, accidents, growth and every other target business leaders are expected to manage. And the majority of these can be managed with the right workforce to some degree.

Our challenge to you…Get out of your office and go talk to people you don’t ordinarily talk to, make some new friends. The HR function is so divided at many organizations and everyone so often works in their silo. And busy enough as it is. But if you want to make a big impact, you have to take some big steps. Get out and understand where you can make a big impact! You might just make some new friends in the process.

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Reason #5 –Opportunities for Collaboration

Posted on September 6, 2011 by admin

We do a bit of work in healthcare and the thing I find interesting about this industry, and I think is severely lacking in other industries, is the level of collaboration between employers.  The health care industry employs highly skilled labor and virtually every region is experiencing significant talent shortages that will continue to worsen as our population ages. I assume this collaboration is necessary because healthcare is so political and everything has to be reported to state and national agencies, therefore requiring some level of teamwork. It is also certainly driven by the lack of talent which in the health care industry becomes a community issue.

In the Dallas Area, we have partnered with the hospital council, a regional association for hospital systems that operate in North Texas. We are working for three of the systems independently and then through this initiative, we are aggregating the data into a central system that can be analyzed for workforce trends throughout the region. This allows the council and its members to work with colleges, universities and vocational schools to ensure in the future, there are enough of the right workers in the healthcare space to meet demand.

Well, a few months ago, I was on my way to Detroit and had the privilege of sitting next to a fellow Dallasite who is an HR manager for a local manufacturing company. She was looking for machinists in the South Dallas area and faced serious challenges in filling those positions. She had already gone to the local vocational schools and tried to talk to the local high school that caters to troubled teens, but they refused to look at adding machinists training to the program. So here we have local companies who are promoting good jobs with a living wage and schools who refuse to train people. In realizing there is a decline in the number of machinists that will be needed in the next 5 years, there is also a significant retirement trend creating a gap of such skilled labor. And last time I checked, machinists’ jobs paid more (average $36,900 in DFW) than say a hairdresser (average $27,350 in DFW).

If a much larger group of cooperating manufacturers in the area had gone to the schools and requested this type of skilled labor, it might have made a difference. Or if encouraging students to obtain these skills is not feasible, how about a joint effort to attract this labor to areas where there is a greater need?  In the US we will experience a lot of skilled labor retiring in the next five years and the skilled labor pools are not being developed behind them.

Workforce planning can help entire industries. But it starts with individual companies and Human Resources teams that are ready to make a difference—both in their companies and in their communities.

Don’t wait until it’s too late!

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#6 Workforce-Financial Benchmarks Impact Business Strategy

Posted on April 26, 2011 by admin

Proper workforce planning takes into account the financial impact workforce planning has on the business. In fact a good workforce planning pilot will provide such measures as revenue per employee, overtime costs, predicted overtime cost in the next rolling 12 months and beyond, surplus payroll measures, earnings per employee, revenue by human capital spend and on and on.

Some of these are simple to calculate and some are not. Forecasting financial impacts is rarely simple to calculate because it requires the use of regression analysis calculations and looks at trending and possible workforce dynamics—attrition, fill rates, etc.

With that in mind, one of the best measures of a business’ efficiency is its comparative Revenue per Employee. It’s as simple as it sounds. Take Revenue and divide by the number of employees. The higher the result…the more efficient the company. Here is a quick snapshot of a few companies in the Retail sector and then the oil and gas sector.

Department Store Revenue # of
Employees		 Revenue/
Employee
Dillard’s $6.12 billion 38,900 $157,351
Macy’s $25 billion 166,000 $150,620
JC Penney $17.5 billion 154,000 $113,840
Sears $43 billion 312,000 $138,865
Kohl’s $18.3 billion 136,000 $135,227
Integrated Oil & Gas Revenue # of Employees Revenue/
Employee
ExxonMobil $370 billion 83,600 $4,427,333
ConocoPhillips $189 billion 29,700 $6,387,845
Chevron $198 billion 62,000 $3,196,742
BP $297 billion 79,700 $3,727,817

In retail, the most interesting to me is the ~$20K difference between Kohl’s and JC Penney. The store model for Kohl’s and JC Penney has historically been very different. Where JC Penney has store associate counters within each department, Kohl’s has a cashier model-reducing the number of required store associates. JC Penney views Kohl’s as its biggest competitor and has recently introduced the cashier model in its new, smaller concept stores–which may affect their revenue per employee in the future.

In the oil & gas sector, the fact that ConocoPhilips and Chevron have comparable revenue, yet ConocoPhillips has less than half the number of employees, speaks volumes. Some of this is related to technology and supply chain management, which drives efficiency.

So what does this have to do with HR and workforce planning? Well, maybe nothing or maybe everything.  If you are part of the executive team, then you understand that these benchmarks drive organizational decisions for changes in supply chain management, technology investment, delivery models, etc.—all things that make up business execution. And with changes in business strategy comes the requirement for new skill sets.

Being highly informed on the financial impacts of decisions that affect the workforce and being able to talk to the opportunities and risks in real numbers is core to guiding strategic change. An effective workforce planning model always takes this into account—providing justification for resources.

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#7 Human Capital Drivers Affect Business Outcomes

Posted on March 7, 2011 by Lori Morgan

I admit that I am intrigued with many a company’s 10-k. Not the whole thing because, well, it’s a 10-k; but a few sections in the document typically contain some good nuggets of information.

For instance, as you are probably aware every 10k includes a section detailing environment and business hazards that pose a potential risk to the business, whether they are vendor strikes, natural disaster, or commodities pricing. In my opinion, you can almost always tell how forward thinking the company is by the statement surrounding talent.

Take for instance these two statements, each from a different major department store.

Retail Store #1: The loss of key personnel may disrupt our business and adversely affect our financial results.
We depend on the contributions of key personnel, including _____ (chairman) and other key employees, for our future success. Although certain executives have employment agreements with us, changes in our senior management and any future departures of key employees may disrupt our business and materially adversely affect our results of operations. ($235 million net income, 290,000 employees)

Retail Store #2: The Company depends on its ability to attract and retain quality employees.
The Company’s business is dependent upon attracting and retaining a large number of quality employees. Many of these employees are in entry level or part-time positions with historically high rates of turnover. The Company’s ability to meet its labor needs while controlling the costs associated with hiring and training new employees is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. Changes that adversely impact the Company’s ability to attract and retain quality employees could adversely affect the Company’s business. ($350 million net income, 161,000 employees)

There is a big difference between these two statements and there is a big difference in the outcome.  Retailer #1. The loss of their key personnel? Really? The retailer has been struggling to find its niche for at least 10 years. Turnover in the ranks here might be a good thing. Clearly, they have not established the link between employee engagement or turnover and the bottom line financial results either. Also, they tend to have less than stellar customer service (engagement?)–#justsayin.

Retailer #2 on the other hand, is one of my favorites. I have had the opportunity to hear the VP of HR from this company present on one occasion. I don’t know if or what steps they are taking toward workforce planning, but I do know they have a strong focus on talent management and employee retention. They clearly recognize the impact front line employees have on the business and they are awesome–#enoughsaid.

For organizations wanting to optimize its use of talent management systems, workforce planning helps to tie employee variables to the organization’s financial outcomes—both historically and predictively. It combines headcount, gap, turnover and business demand to show recruiting need in future years and provides for scenario planning. If you reduce turnover, how does it change the outcome of equation (time and money)?

Understanding how each human capital driver impacts the business and having a mechanism for measuring and monitoring progress gives the HR teams and business leaders the insight they need to truly understand where to spend their time, energy and allotted budget dollars.

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