Article was first published in HRZone.
As uncertainty over the Eurozone crisis continues to dampen confidence and fears of a double-dip recession continue to loom, it appears that UK organisations will need to keep on tightening their belts for some time to come.
And as downsizing strategies go, few measures ever seem to receive the same amount of airtime and column inches as job cuts, which have become the very public face of the economic downturn.
The rationale for redundancies is easy to understand when the workforce can account for anything up to 90% of a business’ total fixed costs. But are employers simply taking the easy way out?
There is mounting evidence to suggest that significant efficiencies – amounting to millions of pounds in cost savings – can be achieved just by managing the workforce more effectively. Cutting headcount is not a cheap proposition and it is an agonizing process in any organisation. Worse still, losing important knowledge and skills can come back to haunt you in the longer term.
While remaining staff may pick up the slack initially, growing the workforce quickly enough as demand rebounds can likewise prove to be a challenge.
In fact, recent statistics from the Chartered Institute of Personnel and Development` showed that employers are already struggling to recruit the skills they require due to increased competition for talent. But this situation can hamper a business’s recovery and may even call its future into question.
Clearly then, it makes sense to retain good people rather than lose them for short-term financial gain. Organisations can do this by addressing three core issues in order to optimise how they manage their workforce: monitoring staff activity and time spent; managing absence and deploying employees more effectively.
Although such a proposition may sound straightforward in theory, a lot of companies simply do not have the tools to go down this route in practice. Managing absenteeism, for instance, is something of a holy grail for HR professionals. Even though absence levels have fallen in recent years, the associated costs remain high.
For example, SK Chilled Foods established a few years ago that it was losing 700 hours per week due to unauthorised absences. As it had 700 staff, it was on average losing about an hour per week per employee.
At Doncaster Council, staff reportedly took an average of nearly 13 sick days per employee during 2009/10, which cost the authority more than £10 million.
Adding to the cost of absenteeism are activities such as wasting time and fraud, which includes rounding up timesheets. Nonetheless, many HR directors are not keen on the idea of introducing absence monitoring systems and such initiatives often stall because of internal political and cultural considerations.
As a result, spreadsheets continue to be the most common tool for reporting time spent and absenteeism, which makes it difficult to analyse the data at any level of detail. The danger is that this situation can give rise to a culture of ‘getting away with it’, which organisations can do little about as they have little hard evidence.
A Wall’s ice cream factory in Gloucester found, on the other hand, that automating its workforce processes saved it time on manual data entry and analysis activities. Before its owner Unilever overhauled how things were done, four full-time clerks and an HR administrator were tasked with allocating staff costs against specific products lines.
But implementing a workforce management system also meant that the factory could deploy its 500 workers more cost-effectively as they were automatically allocated to undertake pre-scheduled tasks.
Managers were able to evaluate labour costs at the activity, production line or factory level and last-minute changes could be made easily in order to cope with absences or to meet production demands. There was also no need for dedicated administrators any more.
Automating manual processes
SK Chilled Foods, meanwhile, saved more than £600,000 and cut absence levels by 40%, which reduced other administrative costs, by introducing a comprehensive, automated workforce management strategy.
A lot of the savings came from simply automating manual procedures such as entering attendance data and connecting together previously siloed HR processes and systems so that things operated more effectively.
Its workforce management systems also enabled detailed information to be recorded about each employees’ attendance levels and activities, which could then be data-mined in order to uncover trends as well as the behaviour of individuals if required.
Such information can help users to understand the reasons for any widespread absenteeism or excessive overtime levels, which may be down to an organisational misalignment that can easily be fixed rather than individuals’ poor behaviour.
The same data can also be used to help optimise scheduling and rostering by providing a more accurate picture of the time and resources required to perform a given task. Moreover, as predictive workforce analytics software becomes more prevalent, it will be possible to base strategic decisions of this type on real-time rather than historical information.
But these systems can also bring benefits for the workforce. A medical devices company, for instance, found that introducing a flexible working model based on annualised hours – monitored by a workforce management system – not only reduced its cost base, but also helped to address growing staff discontent due to erratic overtime schedules.
After having said all of this, it is important to stress that deploying any kind of automated system is likely to expose some ‘dead wood’. Nonetheless, dealing with surplus capacity is a long way from making the mass redundancies suggested by our current apparent ‘sack to save’ culture.
Neville Henderson is a principal consultant at Pasfield Curran, the flexible working, productivity and working time consultancy business of workforce management software supplier, Crown Computing.