I think the jury’s still out on this one. But what’s YOUR experience? Is this downsized “Lean and Mean” workforce really working for or against you, your organisation, the industry and the country as a whole?
Downsizing, or “right-sizing” as we euphemistically called it at the time, was intended to reduce the workforce to an optimal “size” to maintain the organisation’s core business activity. Downsizing acknowledged that, over time, most organisations not only had some “fat” built into it’s workforce, figuratively of course, but also carried a lot of “dead wood” – that is, skills and jobs no longer really needed by the organisation but kept on for sentimental reasons. Well sentiment and loyalty both went out of the window, on both sides, with the advent of Downsizing.
Downsizing was not only about laying off staff, it also started the trend towards “outsourcing”, which lead to the development of a whole new industry. The idea of outsourcing is to maintain a workforce of skills and jobs that are “core” to the business activity of the organisation, and “outsource” non-core activities. The idea, to maintain the “lean and mean” workforce and the operating costs of the organisation.
But, has this really happened? Evidence now being shown and experienced in the world of business might suggest not. But we are just not owning up to it. Let’s have a closer look.
What we are actually experiencing today is:
- A skills shortage – especially at the higher technical levels, with fewer skills coming through from the lower levels,
- It can take 6 months or more to find the right skills for core jobs,
- A 2008 study published by the University of Wisconsin–Madison found that downsizing can actually lead to a higher rate of turnover,
- Outsourcing today has got more to do with the inability to source skills than an issue of cost,
- Salaries are increasing at an alarming rate,
- Using grade-based job evaluation doesn’t work, because jobs are being pushed to higher grade levels in order to pay higher salaries because of the scarcity of skills. It is our estimate that jobs have crept up at least two grade levels over the past 10 years.
And this list is not exhaustive. And – this is all taking place in a world where the demand for high-level skills is increasing! We have only to look at what is happening in Europe right now to know the long-term impact. So, the big question is – have we actually reduced the cost of workforce over time? Or have we just buried our heads in the sand on this issue and pretend that it is working for us?
All evidence shows to the contrary. In fact, workforce costs have spiralled over the same period. If you don’t believe me, go and do the analysis in your organisation. Track your Total Cost of Workforce over the past 20 years and compare with inflation over the same time period. But don’t leave out outsourcing costs and contingent labour costs. They are both justifiable methods of achieving flexibility in the workforce – but they are still workforce costs. Tell me if the Profit per FTE (including outsourcing) has actually improved sufficiently to justify the problems described above – if at all.
So, where have we gone wrong, and what can we do about it? A recent research undertaken by IBM suggests that in order to truly “optimise” the workforce, you need to do the following:
- Workforce demand forecasting and capacity planning
- Improve productivity through better planning
- Match people to jobs (and not jobs to people which is the current practice)
- Optimize work schedules
- Workforce strategic planning
- Meet competitive challenges with advanced workforce analytics
I guess the answer is, we need to plan better, using better information. We need to estimate the result of our decisions over time – a long time if we take skills development time into consideration. And we really need to build our skills resources for the future – the future of the organisation, the future of the industry, and the future of the country.
To help you with better planning and decision making regarding your workforce, .