Today's New York Times had an article (http://www.nytimes.com/2013/03/04/business/economy/corporate-profits-soar-as-worker-income-limps.html?nl=todaysheadlines&emc=edit_th_20130304&_r=0) that discussed how the "Jobless Recovery" has seen an increase in corporate profits, but little help for those seeking employment. The article talks about a number of dynamics in the labor market, including the fact that companies have been able to hold wages the same or slightly increase them without adding headcount because of the continued weakness in the labor market. As the article notes, increases in productivity have helped enable this - corporations continue to be able to increase revenue without increasing their costs. But the article also noted that when companies are hiring, they are often hiring in overseas markets where growth is higher. While the implications for the US workforce is a much longer article, I wanted to focus on a couple of key links from this trend to workforce planning.
One of the most important concepts that I wanted to touch on from this article is the concept of productivity. While measuring productivity at the aggregate level (input vs. output) is fine for Wall Street, it masks some very important underlying dynamics that workforce planners must account for. While it seems on paper that companies are going to be able to continue to raise productivity forever, I think there are a number of other statistics that need to be looked at as a counter-balance. Statistics such as hours worked, worker health, stress levels, absenteeism, EAP usage, and a host of others that can illustrate the hidden toll that often accompanies these increases in productivity. In addition, the stress that is created from increased workloads can be a factor in driving turnover. And while companies often take for granted that people aren't going anywhere in a market such as this, it is often your high performers that do have opportunities and they may indeed be the ones you lose. And while the loss of a single or even a few high performers won't hit the numbers you report to Wall Street, they will make an impact on the productivity and performance of your remaining workforce. Some of the techniques that workforce planners can use to examine these issues include workload analysis (see my previous post here http://workforceexpert.typepad.com/the-workforce-expert/2012/08/look-at-workloads-now.html) and staff level analysis (see here http://workforceexpert.typepad.com/the-workforce-expert/2012/04/how-do-you-know-if-your-staffing-levels-are-correct.html). Again, many companies have become complacent about turnover because of the labor market, but they do so at their own peril in terms of the potential loss of high performers!
Another implication for workforce planning from this article comes from the focus on overseas markets for hiring. This certainly isn't new, and many of the Fortune 1000 now get more of their revenue from outside of the United States than from within. It is incumbent on workforce planners to help organizations figure out where they need staff, not just based on demand today, but on a host of factors that help optimize the long-term costs and productivity of the workforce. Some techniques that I have previously discussed in this area include Location Analysis (http://workforceexpert.typepad.com/the-workforce-expert/2012/01/location-analysis.html) which helps determine where work should be done and Position Analysis (http://workforceexpert.typepad.com/the-workforce-expert/2012/05/one-of-the-advantages-of-having-a-strong-competence-in-workforce-planning-is-the-ability-to-derive-answers-to-many-people.html) which helps determine who should do it. These analyses need to be grounded in the long-term strategy of the organization and must also take into account organization resilience and other factors.
One other aspect that I have spoken a bit about in the past is the financial aspect. As corporations increase their profits, the obvious question becomes what happens to those profits. Shareholder returns is certainly an important concept, but so too is the concept of reinvesting in the business. What investments are going to bring the most return for the business. I have previously discussed techniques for modeling things such as technology investments (see here http://workforceexpert.typepad.com/the-workforce-expert/2012/08/modeling-project-and-technology-investments.html) but there is also an important need to examine people investments. What investments in a company's workforce will yield the most returns? Is it training? More salary? More workers? Lots of guidance for these areas in the research, but also a lot of contradictory data. There is a great deal of value that workforce planning can provide in this area in terms of knowing your particular workforce and how various investments in that workforce will make a difference.
A final note - I am not one to say that productivity is a bad thing. As a consultant, I spend a lot of my time helping organizations become more productive. But whenever I see articles such as this one, I know that there is always a flip side to the coin or another side to the story. Too often I have seen productivity come at the expense of the worker, and I believe that it is important that as workforce planners we be on watch for this dynamic. Because when productivity comes at the expense of the workers, it is bad for the company and bad for the worker. The sustainability of those productivity gains is in question when the workforce dynamic is out of balance. As workforce planners we need to be the experts in these dynamics and help our organizations achieve productivity gains that are sustainable...