As many organizations are preparing to move into their annual budgeting cycles, I am again getting lots of inquiries about different workforce investments and how to model them effectively through workforce planning. So I thought I would talk about a common one – looking at project and technology investments. Given where we have been from an economy perspective, companies are naturally being cautious about their investments. Projects and technology are being scrutinized closely and ROI is being vetted carefully. One of the questions that commonly comes up in an ROI context is “how much will this investment save me?”.
From a workforce planning perspective, our models can often be used to determine ROI. Let me provide a couple of examples. In the case of a process improvement project, if we are tracking the breakdown of our processes through WFP into the tasks, time, and skills associated with each major step, we can examine in detail how the process improvement will impact each step. These impacts can be aggregated into time savings or quality increases (or any other metric) and can then illustrate how workforce needs are changed. Do we need less people? Do we need less expensive skills? Will this process improvement change any volume patterns that might allow us to change staffing? Will the process be more reliable and thus allow us to change staffing? If your workforce planning is still more at the ratios phase (rather than detailed processes and effort) then this type of analysis may become more difficult, as it requires a bigger change in many cases to impact broad scale ratios such as revenue per employee. But you may be able to look at metrics such as staffing per number of calls or some other productivity metric at a departmental level and begin to see an impact from the proposed investment.
The same holds true for technology investments. The most common analysis is can the technology do things that people now do, but you can ask many of the same questions that I referenced above when looking at a technology investment. You may also want to look at things such as will automation of a process allow us to move it to a different location where labor is cheaper, more skilled, more available, etc. Often a forgotten consideration, will it allow easier data access or process execution to allow for more productive time (vs. administrative time) to be available and thus improve our overall workforce hours available? Will it allow me to process / complete work off hours and thus reduce overtime? Basically, you can look at the impact of the project on just about any productivity, volume, or cost factor that is currently tracked from a workforce planning perspective.
But one of the things that I also advise planners is to look at the certainty of impacts from the potential investment. For example, if a process improvement is supposed to reduce cycle time by 20%, how certain are we of that reduction? This could be an appropriate place to do multiple scenarios to determine the impact at various reduction levels and the flow through impacts on cost, productivity, etc. This can often help illustrate the breakeven point of a project (e.g. “we need at least a 10% reduction in effort and the associated headcount reduction for the project to be feasible financially”). And often workforce planning requires the historical data that would also be useful to the project team for understanding what is possible in terms of improvement. Again, this type of analysis is easiest to do when you are doing workforce planning at the more detailed process level.
Workforce planning can be a useful tool for helping to analyze potential project or technology investments, and can help organizations understand the real potential costs and benefits of a given investment, as well as the risk as to whether or not that business case can be achieved. The natural integration of workforce planning into the annual budgeting process is further reinforced through this type of analysis, but it is most effective when workforce planning is being conducted at the detailed process and effort level.
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