Today's post comes to us from board member Mark Wales. In it, he argues that sustainable workforce management practices must be included in your organizational resilience strategy.
A world without employees?
No, I’m not referring to the continual fear of automation and robotics replacing our workforces. I’m talking about an issue that is far more pressing: the fact that workforce management strategies often lag in getting resources and attention.
Organizations tend to think about and plan for potential scarcities. For example, The Hershey Company thinks about and plans for a world with dwindling cocoa supplies and rising costs – this helps them ensure there will always be chocolate.
Coffee giant, Starbucks Corporation, has programs to work with local coffee growers around the world to plant millions of coffee trees and develop more effective and efficient practices for growing coffee. This is a strategy to sustain a core part of their business model.
However, many large companies fail to understand how to sustain their workforce.
As I work with large organizations on their labor strategies, I see a growing understanding that customer satisfaction and brand loyalty are closely linked. Smart companies see the next connection that customer satisfaction and employee engagement are also linked. Poor employee engagement leads to lowered productivity, customer satisfaction, sales and profitability.
It took farmers many decades to realize that industrial farming methods were removing the nutrients and topsoil, and slowly but steadily turning arable land into dusty and arid environments. Now, innovation combined with tried and tested traditional farming methods, is turning these lands back to into healthy ecosystems. On the surface it does seem to sacrifice productivity, but much more importantly, it taps into current trends for organic and heritage products, sale of produce online, and sales of farm share boxes into urban areas. These efforts directly appeal to their customers’ evolving perceptions and desires, giving both the product and the work a more modern sense of purpose.
So, what does this mean for labor strategies?
Traditional “Industrial†workforce management practices for funding and scheduling labor are propagating many of the issues they claim to address. They create a very unhealthy feedback loop that is draining for managers, employees and head office functions. The wasted funding, time and executive attention could be better invested in the employee and customer experience. Labor management is complex and nuanced. Decisions must be made around:
This list isn’t even close to exhaustive, and each business will have their own special concerns to add to it. It is very hard to get executive leaders to understand that decisions made from a single perspective have a very real effect upon the lives of workers and their families, which will eventually impact the ability to hire and retain employees. Difficulty hiring and retaining leads to less skilled employees who make more mistakes, know less about the product and the customer, and require more training. Employers end up with higher costs for training and wage inflation. This puts more pressure on the bottom line resulting in cutting hours or other similar “Industrial†techniques to manage labor costs, which in turn decreases the schedule stability and hours for employees leading to lower engagement, higher unplanned absences and higher employee turnover.
Sounds like a situation to try to avoid, right? But how?
Remember that sustainability is rarely achieved through short term decision making. Instead, employers need to commit to long term changes in products, attitudes and business practices. We have all seen the growth of sustainable business practices becoming a part of corporate annual reports as they respond to their customers and shareholders. An example of this can be seen in the recent commitments by Starbucks to replace plastic straws with compostable straws and lids by 2020. In parallel, Starbucks is also investing in sustaining their workforce with increased stock grants and parental leave. Both are long term changes.
What if we took a page out of the sustainability movement and looked at workforce management strategies in terms of a triple bottom line:
Financial Responsibility – sustaining a strong economic performance
Social Responsibility – sustaining a healthy and engaged workforce
Brand Responsibility – sustaining a positive and relevant customer experience
In this way, we can use tried and tested ways of investing in employee experience with new and innovative management techniques to ensure an engaged and productive workforce that will drive business success.
I recently had the opportunity to talk about the importance of labor cost management in manufacturing with David Caruso, the founder and Principal of David Caruso & Associates, Inc. David's consulting firm specializes in manufacturing, supply chain, and technology strategy. We talked about how manufacturing organizations are increasingly focusing on labor cost management in the current challenging economy.
In our conversation, David provides a number of examples of how manufacturers have used labor analytics tools to analyze and improve both worker productivity and product quality. In one firm he assisted, they found that quality eroded over the course of the day due to worker fatigue. They inserted more breaks into their process and achieved significant improvements in productivity and quality.  Click here to listen to a podcast of our conversation and hear more tips from David Caruso.
You can find additional information on this topic in this new Kronos whitepaper as well as in this article from IndustryWeek by my colleague Gregg Gordon on effective ways to manage a global workforce.
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