The U.S. Labor Department recently announced that workplace productivity dropped 1.8% in the spring quarter, the largest decline in nearly four years. Economists say it’s a sign that companies have trimmed staffs so much, they’re losing ground on productivity.
Companies will have to increase hiring if they’re not meeting their own productivity goals. Whether they do that or not, there’s something else they can do to improve productivity: better understand those they currently employ. It’s amazing how many companies—particularly large ones—can’t answer basic questions such as exactly who is working for them, what they’re doing, and how much it’s costing. Their current HR software isn’t designed to help them with these tasks, either.
It’s a bad situation, considering that employees and contractors typically comprise more than half of the operating budget. In addition to knowing who it’s paying for and what those people do, companies should be drilling into the details: Is an employee’s work on track, and what are the results of completed work? Is he working on the right things—is he even the right person for the job?
When you have a solid understanding of your workforce, you can best prepare for new initiatives (see the article, “Why HR Needs Actionable Analytics“). For instance, let’s say your company is expanding into Asia in 2011, and it has plans for a customer support center in Malaysia to support that new business.
The company needs to determine how many people it should hire in Malaysia to meet the business plan and how long it’ll take to hit that level, the quality and education levels of the local labor market, and local wage rates. It needs the right mix of contractors and salaried employees, and must decide who to transfer to Malaysia from other regions, who will replace those transfers, and which existing employees are best suited to get the center staffed and running. And, it needs to know how much all of these things will cost.
There are other examples: When launching a new business unit, a company needs to ensure it chooses its best people for its most promising products. To increase digital revenues, it must determine the optimal staffing level for that effort, the critical skills required, and the turnover risks for hot Web talent. To meet a goal for improving operating efficiencies, it has to know the true cost of developing and marketing products.
Sophisticated HR and business managers may have sharp business and finance skills, great intuition, strong leadership abilities and a good understanding of the people working directly for them, but that’s not enough. They need the right tools to support their decisions, and these tools must have access to current, quality information. Unfortunately, current systems often hold companies back from accomplishing these goals (I cover this topic in the report, “Why Your Current HR Systems Hold You Back“).
That’s why we’ve built a single HCM system at Workday, based on a software as a service (SaaS) model, from which to view people (including contingent labor), costs (direct and indirect), and performance, with easy-to-use business intelligence tools that dig deep into this data and deliver results within the context of the business challenge. We know this is what our customers need, to keep productivity humming along at optimal levels now, and to meet their growth goals for a strong future.