Creating a great company that people are passionate about working for is an amazing feeling. But once a firm grows beyond the start-up, beyond the fledgling, and becomes an established business, people planning can become an exercise in box-ticking and seat-filling. And that’s bad for business.
Our research shows that the largest UK companies (of 1,000+ employees) are leaving £10.4 billion on the table because of poor people planning. That’s how much the country’s GDP would increase if the 50 per cent of firms with the poorest people-planning scores upped their games to match those in the top 50 per cent.
According to Kay Neufeld, head of macroeconomics at CEBR (who carried out the analysis): “People are both the largest cost and biggest value creator for almost all organisations. Our analysis has shown that whilst businesses clearly understand overall productivity, when it comes to profit per worker there is a significant informational deficit.”
Workforce planning and analysis (WP&A) is the key to unlocking that potential, which will benefit companies, workers and the national economy. The key is productivity growth. Increasing productivity was identified as a concern by 86 per cent of the companies surveyed. That’s a start, but it’s not a plan.
It’s easy to throw money at flashy technologies like AI, machine learning or a revamped online presence with a mobile app to boot. But you’re already sitting on a gold mine. Your workforce data is key to improving productivity and profit per worker.
Good business results don’t come from throwing money at problems, of course. They come from smart investment and our research shows, when it comes to WP&A, that’s not happening. Two-fifths (39 per cent) of the companies surveyed called their productivity ‘very concerning’, but those same firms are investing just 0.25 per cent of turnover in technology to improve it.
Tech is the key to extracting that value
Most large companies don’t know enough about their employees or what they do. So it’s hardly surprising that there’s this much potential upside in getting greater insight into what’s going on with your human capital. For organisations that are investing in their future, getting better information on people and what they’re working on improves productivity by making sure the right people are in the right place at the right time to deliver results.
And make no mistake, it deliver results. Firms with people-planning scores in the top 50 per cent of results experienced productivity growth 285 per cent greater than companies with people planning scores in the bottom 50 per cent.
Think of WP&A as business intelligence but for people. The latest technologies can track performance on an individual level, a team level, a department, a division, however you like. It ties HR data and finance data together, letting you see the cost of every call fielded by John or every sale made by Mary. It even helps you see what might happen, in terms of cost and results, if they switched roles. You can calculate how reassigning roles or restructuring business units would affect costs and outcomes before you commit to those changes.
The reality is most companies already track employee performance, but the data is used only for annual reviews and, if needed, disciplinary action. Using that information as part of the strategic planning process and ensuring people are in the place that makes the best use of their talents at the best cost to the company is a win for everyone.
Almost every large business has HCM systems in place to manage workforce data, but most struggle to integrate with other ERP, BI, CRM and Finance systems to ensure the organisation runs on objective, real-time data.
The power of people planning
The good news is that a small number of the most innovative companies are taking action. Within the research sample, workforce data is generally regarded as important, with 38 per cent stating that employee-level data was highly important in the management of costs, while a third (33 per cent) said that it was highly important in assigning people with the right skills to the appropriate tasks.
It’s not just individuals either. Having quick, connected access across business units allows leaders to assess the current productivity of teams and consider how they might be optimised for the best results.
This kind of planning is crucial, as it lets companies adapt to changing market conditions. But it’s more than reacting. Strong WP&A also allows companies to be proactive.
A full three-fifths (60 per cent) said that employee-level data was either important or very important in determining future workforce needs, and 62 per cent indicated that it was important in identifying gaps between the current workforce and future needs.
What do all the numbers and research boil down to? If your company knows its people - including their competencies and aspirations - it can unleash their full potential.
Clock-watchers aren’t born, they’re made. Made by companies that don’t challenge employees and that keep them in roles they’ve outgrown. Made by companies that think inspiration comes from a Friday beer fridge and a yearly barbecue, not from a feeling of partnership with the company. Are you making clock-watchers or partners? The tools are there. The choice is yours.
Rupert Morrison, ConcentraAnalytics