How to… maximize the potential of your workforce

By Mark Smith, Executive Vice President, Ventana Research

Business managers of past eras would be amazed to see the level of competition that we now consider to be the norm in today’s business world. In this hothouse atmosphere, where market share can turn on the smallest of competitive advantages, businesses are increasingly looking to find ways to improve their organizational efficiency and effectiveness.

Much of this, of course, depends on people. Amazingly though, company managers often fail to pay attention to aligning their workforce management with how they manage operations. To avoid this costly failure, HR, finance and operations executives need to work together to develop a targeted yet flexible strategy for improving employee effectiveness. Organizations that fail to address workforce performance in a sustained and methodical manner will lose the competitiveness race and may well fall short of achieving the results expected by both the stakeholders in, and shareholders of the organization. And, surprising as it may be to some executives, annual performance appraisals and a goal-setting process are not enough to solve the problem.

Alignment is inherently a collaborative process. To begin to work toward it, management must persuade the people within the organization to agree upon a plan that can yield optimal workforce performance. Management can attempt to dictate, but without agreement on how to bring about this alignment of people and processes, the organization will not be able to fully realize the value of its human capital.

Moreover, employees other than executive management must have leading roles in workforce performance. This constitutes its own challenge, since in most cases they have little understanding of what they need to do to drive performance improvement.

So how can HR and others clarify the process for them?

Based on Ventana Research’s research into workforce performance management and experience gained from advisory and consulting engagements, we recommend that you start with a clear definition of specifically what it means to improve the workforce performance of your organization.

The goal of workforce performance management, in general, is to manage employees so that they contribute maximally to achieving competitive advantage and profit. With your definition in hand to guide you toward an understood goal, the next step is to examine all the activities that comprise the performance of the workforce, from acquiring and training employees, through rewarding and promoting them, and terminating their employment. They include:

• Recruitment and hiring.
• Compensation.
• Setting goals and objectives.
• Training and monitoring.
• Defining rewards and incentives.
• Managing competency and transitions.

Some of these processes can operate independently, but ultimately they are interconnected, adding up to the complete individual experience in the organization. The frequency of each can vary; some will cycle annually, others quarterly or even monthly. The examination and resulting understanding of the workforce processes life cycle provides the framework for assessing how well you manage these steps and determining where investments are required to improve their outcomes.

All of the elements of workforce performance management require support by underlying information systems, which often are complex and may be incompatible with one another. In practical terms, this means two systems used to manage aspects of HR responsibilities may not interconnect or be able to share data. As a result, typically it requires a considerable outlay of money and time to extend a human resources management system (HRMS) to provide workforce performance capabilities. The challenge of accomplishing this complexity is compounded by the increasing size of the enterprise resource planning (ERP) suites like those from Oracle and SAP that house some of the workforce-related information.

Top decision-makers must ensure that HR data from within ERP and HRMS is utilized in the workforce processes. In most cases, adding workforce performance capabilities to ERP or HRMS entails upgrades that are expensive in time, capital and resources – often so expensive that it is nearly impossible to accomplish in a development cycle of less than two years. Obviously, such lengthy procurement and deployment cycles cannot meet business’s need for rapid improvement.

These time and cost dimensions help explain the movement on the part of IT departments supporting workforce management functions from licensing on-premises HRMS and ERP systems to contracting for software-as-a-service (SaaS) hosted by the vendor on the Web. SaaS is a rental model that offers lower cost and promises rapid deployment without lengthy upgrade projects. Organizations increasingly are considering the SaaS approach for the obvious reasons: simplicity of access, speed of deployment and cost savings.

But that’s just technology – necessary, but not sufficient. Workforce performance improvement involves not just IT infrastructure, and in fact not just HR and its processes. Rather, it is about building a management practice that focuses on managing human capital assets for the measurable good of the enterprise. Realizing your potential starts with a good self-assessment of your efforts from the perspectives of both process and supporting technology; from there you can determine the logical next steps for improvement.

Adopting workforce performance management can elevate both your career and your organization’s success. It is time to move beyond conventional approaches and build a process that links people, information and technology and drives success.