This article is one in a series sharing best practice insights for continuous organization effectiveness. Other articles can be accessed through links provided at the end.
The workforce is constantly changing as people join, move through, and leave the organization. Simultaneously, positions are opening, changing and closing. And in this context of constant change, real-life rarely goes to plan: positions get filled earlier or later than planned, and/or at a higher or lower cost than planned.
Aggregate measures provide insight to understand the magnitude of change, – for example, to see how the size and cost of the workforce changes over time, – but don’t reveal the underlying reasons for the trends being observed. In many organizations, we see business partners from both Finance and HR spending huge amounts of time reconciling headcount and cost data to equip business leaders with the insight they need.
“We had armies of HR partners and Finance partners across the business getting together every month around their spreadsheets trying to reconcile actual headcount and costs against forecasts. I shudder to think how much time was being spent. We now have this insight immediately to hand.”
Getting control in a context of constant change can appear overwhelming but is within reach. This article introduces three practical actions we see being taken to get control over the constantly changing workforce.
Key measures are tracked over time with insight revealing reasons for changes
Measures revealing the actual size, cost, structure and composition of the workforce are tracked over time to visualize changes between reporting periods. Importantly, however, business partners across the organization can drill-down into trend lines to identify the number of joiners, movers and leavers; where these have occurred in the organization, and the cost of each. In short, they are equipped with insight to understand and explain the reasons for changes over time.
“I can’t just sit back and report that headcount and costs have changed over time, I need to explain why. Reconciling employees who have joined against those who have left the organization or moved to a different business unit was painful work and a terrible use of time.”
When Actuals diverge from Forecasts, the underlying reasons are immediately visible
As introduced in an earlier article, the ability to visualize the future organization and forecast the size and cost of the workforce is a critical component for getting operational control. But real life rarely goes to plan: positions get resourced earlier or later than planned, and/ or at a higher or lower cost than planned. The same goes for positions planned to close or be changed: actions take effect sooner or later than planned, and the cost impacts may be higher or lower than anticipated. In short, a multitude of competing individual changes impact whether actuals are in line with forecasts.
Leading practitioners have the infrastructure in place to efficiently and accurately reconcile differences between actuals and forecasts. They avoid spending excessive time manually cross-referencing data to understand and explain differences. And they achieve this without introducing complex data structures or sophisticated analysis: Taking the example new positions, specifying the ‘planned start date’ and ‘planned position cost’ supplements the ‘entry date’ and ‘actual employee cost’ enabling the efficient reconciliation of reality against plan.
“When we have differences between actual and forecast headcount and costs, we need to understand the reasons causing the variance. The business thinks these are easy questions to answer but there was so much complexity it took huge amounts of time to reconcile.”
“It’s not enough just to show how headcount has changed since the last quarter. I need to explain the reasons why, and what is expected next quarter. I need the detail immediately, not in a month’s time. This is critical for credibility.”
Equipped with insight to understand the reasons for actuals diverging from forecasts, timely course-corrective action can be taken to get back in line.
When changes are made to the data used for planning and reporting, good practice is to counsel stakeholders to whom adjacent value can be delivered. In this example, the immediate focus is date and cost data to support forecasting and reconciliation. But there is opportunity to go further: Specifying the date at which recruitment starts, unlocks the ability to measure ‘time to hire’, benefitting talent acquisition colleagues. Similarly, when a ‘position entry date’ supplements ‘employee start date’, more refined talent management analysis is unlocked.
“We got clear from the start on what could be reported to provide as much value as possible to the greatest number of stakeholders.”
Control over unfilled positions is achieved
Getting control over unfilled positions is key to getting control over constant change. This includes both new positions planned to open, and existing positions which have been vacated. Without transparency, we often see huge amounts of hidden costs buried in the organization.
A pragmatic first step is to understand the status of unfilled positions. If there are relatively few, these can be worked through on a case-by-case basis, for example with colleagues from talent acquisition to identify if there is related recruitment activity. However, we regularly see organizations with thousands of multiple junk positions in their core system due to poor data management. In these circumstances, more radical action is taken to draw a line in the sand: If there is a ‘last filled date’ (or a ‘date created’ for new positions), positions which have remained open beyond a specified duration are purged. If this information does not exist, a property can be created and populated with ‘today’s’ date. At extreme, we have seen all unfilled positions purged then rebuilt by integrating recruitment data then maintained going forward. When radical action is needed, data will initially be imperfect, but progress has to start somewhere. Bringing issues to the fore builds momentum to move forward. It’s likely that some heavy lift will be required to get started, but payoff value will likely be within reach.
With visibility on the number, age, cost and recruitment status of unfilled positions, adaptive resourcing decisions are enabled, with the ability to redeploy resource investments to match changing business priorities.
“We had millions of dollars tied up with unfilled positions and needed to close the gap on cost variance. We needed to get to detail: if a position isn’t filled, what’s the recruitment status, when is it expected to be resourced, what’s the planned cost? We earned credibility by addressing this in partnership with Finance who are now equipped to provide better forecasts.”
“Previously, a vacated position stayed in the system indefinitely. Putting in the hard yards to get to grips with the multiple junk positions earned us the right to influence a new process. Now, when a position is vacated, an active management decision is needed within 60 days: it either passes to recruitment or gets removed from the system and would need to go through the requisition process.”
This article is one in a series sharing best practice insights for continuous organization effectiveness. An overview can be found here, and related articles can be accessed through the following links:
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