It’s a simple question. Do you have a workforce strategy? Many businesses think they do. They focus on cost control within their workforce. They look at data such as cost per hire to focus on what they believe is a good workforce strategy. They use “Best Practices” from other businesses and see them as a one-size-fits-all solution. The focus is primarily on minimizing the cost of the workforce to maximize the value of profitability. That focus is wrong.
A strong workforce strategy first and foremost recognizes one thing, that your workforce is the primary source of growth and value creation in your business. You can have the best equipment, the greatest product or service, and the best-looking offices or office location on the planet; but if you don’t have the right workforce does any of that matter?
I can hear the critics already…”That’s true but…”
Read on my friends.
Hopefully your business has a strategic plan. Not the plan that is gathering dust on your bookshelf or hiding under a couple of magazines in your desk drawer. A business plan that truly describes your strategy for business success. Who is going to execute that strategy? Your workforce. Further, are they familiar with it? Do they know its content and their role in it? Do your managers and supervisors possess that knowledge? Most of you are silently answering those questions with some negative response.
Now those that are still reading, giving me one more chance to reel you in on this heresy of a workforce strategy; here is the meat. Businesses that don’t emphasize their workforce strategy and properly execute it underperform. That’s right, they have lower performance, productivity, profitability, and shareholder value. If you work for or with a Board of Directors, that can cost you your job. Still interested in learning more?
How Does This Work?
There are 4 elements to a workforce strategy, 3 separate strategies and 3 key challenges to developing an effective workforce strategy, assuming you have a good, and it is being used, business strategy (strategic plan). These are:
The 4 elements:
- Workforce Success – key deliverables that drive operational, customer and financial strategies
- Workforce Mindset and Culture – the norms and expectations that your workforce must understand
- Workforce Competencies – The Knowledge, Skills, Abilities, experience, and Behaviors your workforce MUST possess
- Workforce behaviors – Measurable behaviors of your leaders and employees that are consistent with your business strategy and its execution.
The 3 Strategies (each must be measurable in a way that demonstrates its contribution to long-term business success)
- Business Strategy
- Workforce Strategy
- HR Strategy
The 3 Key Challenges:
- Perspective – must shift from cost to be minimized to the primary source of growth and value creation
- Metrics – These must focus on workforce performance in strategy execution and not on HR “stuff.”
- Execution – Use of workforce data to improve decision making
A Key Part
A key part of a successful workforce strategy is differentiating your workforce. In other words, treating your workforce much like an investment portfolio where different dollars are used in the portfolio based upon their contribution to the overall plan. This is where your HR function most often will become apoplectic because this is not about everyone is the same or is treated the same in all things. They will need to change their perspective and get on board.
A differentiated workforce strategy creates a strong differentiation between High and Low performers ensuring that your high performers are retained and your low performers become more likely to leave. It ends or curtails the practice of overcompensating low and even average performers. This workforce strategy must be internally diverse. Different parts of your business will use different strategies. A differentiated workforce will provide you with the following:
- A workforce strategy directly linked to your business strategy
- A recruiting and retention strategy that focuses on the employee of choice instead of being the employer of choice.
- Improved business performance in the areas of productivity, profitability, and shareholder value.
- Effective and the real measurement of your workforce value contributions and the ability for fact-based focus on areas in need of improvement or extra emphasis.
- A clearer focus on execution with a higher engagement at every level of the business from the executive to line management and individual contributors.
This is not something every business will do or should do. Many businesses lack the internal competencies to develop and execute this properly and the commitment to it should be long. However, those that do dominate their market and are more profitable than those who do not. My clients that use this method have, in some instances quadrupled net business value while tripling net profit.