Human capital management
present. If your organisation is still using budget variance reports then you have a problem – just because a department is below budget does not mean that the workforce is being managed as effectively as possible. A more sophisticated
approach requires information in the payroll system, such as time and attendance records and wage payments, to be combined with information in operational systems, such as service requirements. This enables a more comprehensive analysis of planned and actual expenditure and the ability to drill down and discover reasons for overspending.
Difference between profi t and loss
Even well-managed
organisations, who believed they had no further effi ciencies to gain, have achieved savings of 1-2% of labour costs with this approach. That may not seem much, but in the current climate it can mean the difference between profi t and loss for labour-intensive companies.
Once the organisation understands the dynamics of its labour expenditure and is controlling the cost of the existing workforce, it is time to consider the next phase. This is often described as ‘workforce optimisation’. It is a more strategic challenge and requires a greater input from the HR function.
Armed with the data from
the fi rst phase and using their existing knowledge of the labour market, their own workforce and potential forms of employment contract, managers can facilitate even more substantial improvements. These are not just limited to cost savings. Changes can be made that lead to a more fl exible, satisfi ed workforce with
resulting improvements in service performance. For example, many organisations do not accurately know what their optimum workforce is. They may think they know, but a quick look below the surface often reveals spurious assumptions based on outdated ‘rules of thumb’ about resourcing levels. It is not just about the number of employees. Depending on the service objectives, benefi ts can be achieved by introducing different employment models, such as part-time working. New, more family- friendly patterns of work can be introduced, such as those which enable ‘shift- parenting’, where parents work complementary hours which enable them to share child minding responsibilities. Terms and conditions can also be tailored to better meet service requirements.
Closer collaboration A good fi rst step is to put in place good foundations for information and reporting, which are: • Integrated applications for payroll, HR, resource management and time and attendance;
• Consistent rules for workforce planning and allocation throughout the organisation;
• Single source reporting with consolidated resource and payroll data;
• Support for strategic what if analysis on workforce size and deployment.
By facilitating a human capital management approach and close collaboration between operations, HR and IT, managers can ensure that their organisation has the workforce it needs to meet its objectives both now and in the future.
Management Services Spring 2012
ABOUT THE AUTHOR Alan is a well-known management consultant specialising in human capital management. He is Managing Partner of Adventis Consulting, which recently contributed to the joint Department for Transport and Offi ce of Rail Regulation study of the value for money of the British rail sector, Realising the Potential of GB Rail, chaired by Sir Roy McNulty.
The sheer complexity has tended to result in a ‘keep it simple’ approach
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