Imagine a small car manufacturing plant that employed 100 people to produce 1,000 new cars in a given period. Then management formulates a strategy to expand that plant up to a production level of 10,000 cars. It lays out extensive plans for a new building, equipment, construction, supply lines and distribution, but it forgets to address perhaps the most crucial issue: that the existing 100 personnel are never going to be able to run the expanded facility.
Similar plans are made every week in the power industry. Management plans for a new natural gas plant, a huge expansion to a coal plant, or major additions to the transmission/distribution system. It designs the facility in detail and works out how to run the lines, position the boilers, the turbines, the auxiliary equipment, the supply lines/pipelines to bring in the fuel, and so on. But the personnel side is little more than an afterthought. In most cases, they manage to man it up and get it running. But such operations never seem to fulfill their potential. Conceived so poorly, the personnel situation results in low efficiency and unforeseen downtime.
Let’s look at the five biggest mistakes that the industry makes with regard to workforce strategy.
Omitted Workforce Strategy
The most obvious error is not having a workforce strategy. Human resource (HR) management is an area that is too often dealt with on a last-minute basis; that often means paying the highest rates for already-trained staff. For some reason, managers are able to plan 10 years ahead to create new plants or greatly expanded operations. Yet they generally adopt too short-term an outlook on the people side.
For some reason, organizations are quick to lay off thousands as a "necessary economy," yet are painfully slow at hiring to meet pressing operational needs. At this writing, for example, one major utility has mandated a hiring freeze at a time when it is badly understaffed in key areas and losing millions as a result.
What is required is a workforce strategy that is every bit as detailed as the brick and mortar side. This planning must go into every aspect, from recruitment to retention and from operations to maintenance. It must encompass knowledge management, including both capture and transfer. It must take the long-range view to include the development of recruitment pools and mitigation of attrition from retirement and headhunting. Process optimization also plays an important role.
Furthermore, it must be done intelligently. That means getting an in-depth picture of the existing situation. That means taking a long and hard look at current employment levels and linking them to efficiency metrics. This should be done at a granular level, looking at every position and its associated performance.
A Disconnect Between Workforce Strategy and Overall Business Strategy
In those cases where workforce planning is carried out, too often it is disconnected from ongoing organizational strategic planning. What tends to happen is that top management takes care of strategy but doesn’t place much emphasis on the workforce. When this shortfall is realized, it is delegated to HR or business unit heads and so is really only afforded tactical importance. The resulting plans generally fall afoul of more senior mandates. Middle management may be desperately attempting to add staff due to ongoing emergencies, yet top management may suddenly enact sweeping cuts in staff in order to balance the books.
To ensure the success of its business strategy, top management must include a strong workforce strategy element in all of its plans. This can’t be done in a brush-off manner, nor can it just be delegated to others. Instead, business and workforce strategy must dovetail closely together. Only in this way will management realize its long-term aims and attain levels of efficiency and profitability it can only dream about.
Using IT as a Substitute for Sound Workforce Strategy
Another big mistake is thinking that an IT system can substitute for workforce strategy. For instance, many organizations adopt work management systems at great expense in order to bring more predictability into operations and maintenance management. What ends up happening is that the workforce management system does a fine job in determining the most effective way to plan maintenance, identify work requirements, and lay out the work that needs to be done in the proper sequence. But the best laid work management plans often go astray due to lack of workforce capability.
It is all well and good to specify maintenance tasks to be performed to keep production at a high level or to minimize outages. But what tends to happen is that many of the resulting work orders go unexecuted because there aren’t enough workers to keep up with current tasks, never mind implementing more stringent preventive or predictive maintenance programs.
The sad part of all this is that companies merrily sign off on IT systems costing tens of millions of dollars, yet in the same breath they cut much-needed training, workforce development, knowledge management, and attrition prevention initiatives. In one case, for instance, a company cut a training program costing a few hundred thousand dollars that was designed to provide vitally needed technicians when imminent retirements were destined to leave one unit seriously undermanned. Outages in this unit were soon costing millions monthly, yet the money could not be spent to prevent the situation from occurring.
The best approach is to ensure IT investment advances a well-planned workforce strategy in order to gain maximum return. But it is also critical to keep in mind that the purpose of technology in this context is to add value to workforce development and knowledge management, not to substitute for people.
Loss of Critical Skills and Knowledge
Loss of critical skills and knowledge can occur via retirement, layoffs, or general attrition. The result is a steady decline in organizational skill levels. Over the past years companies have steadily let knowledge walk out the door. They are now suffering the consequences. Every retiree or layoff that departs typically takes a whole lot of know-how out of the organization. This adds up to a brain and skill drain. It’s very costly.
The organization, after all, has a big investment in those people. When you add up the time and money spent on enticing people to join the company, training them, accumulating long hours of apprenticeship received from veteran staff, and achieving competence in daily tasks, it is a sad waste to let it all disappear. On top of that are the consequent losses due to unscheduled downtime.
It takes courage and foresight to embark upon a knowledge capture and transfer program. Though this is an expense, there is a sensible way to proceed, which will greatly reduce costs. By aligning knowledge capture efforts to plant efficiency measurements, it is possible to isolate those workers who are truly demonstrating competence and those who aren’t. The veteran, proven high producers should get priority when it comes to capturing knowledge about the job and the organization.
Failure to Establish Recruitment and Training Pools
These days, it seems, everything must happen now. Benefits must become apparent rapidly, and certainly before the end of the current financial year. The Victorians, on the other hand, were renowned for planning that spanned two generations. Though such a long view might not be needed today, sound organizations must at least be able to foresee the results of actions that will manifest over several years. Only in this way is it possible to understand the value of training and the importance of setting up personnel feeder lines from high schools, universities, and technical colleges.
However it is accomplished, no company in the power industry can stay idle while a lack of skills is crippling operations. It takes a lot of time and resources invested all the way up and down the workforce supply chain to ensure an adequate supply of talent.
The Bottom Line
Workforce strategy can’t be done piecemeal or in isolation from an overarching business strategy. It must align fully and must support the business every step of the way. But it also can’t be done blindly. Accurate understanding is essential to ensure that workforce development systems (including manning, forecasting, development, and management and skills maintenance) are in alignment with the organization’s overall workforce and business strategy. This can best be achieved by carrying out an assessment of the existing situation at the plant.
Such an assessment must address the major aspects/questions of a workforce development strategy and management system, including these:
- Is an effective delivery vehicle for knowledge transfer defined and deployed?
- Are there clear standards in place that identify the specific competencies and skills that the organization needs to be successful, and how employees are measured against these competencies and skill requirements?
- Does the organization have an effective approach for accurately forecasting and planning for the change in both retirement and non-retirement attrition, promotions, and position changes, as well as adequate manning levels for the organization?
- Is the correct linkage to the organization’s operations and maintenance strategy in place so that issues such as overtime management, shift management, and other workforce factors are optimized?
- Are potential candidates properly matched to job requirements and necessary skills, and are they able to apply the skills they acquire to the benefit of the organization?
—Brad Kamph is president of Interliance Consulting Inc., a workforce strategy and knowledge management consultancy with U.S. and international clients.