What You Need To Know About Workforce Optimization

March 12, 2009
Sustained commitment to employee training and development counters downturns and results in long-term growth and recovery success.

Question: How serious are companies about workforce development?

Answer: "Wait for a recession and workforce development is the first thing management stops doing. That's the primary error in a typical business recovery strategy," says Brandon Day, business manager, training services with Rockwell Automation, a provider of industrial automation power, control and information solutions. "In cost-cutting moves, some managements seem to think no more of workforce development and training than they do of trimming travel and entertainment expenses. The evidence: Budgets for both are typically banned or curtailed early in the recovery game -- often in the same corporate directive."

Day says the second most common error is that management doesn't take the time to analyze goals and objectives. "They don't step back and prioritize the type of training, or they introduce a lower quality level of training simply because they want to pay less. But pursuing workforce development on the cheap should not be considered the ultimate objective."

He recommends starting with a process that first evaluates the workforce so that proper goals can be set to meet corporate objectives. "Then the actual individuals can be included in the prioritization process as to who needs to know what."

"For workforce development to proceed with maximum impact, the issues of employee training and optimization must proceed with an organizational viewpoint," adds Ron Kirscht, president, Donnelly Custom Manufacturing Co., a leading player in short-run injection molding. For example, he says the following issues underlie his commitment to workforce development:

  • Nothing is static and things are either progressing or regressing.
  • Earnings are in direct proportion to the quality and quantity of the products and services we deliver.
  • Management's first responsibility is to the continuation of the business.

The significant challenge, says Kirscht, lies in enabling senior management to easily monitor and correct weaknesses in workforce training. And above all, he emphasizes, don't position workforce training as being primarily a narrow, departmental issue. Workforce training really fits into broad, corporatewide strategies (see "Top 10 Myths of Workforce Development").

Standardizing Workforce Management

At Air Products and Chemicals, a provider of atmospheric gases and related materials and equipment, workforce training is part of a strategic vision to more completely integrate its separate business units under the corporate umbrella, says Vince Grassi, director, global learning and knowledge management. By unifying business process consistency across the organization, corporate brand identity is strengthened, he says.

"As part of the HR function, workforce training and management is now one of the 13 standardized processes used across the corporation," Grassi adds. "The other advantage of standardizing processes lies in having a uniform, low-cost model available throughout the global corporate presence."

Grassi says the corporatewide process standardization initiative began in 2000. It included the installation of SAP's ERP system to increase process visibility across internal operations.

Another Air Products initiative focuses on knowledge management, a program designed to facilitate the global sharing of knowledge. That, in turn, led to organizational learning, a process facilitated by the freely accessible data drawn from the business experiences across the corporation.

"Not only are we learning from the mistakes of other business units, but we're also able to garner lessons learned' from their successes. Our success with change management skills helped us transition from local to global control of processes." In global organizations local optimization is not entirely adequate, Grassi notes.

Yet, local interests and unique business circumstances are not ignored. To make sure that process standardization properly accommodates regional needs, Air Products has evolved more than a hundred communities of practice. In essence, the communities of interest are focused on balancing what the customer requires versus what is optimum for the business process standards of Air Products. The regional Air Products plants submit their best practice ideas via e-mail to obtain companywide usage authorization. "They capture what they learn from real business problems and are able to pass along that tacit knowledge to educate others," Grassi explains. "Over the last nine years our workforce development programs have continued to combine more and more organizational learning experiences with conventional formal training initiatives."

Making Manufacturing More Attractive

Rapid advances in manufacturing technology add another dimension to the compelling need to accelerate ongoing workforce development. For example, a recent Manufacturing Institute/NAM Skills Gap survey found a growing shortfall of highly qualified workers. Similarly, a 2003 Deloitte report found that in the United States, Germany and Japan, the percentage of students graduating with science and engineering degrees was documented as being in single digits. That's far below what the report cited for China and India and that trend continues today.

Rockwell Automation notes that declining student interest and failure to encourage young people to pursue manufacturing careers are significant factors. As early as 2004 the Wall Street Journal was documenting the declining student interest: "Only 5% of U.S. students earned undergraduate degrees in science and engineering. That compared with about 42% in China."

Adding irony to this workforce development situation are the rising educational needs for blue-collar workers, according to Rockwell Automation. It cites tool and die workers as an example and notes skill problems despite the required years of apprenticeship. Rockwell's reference is to a study by the Society for Human Resource Management. It found that half of survey respondents said they are seeing many new workers who lack overall professionalism, written communication skills, analytical skills, or business knowledge.

Nonetheless, impressive workforce performance gains are being made. One approach uses the Predictive Index, a managerial assessment tool developed by management consulting firm PI Worldwide Inc. Recently applied at Vanamatic, a supplier of precision machined components and assemblies, the tool is helping to improve productivity, turnover and training speed while helping to reduce employee absenteeism. Predictive Index offers insight into the natural workplace behaviors and motivations of employees, says PI's Todd Harris, director of research.

Sometimes workforce challenges translate into unique opportunities, and one example is how satisfying workforce development needs is driving a successful economic development program in northern Kentucky. "Twenty years ago, three Kentucky counties in the Cincinnati area -- Boone, Campbell and Kenton -- joined forces as the Tri-County Economic Development Corp. (Tri-ED)," explains Dan Tobergte, president and CEO. Together with state aide and schools such as Northern Kentucky University and Gateway Community and Technical College, the combined group facilitates significant solutions for the area's workforce development needs.

The result: 475 companies have either relocated or expanded in northern Kentucky, accounting for the creation of 47,000 new jobs and $4.6 billion in capital investment in the region, adds Tri-ED's Bob Green, senior vice president, business retention and expansion for the non-profit development corporation. (Tri-ED is an extension of both the local government and the local private sector.)

Northern Kentucky's workforce initiative is designed to sustain as well as attract manufacturers to the region. One example is how Tri-ED is collaborating with local plants and universities and colleges to offset projected losses of skilled employees. This is of particular importance as some area plants stand to lose as much as 40% of their skilled labor to retirement in the next decade.

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