Building the Right Workforce

RUNNING HEAD: BUILDING THE RIGHT WORKFORCE

A LOOK AT STRATEGIC AND OPERATIONAL ISSUES IN BUILDING THE RIGHT WORKFORCE LATALA COFIELD STRAYER UNIVERSITY

Building the Right Workforce

Abstract What is human resource planning? Human resource planning is the term that is used to describe how companies ensure that their staff is the right staff to do the job. So why is this important? In order to maintain a competitive status in the workplace, it is essential to build a high-performing workforce. Yet, American society is undergoing seismic shifts. Because of this shift, the U.S. workforce is increasing in unqualified workers and the pool of workers is shrinking, making it an essential demand for talent. Obtaining and optimizing the preeminent talent provides a major strategic benefit. Thus, recruiting organizations today are seeking to analysis how to best select and retain talent and skilled employees.

Building the Right Workforce

The Challenges of Recruiting Tomorrows Workforce There are new business challenges that are reshaping the workforce of the future. These challenges are as follows: potential labor shortages, changing demographics, and declining morale. Retirement will soon be under the belts of the baby boomer generation and as we inch closer, the U.S moves even closer to a potential labor shortage. Wikipedia.com defines labor shortage as an economic condition in which there are insufficient qualified candidates to fill the market place demand for employment at any price. According to the Bureau of Labor Statistics, between 2000 and 2012, the annual growth rate is expected to fall to 1.1 percent from 1.6 percent in the past and down to 0.6 percent when the timeline is stretched to 2050. Why is this labor shortage increasing so dramatically? Kelly Services Inc. states that this increase is due to college education flattening, skills are dwindling, and the workforce is changing dramatically. Because the change in the workforce, for the first time in our lifetime, the labor force will employ four different generations side by side. Another challenge of tomorrows workforce is the change of demographics. The workforce is becoming multigenerational. Each generation will report to work expecting different rewards and hold there on value and attitudes. Each generation will be motivated by various factors. How will companies cater to the needs of this multigenerational group? Organizations will have to modify job opportunities, learning strategies, and reward systems to accommodate the desires of these demographic groups. Job security for the traditional worker will be vital and the work/balance and skill-building opportunities for the progressive worker is a must (Kelly Services, 4). But labor shortage and demographics

Building the Right Workforce

are not the only challenge facing the workforce in the future. Declining morale such as employee dissatisfaction is a key factor to the challenges within the workforce. A 2004 report from the Gallup Organization showed that only 30 percent of employees were engaged in their work, 54 percent were not engaged and 16 percent were actively engaged. Meaning that 70 percent of the workforce is not satisfied on some level. Contemplate on how this affects productivity. Workers that are not motivated are not apprehensive about efficiency or being productive which in return, slowly tears down the whole organization. According to a 2006 report from Monster.com, employees hold more confidence in their ability to obtain alternative employment opportunities. In addition, employees that are not satisfied are always seeking opportunities for advancement or promotions within another organization. Taken away their intellectual capital with them and this once again hurts the organization. Employee dissatisfaction is a very important challenge that will be faced in the future. Looking at the challenges that will be faced in the future, organizations are seeking ways to recruit and hire the most qualified and skilled candidates. Companies will take time now to examine their recruiting and retention activities and ask what changes can we make today to be an employer of choice for tomorrow (Kronos, 3). How can companies compete? They can compete by examining the recruit-reward-retain cycle from strategic and operational angles. By utilizing these strategies, organizations can maintain a competitive edge in the face of the business challenges. The purpose of this research paper is to explore three vital activities: recruiting, rewarding, and retaining and to examine the strategic and operational elements of each activity. Recruiting From the Strategy Side

Building the Right Workforce

Recruiting is the process by which organizations locate and attract individuals to fill job vacancies (Fisher and Shaw, 232). There are two major activities that fall under the area of recruiting, they are: Hiring the best talent for the position before the competitor takes them off the market. Being certain that the candidate that was selected is productive.

The nature of a firms recruiting activity should be compatible to its strategy and values. A proficient recruiting strategy starts with an evaluation of business necessity in the present and in the future. Questions that an organization should ask in order to implement a good strategic recruiting program are (Kronos, 5): What are the organizations long term strategic goals? What are the quarterly and annual goals? What changes are ahead? Is the organization planning to introduce a new product? Are there plans for a merger or acquisition? What type of human resources and knowledge, skills, and abilities does the organization need to meet the business goals? Are the resource needs well defined? Once the organization has input to all of these questions, the company can begin defining the required talent necessary in order to organize a pool of qualified and skilled candidates. The recruiting process should generate workers who are good performers and who will reside with the organization for a substantial period of time. Recruiting efforts should also have beneficial spillover effects; meaning, that the organizations general image should be enhanced, and even unsuccessful applicants should develop positive attitudes toward the company and its product (Fisher and Shaw, 235). Furthermore, all the preceding goals

Building the Right Workforce

should be reached with the greatest accuracy, speed, and the least possible cost. And this is where the operations side comes in. Recruiting From the Operational Standpoint In order to control cost and to acquire the best candidates, it is important for the recruiting operations to be proficient and aerodynamic. In order for this to happen, it is fundamental that the organization is efficient, a streamliner, and manage there cost. When it comes to the recruiting process, it is easy to be distracted with labor-intensive manual tasks. In order to keep priorities in tack, it is important to have some level of automation; in return, one can redirect time and energy to more worthy activities. According to Kronos, Inc. opportunities for automation include: Job postings, both on public websites and for internal mobility Filtering for the right skills Tracking the results of testing

Many organizations maintain a central repository of information about interviewees. This central repository of information is a database that hiring managers and Human Resource professionals alike can access. Information can be stored in relation to each hire and acknowledge any outstanding action items. This type of technology allows improvement in order to encourage participation from both hiring managers and HR professionals and this is one of the most vital elements in a competent recruiting process. Once action items are easy and clear, it is vital to become streamlined. Streamlining starts with a reliable assessment of the current recruiting process. Technology is crucial to streamlining operations. In fact, technology ranks as the numberone operational staffing priority for companies according to Staffing.org 2006 Recruiting

Building the Right Workforce

Metrics and Performance Benchmark Report. Why is technology so important? Technology can be used within the organization in order to speed the interview and approval cycle, easily report and comply with regulations like the EEO commission, and align training to fill specific skills gaps. Once the organization have become streamlined, it is imperative for the organization to manage recruiting costs. In order for the organization to manage cost, the organization must determine which recruiting strategies are paying off and which ones need to be terminated. In order to control cost, the hiring manager and the HR professionals should understand the hiring requirements, identify sources of talents and manage candidate pipelines, and bring best practice and dedicated resources to recruiting and resource processes. Probing recruiting activities now will ensure that when candidates are on the market, the organization gets the hire. Rewarding Your Employees Performance The system an organization uses to reward employees can play an important role in the organizations efforts to gain a competitive edge and to achieve its major objectives. Reward systems are one of the most prominent and frequently discussed features of organizations (Fisher and Schoenfeldt, 483). Reward systems should motivate employees to perform effectively, attract and retain the talent that the organization is seeking, encourage employees to develop skills and talents, and allow employees to meet or exceed expectations of the companys objective. Rewarding From the Strategy Side In a multi-generational workforce, it is not feasible to reward all employees in the same form or fashion. An older worker may simply not value the same thing as a younger

Building the Right Workforce

employer. Yet, the first thought that comes to mind when speaking of rewards is monetary. According to Wikipedia, a salary is a form of periodic payment from an employer and an employee, which is specified in an employment contract. Salary is the most central and visible element of a total compensation package. This is one area where the capability to analyze data is crucial. Of course, salary is just one part of the package. Workers can also be rewarded by the allowance of benefits. There are many benefits that can be offered to an employee but this depends on the discretion of the employer. Benefits are fundamental but recently, benefits have been causing problems in many organizations. One issue of the increased attention to benefits is cost. Seaborn states that the increased cost of benefits has created something of a value gap-as the cost has gone up, employee satisfaction with benefits has gone done, and the value of benefits in meeting strategic organizational goals has diminished (576). Because benefits are contingent on membership in the organization, they assist an organization in attracting and retaining employees. Companies are learning that a proactive communication strategy is a way to increase the morale of customer satisfaction. Another important strategy is customizing rewards. For example, training, flexibility, and formal recognition are key motivators. As companies and employees improve there skill set, the company strengthens its succession planning. Strategically, the objective is to comprehend what employees value, and then make sure the reward structure is general enough to meet the diversity needs of the organizations employees. Rewarding From the Operational Side It can be complex to administer compensation, benefits, training, absences and a lot of other mechanisms in a reward system. For example, technology is vital opposed to

Building the Right Workforce

manual processes because it increases productivity levels, deflate unnecessary cost, and decrease the risk of human error. Automating tedious tasks can make an enormous difference when it comes to tracking trends and benchmarking with other employers. Companies rely on technology in order to manage benefits and complex training areas. When it comes to compensation operations, companies struggle to control the appropriate tracking of each employee. By automating these functions, they can diminish payroll errors and act in accordance with ever-changing laws. Eventually, this creates substantial savings. Overall, efficient operations save money and strengthen employee satisfaction. Retaining Exceptional Performers In todays changing business atmosphere, hiring an all-star workforce and maintaining it is a test for any organization. According to a survey by Monster.com, 45 percent of firms surveyed said that retaining workers today is a high or very high challenge. And 55 percent predict that workforce retention will be high to very high challenge in the next five years. Identifying and retaining exceeding performers is not the only matter. In order to compete, organizations need to plan for higher numbers of employees entering the retirement phase. It is a never ending procedure to measure, assess, and regulate companys retention plans. Retaining From a Strategy Side Approaches that can compel retention include: work-life balance, goal-setting, performance reviews, and compensation management. As oppositions for the preeminent employees strengthen, one convincing strategy is to encourage work-life balance. Employees of all ages value flexibility in order to arrange their schedules in order to attend matters outside of work. This is an advantage if organizations are willing to accept it.

Building the Right Workforce

10

Beyond salary and benefits, work-life balance can tip the scales and convince a high performer to stay. Goal-setting is another contributor to job satisfaction. According to Wikipedia, goal-setting involves setting specific, measurable and time targeted objectives. In an organizational or business context, it may be an effective tool for making progress by ensuring that participants are clearly aware of what is expected of them, if an objective is to be achieved. If an employee feels they are playing an important role in the company, it creates a reason to stay. Goal-setting has broader implications as well. According to Watson Wyatts Work USA Survey 2005, three-year total shareholder returns are three times higher at organizations with open communications. In addition, when employees feel connected to the targets, organizations can deliver 21 percent return to shareholders, compared to a five percent return when they feel disconnected. Management feedback and communication is vital in retaining employees and the dialogue of goal-setting assist in cultivating a two-way communication. A performance review is an important element for retention. During this period, goals can be refined and managers can distinguish which rewards will motivate their employees. The reason it is important to acquire the outcome of performance reviews is because it can give the organization an in-depth view of its talent. The key to efficient performance reviews are collecting the information regularly. Overtime, this information can be utilized to make strategic decisions on hiring. Compensation is another important strategic interest. Many factors come into play when the overall compensation program is reviewed. To generate more accountability among employees, companies are seeking to tighten the link between performance and

Building the Right Workforce

11

compensation. This will enhance the organizations ability to align its workforce with company objectives. Also, learning how to deal with low performers is another strategic decision. Seeing low performers reap the rewards of high performers at the same level not only damages the high performer morale, but is means for the high performer to leave. Strategies that improve retention can sometimes create new operational challenges. Retaining From a Operational Side Absence management plays a vital role. When employees do not attend work, it damages the organization ability to meet commitments and reach goals. According to the 2004 CCH Unscheduled Absence Survey, published by CCH Incorporated, the rate of unscheduled absenteeism has climbed to a five-year high. The average annual cost to employers of last minute no-shows is $610 per employee. In a large organization, this cost can grow into the millions annually. Compounding the issue, few organizations have a strategy for managing employee (Kronos, 13). Controlling absenteeism by simply tracking this information can reduce the companies costs, save time, and allows the workforce to be more efficient. Conclusion: Positioning the Pieces for a Perfect Fit Finally, in order to recruit, reward, and retain the best employees, organizations need a well-thought out strategy enforced by an efficient operation strategy. With competent operations, an organization can gather data that can be used to make strategic decisions. Once tweaked, the organization can rely on their operation strategies in order to get the job done. How is this done? By streamlining operations and relying on technology. Automation of benefits enrollment, training, and payroll can become open blinds into how the company is running and where improvements need to be implemented. In contrast, if

Building the Right Workforce

12

operations were handled manually, tasks would become overwhelming, time-consuming, and inefficient. By perfecting the organizations strategies and operations now can position the company to be the employer of choice for the future.

References 2006. Goal Setting. Retrieved January 26th, 2007 from http://en.wikipedia.org/wiki/goal-setting. 2006. Labor Shortage. Retrieved January 30th, 2007 from http://en.wikipedia.org/wiki/labor_shortage.

Building the Right Workforce

13

2006. Salary. Retrieved January 30th, 2007 from http://en.wikipedia.org/wiki/salary. Bergman, J.M. Industry Output and Employment Projections to 2012. Bureau of Labor Statistics, February 2004. Fisher, D.C., Schoenfeldt, F.L., and Shaw, J.B. (2006) Advance Human Resource Management. Boston, MA: Houghton Mifflin Custom Publishing. Gallup Q12 Engagement Index, Gallup Organization, 2004. Group, D. and Joseph, J. 2005-2006 Recruiting Metrics and Performance Benchmark Report BNA and Staffing.org, 2005 Kelly Services, Inc. Career Satisfaction/Free Agent Research Study. April 2004. Kronos, Inc. 2006. Recruit, Reward, and Retain. Workforce Management, 15 (30), 17. Milkovich, G. and Newman, J. 2005. Reward Systems: Theory and Administration. New York, New York: McGraw Hill Custom Publishing. Retention Strategies for 2006 and Beyond, Monster.com, 2006. Seaborn, Emmett, Strengthen Links between Benefits and Strategy, HR Focus, June 1999, pp. 11-14. Work USA Survey, Watson Wyatt Worldwide, 2002.