The Notes From the People Cloud column is dedicated to elevating the conversation about people and work. Read on for expert perspectives on how changes in the world of work can be supported through smarter technology.
Society has felt the impact of supply chain disruptions over the past two years. Whether it was the rush on toilet paper during the initial wave of Covid infections, or the escalating price of oil, we have dealt with the repercussions of not having an adequate supply of goods and services.
What is just as impactful, as evidenced by its enduring presence in the mainstream media, is the radical shift in the supply of people—their capacity and willingness to work, as well as change in who they will work for. This “market” for the capabilities of people has undergone the same level of disruption as the supply of goods and services, and yet organizations are falling back on outdated practices in an attempt to survive—hoping the problem will go away.
Instead they need to realize that the change is here to stay. This means organizations need to rethink how they source, assess, select and deploy people to ensure they continue to thrive as an organization. They can start by developing a capability-centric view, which, like a modern supply chain, balances cost with speed and risk when considering the requirements to find people to deliver any type of work.
Supply side challenges
Prior to 2020, many organizations were lulled into a false sense of security as the predicted changes to worker availability did not seem to materialize. Changes in worker behavior and worker accessibility kept the labor market relatively balanced. These changes—which took years to develop—unwound in a span of months, causing a rapid and urgent need to change. Remote work opportunities and the participation of workers over 65 provide clear examples of supply-side disruptions that have rapidly developed.
With respect to the working population aged 65+, the chart below shows the increase and subsequent rapid drop in the number of these people in the workforce. People delaying retirement – many for economic reasons, kept more people employed, hiding the deficit that had been forecasted due to the fundamental demographics of the population.
At the same time, the situation where you could only hire people who lived within commuting distance of your work sites had been slowly shifting. Remote work was on the rise. Of course, during the pandemic this changed radically with remote jobs becoming as prevalent as roles that were anchored to a site. It remains to be measured exactly how much remote work will remain after new work patterns are established, but it is reasonable to expect the levels of remote opportunities to remain high.
There are numerous other examples of changes to the people dynamics on the supply side of the labor market: There are not enough people to fill the current number of open positions, people are shifting their career focus, more people are opting into gig work, and some families are choosing to build a lifestyle around a single pay earner. The list goes on and all of the changes are profoundly disruptive to the functioning of organizations that rely on these people to survive and thrive.
What needs to change?
This level of disruption forces fundamental changes in how organizations engage in the labor market. But there are a number of habitual practices–think of them as organizational reflexes–that prevent organizations from taking a holistic view of the supply of people. Only by analyzing, understanding, and actively experimenting with the interplay between the demand for work and the potential to get work done can organizations make real progress. This requires a more integrated view of the people-side of the business than many companies have today.
One very visible example of the type of change required is the focus on skills. There has been a lot of discussion around using skills to find and match people to new types of work demands. In some instances this will have merit, building internal mobility or opening up new opportunities, but for other organizations, skills could be less relevant. People supply gaps will not automatically be based on skills gaps! Any organization that is looking to start sourcing, promoting or developing people based on a detailed understanding of their skills, matched with the skills required by the work should proceed with caution. The risk of introducing systemic bias, through which opportunities are not equally distributed, is high, and is increased with the use of AI models whose output cannot be explained.
From our perspective, the current narrow focus on skills is misplaced. Matching people to jobs based on skills is a tactic, a means to an end, but not an end in itself. It is a bit like jumping in to redecorate one room, before the plans for restructuring the whole house are finished!
A more logical place to start, and one that would be familiar to anyone in a manufacturing supply-chain role, would be to build a holistic view of all the channels through which people are integrated into the business. Using this insight to gauge the current performance and future viability of each channel.
For example, this means analyzing hiring for permanent roles compared to bringing in contract or contingent employees, or reviewing whether or not external gigs can effectively fit into work patterns.It should even go so far as to seek out and remove work that is now redundant. Overtime many work processes become overly complex, adding “time overhead” which is not necessarily linked to value. How much of your work capacity problem goes away when non-value added work is stripped out of your system? To illustrate the point, consider a well known anecdote from the UK power industry where an organization learned, through a strike action, that instead of needing 100 people to run their plant safely, they could run with just nine! Prior to asking what skills are needed to complete the task, it makes sense to ask what work is required in the first place.
Rather than starting with people and a catalog of their skills, this approach starts with work and what it takes to generate value. Understanding the goals and outcomes of the business and the work that supports this shifts the conversation from how do I fill this open position?; to what is the work that needs done and what is the best way to achieve it with the capabilities we can access? It requires a more strategic mindset and has to be supported with an analytics and predictive capability that makes the whole approach to the supply of people, from inside and outside of the organization, visible. Unless HR and Finance functions are prepared to collaborate, working across their siloed structures and legacy processes, this holistic and more effective approach to the people supply chain will remain out of reach.
Barriers to the supply chain view
Given the clear value of a holistic view of how people deliver work, why are more organizations not following this approach? There are three common barriers that have evolved from traditional work structures. These are best summarized as follows:
1. A finance-first view of paying for work
Most organizations run a budgeting process by which money is allocated for people to do work. Often this process specifies not just an amount, but also a count and contract type for the work. This locks the expectations into the process by which the work is acquired and funded. In a dynamic and changing business environment, this approach limits flexibility and leaves no scope to readjust the allocation of people. It often means managers are restricted to hiring one full time person because that is what finance approved–when what would actually work best is engaging a series of contractors or multiple people on a flexible work schedule, etc. Applying the same approach to the supply chain would be like finance specifying the model and manufacturer of the processing chips” being built into your technology products. This is a good example of how internal processes and conventional thinking get in the way of what we’re trying to solve for in the first place.
2. Isolated people acquisition processes
Along with the planning process comes the operational process to achieve the plan. This leads to at least two and sometimes more “channels” through which people are matched with work. The talent acquisition team, which are part of HR, are the core of the overall supply system. However, most TA groups have zero visibility into the people within their organization that can fulfill needs. In addition, and often on purpose, the group who handles the procurement of contingent, contract, or gig workers is one or more separate groups. The processes and relationships are seen as separate and that different teams are needed to run each one. However, when it comes to delivering the work outputs for the company, most teams will be a combination of permanent, contract, contingent, and gig workers. They are all sourced and supplied independently, however when they show up to deliver work together, it is their collective production which truly counts. Without coordination across these channels there is no way the best overall team can be formed and maintained. Imagine if three different designers were in charge of decorating a house. Would you be surprised if the decor didn’t match?
3. Prioritizing infrastructure over business impact
Technology has been transforming how organizations operate for decades. But the focus of this work has simply been to “digitize” existing administration and workflow, removing the need for people to record information or move it around. With these systems moving to the cloud, the available efficiency gains are getting smaller. What this phase did not focus on, and has now become imperative, is understanding which aspects of these processes worked, which did not, and how the overall approach to supplying people to the business could be optimized. However necessary the digitization of administrative tasks, it is no longer sufficient to keep a company competitive. What is required are investments in “systems of insight,” technologies which focus on understanding how people shape business results and explain to business leaders the trade-offs in their decisions about borrowing, building, automating, or renting the capabilities they need to achieve their business goals.
Towards a holistic view of the people supply chain
The supply-chain challenge, as it relates to people, is a classic business issue where the solution is rarely seen from within disparate functions. The divided nature of the work, systems, and teams sets up the conditions for perpetuating the inadequacies of the model. No one within the system can easily see or start a process of change.
Instead it requires senior leaders to understand the costs, risks, and opportunities lost that are stemming from the lack of integration and an inflexible approach to putting budgets into action. These senior leaders need to set an expectation for improvements, allocating the people and resources required to create a unified approach to sourcing people and matching them with valid work demands.
The first step on this journey is to harmonize all of the raw data from across various channels into a single orchestrated view, where the performance of the overall supply chain can be understood and analyzed. With the right team, supported by the right technologies, this process is readily achievable today. This action should not be approached as a consulting project, it should be built as an internal capacity that will continue to analyze and guide the decisions related to sourcing people to do work.
There are few signs that the current constraints on the availability of people to do work will ease. We are heading into the decade of the employee, this means an organization’s ability to succeed in this business climate will be defined by their ability to connect the work they have with the people they need, at the best cost. The status quo approach of siloed teams and technologies is already creaking, it is time to change it before it fails completely.
About the Authors
Yustina Saleh, Ph.D.: Yustina has been on a quest for connecting people and value for over 20 years. Her life goal is to help people and organizations unlock their unique niches and then find and be found by their perfect matches. Yustina formerly led skill-based analytics at Emsi, The Analytics Center of Excellence at Rutgers, real-time labor analytics at Burning Glass, and labor market and demographic research for the State of New Jersey. As Visier’s VP, Research and Value, she’s building a platform that connects people and work data with business outcomes to maximize people impact. When she is not optimizing talent capabilities, she enjoys spinning, running, and ballroom dancing.
Jake Sorofman: Jake Sorofman is Chief Marketing Officer of Visier. Previously, Jake was president of MetaCX, CMO of Pendo, and chief of research at Gartner. His writing has appeared in dozens of publications, including Forbes, Inc., and Harvard Business Review.
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