Managing an Organisation’s Most Significant Cost – the Workforce
Posted by Navigo | Filed under Organisational charting
Due to their visual nature, organisation charts have several advantages over spreadsheets in managing workforce costs and metrics, such as:
- Intuitive, at-a-glance ability to visually assess the workforce, managers and employees both in aggregate and individually on key workforce dimensions.
- The ability to show cost issues at the individual manager level, which is particularly valuable when multiple managers occupy the same cost center.
- They provide the ability to analyse the workforce and managers using performance level, compensation element (e.g., salary, bonus, and benefits), tenure and job role among other analysis options.
- The ability to calculate additional metrics and measures that roll up the organisational structure and use color coded conditional formatting to flag issues.
- Organisation chart cost data can be tied to both managers and individuals, enabling near real-time “what-if cost scenario modeling” for reorganisations, layoffs, acquisitions, or divestitures.
For example:
The view below shows that Mike Thornburg’s total workforce cost exceeds budget. Conventional wisdom may dictate a ‘hiring freeze’ for Mike’s entire organisation. However, drilling into his management team shows that Fred and Rich are managing costs within plan, while Hal, Nathan and Taylor have gone over budget. With this information, Mike can surgically manage headcount additions or reductions without penalising managers who have managed to plan.
With the integration of basic workforce costs and metrics into OrgPlus, it is possible to both visualise and effectively manage total workforce costs, enabling better workforce strategy decisions.
Instead of applying workforce strategy like peanut butter across the organisation, embedding workforce cost information and metrics into organisation charts creates a workforce analytic capability and focus that allows users to more effectively identify and execute specific workforce cuts, re-organisations, and acquisitions and divestitures. This capability enables both thorough and thoughtful risk management and identification of unrealised opportunities for cost savings…
Read the full whitepaper:
Managing an Organisation’s Most Significant Cost – the Workforce
(available from HumanConcepts)
About the authors:
Jeff Higgins, CEO and Principal, Human Capital Management Institute
About Jeff: Jeff Higgins is a driving force in Human Capital analytic advances among Fortune 500 Companies as well as leading companies seeking to transform workforce data into a source of value and action via workforce planning and predictive modeling.
Jeff led North American Consulting and Member Services for Infohrm, was EVP of Workforce Planning at Countrywide Financial Corp, and held other senior HR leadership roles at companies such as, The Irvine Company and IndyMac Bancorp Inc.
Grant Cooperstein, Sr. Consultant and Principal, Human Capital Management Institute
About Grant: Grant has spent the last seven years in workforce analytics and planning as both a consultant and practitioner. Grant formerly worked as a consultant for the Infohrm Group where he advised Fortune 500 companies on analytics and planning best practices. Prior to that, Grant managed a workforce analytics team at IndyMac Bank.
Note 1 – Source: 2006 SHRM survey of over 700 companies including a significant number of Fortune 500™ companies and corroborated by a study at the Brookings institute.
Note 2 – Total Cost of Workforce (TCOW) is defined as the total costs of all salaries, wages direct and indirect cash or equity compensation for all employees. TCOW includes all costs for contingent temporary or contract workers whenever the organisation primarily directs the work of such labor. For example, offshore employees who work in a separate legal entity that is 50% or greater controlled by the organisation should be included in the total cost of workforce. TCOW includes all company provided or paid employee benefits, perks and rewards. Such costs also include all company retirement related costs for both current and former employees. TCOW includes all enterprise training costs provided to employees and or contingent labor. All recruiting costs not already included incurred as workforce acquisition costs. All employee relations, severance and legal settlements paid to current and former employees or contingent labor.
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Tags: cost management, hr reporting, metrics, Organisational charting, process improvement, workforce modelling
