With stagnant demand across many developed economies and increasing uncertainty in emerging markets, CEOs are under pressure to execute an effective growth strategy.
Despite the strong potential of a company's creativity through innovation, design or R&D (while competing against businesses with lower cost structures), those that are dependent on highly skilled workers must face the harsh reality of being short staffed. The implications of a global talent shortage on advanced economies are especially troublesome, but there are strategic moves an executive can make to mitigate this type of risk.
Leverage existing capacity
Our experience shows that productivity improvements can expand capacity in areas of the business that require a great degree of skill. Wasteful practices in these areas evolve over time and become habitual -- it is not uncommon for an organization to become accustomed to these inefficiencies. In one of our client engagements, engineer efficiency levels hovered around 45-55% as a direct result of poor work practices, non-value-added tasks and suboptimal management. By addressing these deeply ingrained practices, engineers can be 15% more productive on average.
Immediate management response
There is an immediate opportunity for management to determine how many people are actually needed to perform key tasks and effectively manage the workforce. This type of organizational “right sizing” results in the reallocation of limited resources to other vital areas of the business. There is often untapped capacity from existing skilled workers when they are allowed to focus on tasks that require their specific expertise. The key to success is eliminating the non-value-added work that interferes with the completion of mission-critical responsibilities. It is management’s job to make sure the company's highly skilled employees are utilized properly. For example, one of our manufacturing clients in the automotive industry had skilled labor utilization rates as low as 55%. Within four months of the engagement, output increased by 23% due to better matching of available resources with projected needs and the redistribution of skills to other areas.
Seizing the opportunity
Productivity improvement with highly skilled personnel is complex. In our experience, it requires simultaneous attention on three fronts: behavioral change, process review and redesign, and the development of a decision support system. Behavioral change requires improvements in day-to-day practices, decision support systems necessitate improvements in planning and monitoring, and processes impact day-to-day operations. The challenge lies in getting people to do what they don’t want to do, which equates to change. For this to happen, one must change their mindset. In our experience, people will commit to learning when the goals and objectives are perceived as realistic and of value. A critical first step is to build trust, then it is the combination of specialist resources, tools and techniques (including specific methods for measurement and follow up) that will perpetuate change. Working with a global airline manufacturing company, our comprehensive approach generated a spectacular 25% increase in the productivity of its highly skilled engineers -- reducing the amount of work backlog and their product's time to market.
Facilitate knowledge transfer
Surprisingly, occupational development and training is not always a priority for companies looking to recruit highly skilled workers. It cannot be stressed enough: skills development and training are crucial during a talent shortage, as well as bridging internal knowledge gaps between senior level and new employees. The knowledge transfer from a veteran workforce allows companies to operate efficiently with fewer skilled employees and accelerate growth when new talent is hired. Knowledge transfer across multiple levels of management helped a major retailer increase its productivity by 34%.
Build operational and management capabilities
We recommend that skills development focus on operational skills – simultaneously increasing both worker proficiency and competency. The result is a solid foundation of knowledge that gives employees the ability to manage greater operational responsibilities in a shorter amount of time. Training needs to also include the development of critical management and supervisory skills. All too often, employees are promoted to middle management without the skills needed to be effective leaders. Senior executives must put building blocks in place to properly develop effective managers as well as strengthen the abilities of skilled workers. Proper coaching and comprehensive leadership training for our mining client's supervisors contributed to a 25% increase in their tons produced per operating hour and a 7% improvement in machine uptime.
While the shortage of highly technical skills is a global issue affecting many industries, there is a solution: improve the productivity of existing skilled personnel. Companies that act now have a relatively inexpensive solution to a potential long-term systemic problem and a distinct advantage over competitors that are slow to adapt.
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