Cost reduction with OrgVue
Cost reduction is the number one challenge facing businesses today. Cost means risk. If cost reduction is managed well, the risk is low – but there’s the possibility you’ll cut the wrong people and resources, or that a reduction could lead to higher costs in the long term. Organizational Planning and Analysis can help.
Cost reduction doesn’t work
The way organizations go about cost reduction today doesn’t work. When they discover the business is ‘overweight’, they resort to sweeping cuts with little visibility of the skills and capabilities being lost. Later they realize they can’t meet their revenue targets and begin to rehire the same people, often on expensive contract terms.
This ‘yo yo’ effect of event-driven workforce planning will slowly but surely stifle the business. As it stands, cost reduction is about efficiency, not effectiveness. But we can fix this.
‘Work and value’ not ‘people and cost’
A better way is to look at the work people are doing, because you need to understand who’s driving profitability. The fact that ownership of workforce planning is split between supply (owned by HR and Operations) and demand (owned by Finance and Sales) is the reason cost reduction programs don’t work. To bring visibility and control to workforce planning, you need to take both supply and demand into account.
All of this comes back to automation, collaboration, and software product, working together continuously to focus on activity rather than roles. Activity analysis provides a richer context for managing costs, and consequently risk, based on the work being done.
OP&A: the way to sustainable cost control
OrgVue has the analytics and modeling capability to shift cost reduction from being an event-based exercise to being a clear, iterative process.
We call this Organizational Planning and Analysis, or OP&A, and like Financial Planning and Analysis, this should be an in-house discipline that you do constantly. It may seem overwhelming at first, but it’s a capability that will evolve over time and will eventually become embedded in the fabric of the business. You just need to start.
Making people count
2019 workforce analytics research report
Rethinking workforce planning for a disruptive age: OP&A leads the way
For more information on OP&A, read this article by Rupert Morrison