IDC TECHNOLOGY SPOTLIGHT Sponsored by: Workday

Optimizing the Workforce for a New World November 2021

Written by: Lisa Rowan, Research Vice President, HR, Talent, and Learning Strategies

Introduction The world has changed dramatically during the global pandemic. Companies had to quickly react to dramatic business upheaval. Direct-to- consumer businesses such as hospitality and retail needed to swiftly pivot to new models, such as going from in-house dining to takeout and delivery. Other businesses essentially shuttered their primary work sites and sent workers home.

There were already signs of big changes to come before the pandemic even hit. Businesses were looking to become more agile and digitally centric. The pandemic exacerbated and accelerated these trends. One of the bright spots in the wake of this disruption is that digital technologies served to shuffle the old ways of doing things in a positive way.

These seismic changes have had an impact on the skills needed to achieve business objectives. New technologies and ways of doing business require a skill set that may not exist within a particular organization. Most important, companies need to understand and identify where they possess skills and where they have gaps that need to be filled either through workforce development or talent acquisition.

In addition to the need for an infusion of new skills, companies are challenged to find and attract talent in an extraordinarily tight labor market. A number of workers — especially in hourly industries such hospitality and healthcare — have not returned to the workforce. Instead, many are seeking other opportunities or holding out for more flexibility in their old workplaces. Dubbed the "Great Resignation," this phenomenon has employers deploying a number of tactics to win workers. Offering a transparent and flexible work environment is one of the keys to securing talent. Workers want to make their own schedules.

Together, these changes have brought about the need to have a strong focus on employee and manager experiences. Employee experience (EX) is of particular importance when it comes to workforce optimization. Not only is it difficult to find the right skills and attract new talent, but a steady stream of voluntary turnover is occurring. It is important that employers and HR teams do as much as possible to keep the workforce engaged through strong EX to ensure retention of key talent.

To thrive in today's digital-first world, organizations need to achieve operational efficiency. Taking steps to optimize the workforce is critical to managing costs while prioritizing the overall employee experience.

KEY STATS According to IDC research:

» The number 1 challenge identified by HR leaders is attracting the right talent.

» The number 1 business priority worldwide is achieving operational efficiency.

WHAT'S IMPORTANT » Without workforce flexibility, companies

can't attract top talent.

» Operational efficiency is the groundwork for achieving all other business objectives.

AT A GLANCE

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IDC TECHNOLOGY SPOTLIGHT Optimizing the Workforce for a New World

Consumer behavior has changed and shows no signs of completely returning to its pre-pandemic state. Consumer behavior has a direct impact on the supply chain and the deployment of workers. As a result, the composition and location of the workforce will continue to adapt and, in some cases, remain remote and hybrid.

To meet and exceed key business objectives, enterprises will need to improve processes in every corner of the organization. Improvements needed will include better visibility and agility throughout the supply chain. In addition, employers must improve upon the overall employee experience to ensure high employee engagement and retention. All of this points to a strong need to optimize the workforce.

What Is Workforce Optimization?

In a typical environment, companies build out shift schedules based upon predefined norms and shift preferences established on an ad hoc basis. Much of workforce management relies upon supervisory knowledge with little in the way of science to back up plans. Workforce optimization takes workforce management to a new, modern level by infusing skills into the process. With a skills-based approach, decision making is improved, leading to a more effective workplace. Optimization calls for improved visibility through effective analytics and dashboards that offer actionable information to decision makers. Through these advancements, companies can become far more agile and responsive to business needs as they arise. As a result, managers, supervisors, and employees enjoy a much better overall experience.

Optimizing the workforce allows companies to have true visibility, transparency, and control. Contextual insights offer a deeper understanding of workforce sentiment, composition, and development. Workforce optimization brings together modern, digital workforce management solutions with a skills-based approach to people management. Having skills at the core of the process means getting the right labor in the right place at the right time.

Optimizing the Workforce: What Are the Risks of Not Doing So? It is essential for businesses to have a complete picture of the workforce. Where is the labor needed for particular project? Are there gaps in coverage? If there are gaps, where are they? Management needs to understand where both costs and risks exist. HR leadership and operations leadership need to come together. The CHRO and the COO need a shared view of the complete workforce picture. Without this visibility and coalescence around a common set of information, the enterprise faces a number of risks, including:

» Missed financial targets. Simply put, not having the right labor in the right place at the right time means that projects cannot be completed in a timely or accurate fashion. Unfinished projects or work slippages translate to financial issues.

» Legal risk through lack of compliance. Many industries are highly regulated and require a unique set of skills and/or compliance mandates with strict regulatory oversight. Noncompliance may translate into missed financial goals as well as the potential for costly legal troubles.

» Cost overruns through unplanned expenditures such as overtime. Companies need the right number of workers and the right mix of skill sets to meet project deadlines. Too few workers — or inadequately trained workers — may translate into overtime and cost overruns.

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IDC TECHNOLOGY SPOTLIGHT Optimizing the Workforce for a New World

» Inability to scale to meet changing demand. While it is important to have talent on hand to complete pressing projects, that talent must be optimized to meet staffing needs efficiently. Underutilization of workers may lead to cost overruns, and overutilization can lead to worker burnout, costly overtime, and more.

» Disconnected and siloed processes. To be successful, everyone on the boat needs to be paddling in the same direction. If the port side of the boat can't see what the rowers on the starboard side of the boat are doing, chaos may ensue. This applies to all businesses. Visibility across the enterprise needs to be paramount.

What Are the Benefits of Optimizing the Workforce? Many organizations claim that their workforce is what separates them from the competition. An effective, well-trained workforce can mean the difference between achieving objectives and missing them. The ability to effectively deploy the workforce is one of the primary tools for achieving and maintaining competitive advantage, particularly for organizations that rely heavily on an hourly workforce. Benefits of workforce optimization include:

» Making every worker count. Understanding the skill level of each employee enables the company to apply those skills where they are needed. Knowing the worker is the first step of engaging the worker. During this time of upheaval, investing in the workforce elevates the employee experience and is integral to success.

» Empowering smart staffing and scheduling. Workforce optimization enables employers to put people where they're needed at the right time. Smart staffing benefits the enterprise by putting the right people in the right place at the right time; it also benefits the workforce itself by offering employees a transparent and agile overall experience.

» Establishing predictable labor costs. Superior visibility leads to better business outcomes. Building smart schedules informed by reliable data leads to labor cost transparency.

» Lowering administrative costs. Minimizing and eliminating manual intervention lead to a lower overall cost basis for administration.

» Putting control in the workers' hands. Workers are looking for flexibility from their employers in a time of skill shortages and high turnover. Offering employees visibility and options for when and where they work provides employers with a positive differentiator, making their organizations more appealing places to work.

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IDC TECHNOLOGY SPOTLIGHT Optimizing the Workforce for a New World

Trends Demonstrating the Motivation for Workforce Optimization Recent IDC research points to a sense of urgency around optimizing the workforce.

First, IDC's annual survey of HR buyers asked respondents about the relative importance and criticality of a number of workforce challenges. Attracting the right talent topped the list, followed closely by ensuring employee productivity and concern over access to needed skill sets, as seen in Figure 1.

FIGURE 1: Top 10 Most Critical Workforce Challenges

n = 500

Note: Respondents were asked to rate the challenges on a scale from 1 to 5, where 1 indicates least critical and 5 indicates most critical.

Source: IDC's Survey of HR Buyers, April 2021

Attracting the right talent and making sure that organizations have the necessary skills to achieve business objectives have been top of mind for most CHROs. Optimizing the workforce helps ensure that the right skills are identified and deployed; it also highlights gaps that need filling. Workforce optimization cuts across all facets of talent management. It sets up a positive work environment that helps retain employees and serves to develop workers to position them properly for the roles needed most. Through higher retention, it reduces the need to recruit new workers.

Second, IDC's monthly Future Enterprise Resiliency and Spending Survey addressed decision makers' top business priorities. As Figure 2 illustrates, 43% of respondents identified operational efficiency as their top business priority. Organizations across the globe and across all industries recognize that they need to achieve a high level of operational efficiency and excellence to stay competitive and agile. Workforce optimization is a key component of achieving operational efficiency.

The priorities highlighted in Figure 2 were the same across all industries, including those with a heavy reliance on an hourly workforce.

3.4 3.5 3.6 3.7 3.8 3.9 4

Need for improved leadership development

Need to improve company culture

Onboarding new workers

Home-based work model due to COVID-19

Inability to attract top talent

Bringing workers back onsite post-pandemic

Skills shortages

Employee productivity

Data privacy

Attracting the right talent

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IDC TECHNOLOGY SPOTLIGHT Optimizing the Workforce for a New World

FIGURE 2: Top 3 Business Priorities Q What are your organization's top 3 business priorities?

n = 920

Source: IDC's Future Enterprise Resiliency and Spending Survey, Wave 7, August 2021

Considering Workday Workday is a provider of cloud-based financial and human capital management (HCM) software. It offers capabilities across the HCM portfolio to help organizations achieve digital acceleration and reach workforce optimization.

Workday recognizes that achieving workforce optimization is a journey and that organizations need to approach optimization in the manner and the time frame best suited to them. First, organizations need to achieve a level of excellence in the administrative processes themselves. This means undergoing digital transformation to make sure that there is a solid foundation on which to build. Second, companies need to examine operations to ensure that they are agile and built for speed. At this stage, they also need to improve upon and offer a simple intuitive experience for both employees and managers. Third, organizations can continually increase the value of the workforce by applying skills assessment and remediation and ensuring a fully engaged workforce. Figure 3 illustrates this entire journey.

0 5 10 15 20 25 30 35 40 45

Less time to market

Less business risk

Cost savings

Revenue

Innovation

Employee productivity

Profits

Customer satisfaction

Operational efficiency

(% of respondents)

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IDC TECHNOLOGY SPOTLIGHT Optimizing the Workforce for a New World

FIGURE 3: Steps to Workforce Optimization

Source: Workday, 2021

Challenges

Workforce optimization is a new concept that will require Workday to provide guidance and insight to potential clients to help them understand and embrace its capabilities. Depending upon economic and geopolitical developments, the perceived weight of other business initiatives may push workforce optimization down in terms of immediate importance. Other potential challenges include:

» Some organizations may have an inherent aversion to perceived risks associated with modernization of core operational processes.

» Customization bias may occur, as some enterprises believe that their processes are unique in the industry.

Conclusion The world has changed dramatically in the past 18 to 24 months with no signs of a return to what would have been considered normal before the global pandemic. These shifts have been felt by every business across every industry, especially those that rely upon an hourly workforce. It has become imperative that organizations make the best use of their resources to meet business objectives. Chief among these resources are the employees themselves. Investments in attracting, retaining, and developing the workforce are essential.

A well-developed and skilled workforce is one of the keys to workforce optimization, which takes workforce management to a new, modern level by infusing skills into the process. A skills-based approach improves decision making, leading to a more effective workplace. Workforce optimization ensures that every worker counts while improving the predictability of labor costs overall.

A well-developed and skilled workforce is one of the keys to workforce optimization.

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About the Analyst

Lisa Rowan, Research Vice President, HR, Talent, and Learning Strategies In her role for IDC, Lisa Rowan is responsible for global research on human capital and talent management software and services. Lisa provides expert analysis focused on both the business services and software used to address HR and talent-related dimensions. Her research addresses developments in human capital and talent management applications, HR consulting, and HR outsourcing services.

MESSAGE FROM THE SPONSOR

Workforce Optimization combines the efficiency of an automated workforce management platform with the flexibility of an agile, skills-based approach so businesses can adapt in unpredictable times and quickly pivot the workforce to support change and new opportunities

Workday provides enterprise cloud applications for finance and human resources, helping customers adapt and thrive in a changing world. Workday applications for financial management, human resources, planning, spend management, and analytics have been adopted by thousands of organizations around the world and across industries—from medium-size businesses to more than 45 percent of the Fortune 500. For more information about Workday, visit workday.com.

The content in this paper was adapted from existing IDC research published on www.idc.com.

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