How to Treat Workforce Management Like an Investment Portfolio

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A Gallup study finds that “actively disengaged” employees – the 18% who are so unhappy that their inactivity undermines their colleagues’ work – cost U.S. businesses up to US$550 billion annually.

Companies need to start looking at their workforce like any other important investment portfolio. Here’s how.

1)Invest in Skills Development
2)Align Workforce Development with Long-Term Business Strategy
3) Get HR to the Strategy Table
4) Rethink Career Advancement

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How to Treat Workforce Management Like an Investment Portfolio

  1. 1. NO. 35E-Book 100 90 80 70 60 50 40 30 20 10 0 SAP Center for Business Insight |Brief |Q&A |Case Study |Inquiry |E-Book How toTreatWorkforce Management Like an Investment Portfolio
  2. 2. E-Book: How to Treat Workforce Management Like an Investment Portfolio2 NO. 35©2014 SAP AG or an SAP affiliate company.All rights reserved. A Gallup study finds that “actively disengaged” employees – the 18% who are so unhappy that their inactivity undermines their colleagues’ work – cost U.S. businesses up to US$550 billion annually. Stop Leaving Hiring to Chance Companies need to start looking at their workforce like any other important investment portfolio. Here’s how. Unhappy Employees Are a Huge Drain on Earnings
  3. 3. E-Book: How to Treat Workforce Management Like an Investment Portfolio3 NO. 35©2014 SAP AG or an SAP affiliate company.All rights reserved. Sources: Gallup, Deloitte, Institute for Corporate Productivity, Accenture, and A New Vision for HR Management: The Workforce Ecosystem Let employees acquire skills by giving them a variety of roles over time rather than keeping them in narrowly defined roles. Yes it costs money, but replacing valued employees costs more. In a Deloitte survey, lack of career progress topped a list of five major factors that would push employees to look for a new job. Former employees with fresh skills can become productive more quickly because they’re already familiar with company operations and culture. High-performing companies use contingent workers more often and more strategically than low performers.And an Accenture study reports that between 20% and 33% of the U.S. workforce comprises contingent, or independent, workers. Employees with the right combinations of skills are often lured away by better offers or the opportunity to work independently. Employees in 1979 received 2.5 weeks of training per year; in 2011, nearly 80% of workers had received no technical training in five years. Here’s how to give employees that training without breaking the bank: 1 Invest in Skills Development SHIFT ROLES INVEST IN TRAINING AND DEVELOPMENT STAY IN TOUCH USE CONTINGENT EMPLOYEES
  4. 4. E-Book: How to Treat Workforce Management Like an Investment Portfolio4 NO. 35©2014 SAP AG or an SAP affiliate company.All rights reserved. Sources: “‘Talent on Demand’: Applying Supply Chain Management to People” and A New Vision for HR Management: The Workforce Ecosystem Look at skills needed three and five years out so you can hedge your bets about how many people, with which skills, you should have on board. Because forecasts inevitably go wrong, companies should balance their investments in employee development with hiring from outside the company to fill unanticipated gaps. Contingent employees could become candidates for other short- and medium-term roles or for permanent positions – but only if HR is managing the relationships. Rather than plan for their short-, medium-, and long-term talent needs (as they would their financial needs), companies end up scrambling for vital skills because they haven’t systematically identified those needs or how they’ll fill them. Here’s how to stop leaving hiring to chance: 2 Align Workforce Development with Long-Term Business Strategy IDENTIFY LONGER-TERM NEEDS BALANCE THE PORTFOLIO TAKE CONTINGENT EMPLOYEE HIRING AWAY FROM PURCHASING
  5. 5. E-Book: How to Treat Workforce Management Like an Investment Portfolio5 NO. 35©2014 SAP AG or an SAP affiliate company.All rights reserved. LINK MACROECONOMIC TRENDS TO PLANNING USE DATA IN WORKFORCE PLANNING GO FROM TRAINING TO CURATION Source: A New Vision for HR Management: The Workforce Ecosystem 3 Get HR to the Strategy Table Understanding where the economy is going is crucial to predicting need for skills in the longer term. It’s not enough, for example, to know the average age of the workforce; HR must also know whether most people in a particular job category are likely to retire around the same time so it can plan to address the gaps. HR’s role has to change from creating training courses to curating resources from experts both inside and outside the company.That requires research and content management skills rather than instructional design skills, as well as a stronger partnership with business managers. Although HR is no longer strictly an administrative function, many HR professionals aren’t well versed in business operations or market trends. Here are the tasks HR will need to be able to perform:
  6. 6. E-Book: How to Treat Workforce Management Like an Investment Portfolio6 NO. 35©2014 SAP AG or an SAP affiliate company.All rights reserved. WENEEDPEER-TO-PEERPERFORMANCEAPPRAISALSANDCAREER PATHS THAT RECOGNIZE THAT MOVING UP IN THE ORGANIZATION MAY BE LESS IMPORTANTTHAN JUST MOVING TO AN INTERESTING NEW JOB THAT BROADENS THE EMPLOYEE’S SKILLS. ” “ – Josh Bersin, principal and co-founder, Bersin by Deloitte Source: Q&A: How to Build a More Sustainable Relationship Between Companies and Employees 4 Rethink Career Advancement
  7. 7. E-Book: 4 Ways That Electric Vehicles Will Impact Utilities7 NO. 35©2013 SAP AG or an SAP affiliate company.All rights reserved. There’s More The SAP Center for Business Insight is a program that supports the discovery and development of new research-based thinking to address the challenges of business and technology executives. TO LEARN MORE, READ A NEW VISION FOR HR MANAGEMENT: THE WORKFORCE ECOSYSTEM, AN IN-DEPTH REPORT FROM THE SAP CENTER FOR BUSINESS INSIGHT.
  8. 8. SAP Center for Business Insight |Brief |Q&A |Case Study |Inquiry |E-Book NO. 35 © 2014 SAPAG or an SAP affiliate company.All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG or an SAP affiliate company. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG (or an SAP affiliate company) in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, andSAPAGoritsaffiliatedcompaniesshallnotbeliableforerrorsoromissions with respect to the materials. The only warranties for SAP AG or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. In particular, SAP AG or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein.This document, or any related presentation,and SAPAG’s or its affiliated companies’strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP AG or its affiliatedcompaniesatanytimeforanyreasonwithoutnotice.Theinformation in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differmateriallyfromexpectations.Readersarecautionednottoplaceundue reliance on these forward-looking statements, which speak only as of their dates,and they should not be relied upon in making purchasing decisions.

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