With labour shortages here to stay, effective workforce strategies – based on sound people data – are crucial. Business owners are struggling to find workers, with 85% of Australian businesses reporting staff shortages are preventing operations at full capacity (Australian Financial Review, 3 Feb 2022). Forecasts predict unemployment rates will remain below 5% for the next five years (based on Statista May 2022 & IMF).
Combine this with the “great resignation”, or the “great re-evaluation”, or the “great reshuffle” – where employees are re-evaluating their employment status, career choice, or the industry or sector they work in – and the problem isn’t going to solve itself.
The cost of workforce shortages
Workforce shortages are causing revenue losses, operational and workforce disruption, and significant hidden costs to businesses. Hidden costs which are not often measured or known include the cost to hire, cost of temporary staff, cost of training new hires, cost of lost productivity and, most of all, loss of revenue due to operational capacity constraints.
$25k was thrown around a few years ago as the cost to fill a vacant role, but more recently I’ve heard one business estimate hidden costs of $40k!
Additionally, there are intangible costs. Low employee morale, low productivity, low engagement, and damage to culture or organisational reputation. To compound the problem, often when key talent departs, others leave around the same time.
What can be done?
To overcome the cost of turnover, while limiting the impact of revenue loss, you have several options, including:
- Shutdown services
- Postpone growth
- Intensify talent recruitment
- Realign staffing to customer demand
- Improve retention
The last two actions listed above require internal change and a strategic approach. However, many businesses lack the people data to implement effective workforce strategies. Or, they are data rich and insight poor. People managers are grappling with how to deal with the challenge because businesses lack people analytics. Often the data is scattered across systems and there is limited capability in strategic workforce planning.
When businesses consider growth strategies, new research and development ventures, or capital investments they rely on the numbers. To implement effective workforce strategies, businesses also need to get smarter with their people data.
7 steps to develop effective workforce strategies
So, where do you start? Develop effective workforce strategies by adopting these seven simple steps.
- Align your “workforce leadership” team
- Define and quantify the actual problem
- Analyse the drivers
- Workforce planning and prioritisation
- Generate and implement action plans and solutions
- Monitor and evaluate workforce performance
- Continuously adapt and improve strategies
Effective people data can help immeasurably by informing each of these steps when developing your workforce strategies. There are plenty of solutions to assist with collecting, analysing and interpreting people data. However, you can often reconfigure existing systems to assist.
Synectic’s expert business consultants have a deep understanding of business management and strategy. We can provide you with an independent review and help you manage talent in your business.
About the author
Claire Smith is a senior executive and accountant with almost 20 years’ experience across the private and public sectors. She is passionate about business performance and cares deeply about strong and empathetic leadership. Claire has an extensive background in strategy and business development, risk management, human resources, workforce development, and digital transformation.
Contact Claire or any of our Synectic business advisers to discuss how we can support you.