As the economic fallout from the pandemic intensifies, many business leaders are trying to do everything they can to keep their people employed. For some, that may not be possible. According to PwC’s latest COVID-19 CFO Pulse Survey, 67% of US CFOs are deferring or canceling their planned workforce investments. This indicates that leaders are settling in for a tough period of falling revenue and are looking to cut costs — and one area they’ll almost certainly dig into is labor.
But how can you make the right workforce decisions quickly, given so much unpredictability? One answer: Put data modeling at the center of your workforce decision-making.
Use it for dynamic planning. Use it to be transparent with your stakeholders — including your employees, shareholders and customers — about the health of your company and what you expect going forward. Use it as the backbone for the tough people decisions you’re likely facing.
In the current environment, it can be difficult to get clarity on the path forward. But using data to define your strategy — then testing and adjusting your plan as the situation changes — can help you respond faster and more transparently, especially when it comes to your workforce.
In a time of uncertainty, you don’t need absolute precision. You need dynamic plans that let you pivot as things change.
Well-thought-out models consider internal information — such as headcount capacity and organizational data — as well as external data, such as unemployment numbers, confirmed COVID-19 cases and guidance from experts on when it will be safe for businesses to resume normal operations.
Combining different data sets to run through scenarios and understand your workforce options can help you make “microplans,” which you can adjust or evolve as the situation changes. In other words, you can continue moving forward, but you can also course-correct quickly.
For example, some businesses are temporarily operating in new ways that are driving revenue during the pandemic, even as other parts of their business are shut down. Think of restaurants shifting to making home deliveries or clothing manufacturers now producing masks instead. It’s uncertain how long those companies will need or be able to continue doing that, but those companies could model various revenue scenarios, factoring in data from experts about trends in viral outbreaks. Those insights could help them make better decisions about their workforce needs for the immediate future, while still having flexibility to pivot quickly if the situation changes.
Data-driven scenario modeling is at the core of dynamic workforce planning. As you look to reduce labor expenses, for instance, you likely have a range of options, including changes in compensation, furloughs, compressed work schedules and more. Choosing one — or a combination of these options — will have an effect on your organization. Without a way to look at various financial and operational factors together, it can be complicated and take too much time to assess the tradeoffs of any potential decision.
This is especially the case when you start to layer in federal and state regulations or need to consider provisions within the CARES Act. The ability to continually model and consider the many variations in play can help you derive insights quickly in order to make the right tradeoffs.
Before the crisis, nearly two-thirds of organizations said it was important to use insights from big data and advanced analytics to make workforce decisions, but only 27% said they actually did it.
Currently, the personnel decisions you’re likely facing are too complex not to model them in some way: What levers can I pull to help protect jobs long term? How can I structure changes in a way that protects employees as much as possible? Where can I redeploy people into areas with higher demand for products or services? And, perhaps most important, Have I considered every possible option to cut costs before letting people go?
Being transparent is always important, but in a time of uncertainty, it’s critical. Building and maintaining the trust of all of your stakeholders — including customers, employees and shareholders — keeps them believing in your organization's mission even when times are tough. With 81% of CFOs expecting COVID-19 to decrease their company’s revenue and profits this year, it’s essential to be transparent about the health of your company and the decisions you’re making.
Supporting your decisions with facts, evidence and clear comparisons can help employees, customers and shareholders understand the steps you’re taking and why you’re taking them. For example, showing how many jobs you could save by reducing compensation is much more likely to maintain your team’s trust than if you just announce a pay cut.
Layering in employee sentiment can help you plan in a way that includes your people in the process. Pulse surveys, for instance, allow you to “hear” the voice of the workforce in real time and quickly identify barriers or obstacles to productivity. By using natural language processing, you can quickly analyze a significant amount of employee sentiment.
Another type of survey involves preference analytics or reward optimization. In these situations, employees are asked a set of tradeoff questions, such as whether they’d rather keep five vacation days or 1 percent of their 401K match rate. This information helps you learn what your people value the most, so you can reduce costs in areas they value less, demonstrating that you’re listening and care about what’s important to them.
As the crisis continues, the need for dynamic workforce plans will become increasingly important, especially given the uncertainty of this crisis and the increasing length of time leaders think it may take to recover. Even planning for a return to work will require new considerations about things like employee health, workforce interactions, safety concerns and workforce capacity.
With so much uncertainty, you’ll likely need to adjust your workforce plans repeatedly as the pandemic evolves. Basing those plans on sound data models and employee sentiment can help you navigate the crisis with confidence.