Friday, May 3, 2013

Only Hiring for Today Won’t Prepare Organizations for Tomorrow

In April of 1860, the Pony Express made its first delivery from St. Joseph, MO to San Francisco, CA. It took ten days to make the trip and cost $5—in current day dollars more than $225—to mail half an ounce. More than 115 years later, a series of deregulations allowed private carriers to ship packages by air and for the first time deliver them to and from all of the 48 contiguous states. In 1981, FedEx introduced Overnight Letters throughout the U.S. and in 1985 UPS followed suite with its Next Day Air service.

This new speed of delivery came about at the same time as Toyota Motor Company’s new supply chain philosophy was coming to the attention of Western manufacturers. Just-in-Time supply chains eliminated waste by only receiving the product that was immediately needed, saving warehousing costs and other waste related to buying product before it was needed. Reliable express shipping was critical to keep Just-in-Time systems working though since one critical shipment being a day late could bring an assembly line to a standstill and defeat all of the process’s benefits.

Reducing waste is an ongoing battle in every organization. In the past several years, reducing human capital costs specifically has gotten a renewed level of scrutiny. The recession prompted many organizations to move once manual tasks into automated systems providing long-term cost savings. Other organizations added more contract staffing to their employee mix adding flexibility and reduced scaling costs. Still other organizations have taken another tack and whether consciously or only in effect, have moved their staffing strategies to a Just-in-Time philosophy.

“In this economy, companies continue to focus on cost containment, and one of the easiest way to keep costs low is to leave vacant positions unfilled and limit the creation of new positions until there is no other option,” says Rob Romaine, president of MRINetwork. “They feel that they are saving money as long as these positions are left open. But, when the need is truly urgent, there is no overnight option.”

In February, there were 3.9 million job openings in the U.S., the highest number openings since May 2008, but in March only 88,000 new jobs were filled.

Whereas it is easy to predict when a part or component will arrive—all package carriers today have detailed tracking features—when a new vice president of sales or director of operations will be hired, on boarded, and begin operating at full speed is a much looser science.

“Working with an industry expert recruiter will both reduce the time to hire and help find people who will be up to full speed faster. But, that time is still at minimum several weeks and potentially several months,” says Romaine. “If the employee is already needed, those weeks and months are going to turn into a time when either customers are underserved, existing staff is overworked, or both, which costs far more than is saved.”

The shift is that employers by and large stopped looking at their business and their pipelines to project the need for more staff several months down the line. Instead they wait until the growth has already materialized to hire the staff needed to service that growth. Deciding in May that more staff will be needed in August creates enough time for top candidates to be recruited and onboarded before the additional capacity is needed.

“Using solutions like contract staffing adds agility to workforce management and we have seen it being used increasingly in recent years,” notes Romaine. “But workforce planning isn’t a short term endeavor. In the big picture, hiring someone a few weeks or even months before they are needed is a small price to pay to ensure you have the talent when you need it. Business leaders need to be able act on what they see on the horizon even when they know their vision isn’t perfect."