The U.S. labor market got a welcome surprise on June 5: Unemployment numbers actually dropped when all indications were that job-market turmoil would continue amid the COVID-19 crisis.
But popping the Champagne corks would be premature to say the least. According to the United Nations’ International Labor Organization, the world could lose the equivalent of 305 million jobs in the second quarter of 2020. Despite downward infection trends in the U.S., Europe, and Australia, sharp and worrying rises are occurring in places like India, Brazil, and South Africa.
The only short-, mid-, and long-term certainty is uncertainty. Which means that now, more than ever, organizations are scrambling to prepare for disruptive changes sure to impact the workforce. No sector or company is immune.
Consider that within the same recent week, the airline industry announced thousands of layoffs with a hint of more to come while the healthcare sector showed accelerated growth, fueled in part by the pandemic — open positions cannot be filled quickly enough. However, aviation will eventually return to normal hiring and today’s healthcare boom will inevitably slow down. Companies in both sectors need to be better prepared for future ebbs and flows that shift companies’ desired skill sets accordingly.
To plan for the uncertain road ahead, companies need the ability to simulate various workforce scenarios so they can evaluate, pivot, and quickly manage — with full clarity and visibility — small and large organizational changes alike. Fortunately, it is simpler than it sounds; all it takes is an approach to workforce modeling that delivers a wealth of information with minimal effort.
Faster and Smarter Reductions, Additions, and Reshuffles
As the COVID-19 crisis first set in, companies were weighing complicated scenarios that likely included a combination of salary reductions, furloughs, and quick hires to fill skill gaps. No matter the situation, getting it right is not easy if a human resources (HR) team has to manage such decision-making at breakneck speed.
This is why HR managers need the tools to lay out a series of what-if staffing scenarios they can act on should conditions change by region, by business unit or other forces and factors possibly on the horizon.
Historically, manufacturers have managed this well. Auto suppliers, for example, not only often use enterprise resource planning (ERP) software to handle shifts in demand, they have also always needed to reallocate back-office and production-floor resources accordingly — and quickly. Many of these manufacturers have been dark for the past several months, but the best ones are already preparing to ramp up again by planning a variety of what-if scenarios now, based on the volume and variety of demand that may emerge in the near and long terms. Other sectors have not been as strong in this regard, but they need to be now more than ever.
Critically, solutions like Ingentis provide real-time visibility into the structure of an organization and its costs, such as salary information, seniority, etc. The solution gives HR managers the ability to drag and drop on an org chart, essentially moving chess pieces to plan a variety of what-if reorganization scenarios and model their immediate financial impact. The information can even be uploaded into a human resources information system (HRIS) program like SAP SuccessFactors Employee Central, turning what-ifs into fast action. But there are bigger boons to actively using a workforce-modeling solution such as Ingentis, all of which pay long-term dividends.
Three Benefits of Workforce Modeling with Ingentis
Workforce modeling with solution-driven software saves time. Since Ingentis layers in financial and key performance indicator (KPI) information, there is not a need to do manual calculations after simulating an organizational change. The calculations are performed in real time, as each department or position is dragged and dropped into a new org chart. Multiple scenarios can be planned for simultaneously and often, with the right organizational structure ready to deploy when it is needed.
Critically, in planning such scenarios, diversity can be put front and center, where it belongs. As an organization is reshuffled, grows, or contracts, a solution like Ingentis can show if diversity is increasing or decreasing as a result of a new structure. This is critical given that diversity is known to be a key success factor of businesses overall, as well as a driver of innovation. The data is clear: Companies of all shapes and sizes that commit to retaining a diverse workforce deliver better business outcomes in lean and lush times alike.
Workforce modeling builds longer-term thinking in the HR function, making it more proactive than reactive. By planning for a variety of scenarios — positive and unfortunate alike — workforce modeling allows a company to plan for the success of the business in phases, rather than rushing to make knee-jerk decisions based on the next set of market conditions. Companies can model smaller, larger, or different types of workforces, with contingency plans for each.
Start Modeling Now
After all the upheaval COVID-19 has brought, no company wants to be caught flat-footed again. Investing in the right workforce modeling solutions now, in this time of uncertainty, prepares companies to act quickly, decisively, and intelligently about changes to the organization as the business environment shifts for the better or worse in the weeks, months, and years ahead.
Across G7 countries, the economic picture is a mixed bag, comprising question marks of different shapes and sizes. Unemployment is dropping in Italy but still rising in Canada and the UK. The jobs market in the U.S. is currently the worst it has been in a lifetime, with 40 million unemployed, yet the stock market is currently trading as if a very rosy economic outlook is on the horizon. Will that be the case six months from now? Or even in six weeks? No one can say for sure.
We keep hearing that nothing will be the same, so it is crucial to have tools that power agile decision-making throughout an organization. The companies that do not take this opportunity to plan ahead will make less-informed, hastier decisions — just as they did in February and March of this year — that are even tougher to recover from.
Nick Macllvaine is the global vice president for SAP SuccessFactors.