Before implementing any of these changes, conduct an analysis to estimate the potential cost savings and benefits of each alternative, including indirect costs, such as damage to customer experience, reduced workforce productivity, and increased turnover.
Step Two: Assess Capability Gaps
Whether or not the company is explicitly revising its strategy, identify those businesses and product lines that are most profitable, or potentially profitable, for the long term. Then identify the key capabilities (knowledge, skills, and behaviors) that people will need most to keep these businesses going. Finally, assess the capability gap that exists between the talent the company needs and the talent it has available. Focus first on finding or developing needed skills and knowledge sets.
Assess these skills in light of any process and technology improvements that are also being considered. This connection is often overlooked because many organizations develop business and technology strategy separate from talent strategy. It’s all too easy to end up with a sophisticated new process in place, designed to instill innovative practices at lower costs — but without enough skilled people on hand to quickly implement it.
Answers to the following questions are instrumental in developing a deeper understanding of the kind of people the company will need to recruit or train going forward and how best to deploy them:
- Which segments of the workforce are most critical in delivering value?
- Is our value proposition effective in attracting, motivating, and retaining this critical talent?
- In what parts of the company does more or higher-caliber talent make the most difference in business performance?
In assessing their workforces, organizations often assume they need topnotch talent (“A” players) in all roles, yet this is neither cost effective nor necessary. For positions that are ancillary to delivering core competitive advantage, “B”- or “C”-level players may be adequate. For example, Apple Computer Inc. has been extremely successful in developing game-changing products that command a premium price. Having “A” players as engineers, product designers, and marketers has been key to its competitive success. Yet in many other areas of the organization Apple does not put as much effort into employing top-flight talent.
As the business strategy changes, people who were once key value creators may no longer fit. Periodically revisit workforce capability assessments, and make sure that recruiting and talent development stay aligned with the strategy.
Step Three: Assess People
Identify high performers who are a good fit with the company’s future and core capabilities (from step two), and place a higher priority on developing and deploying them. Doing this requires a company-wide selection process, starting with assessments.
An assessment should consist of two steps. First, look at the workforce overall by answering these questions:
- How aligned is the current workforce with the organization’s new requirements?
- Which parts of the workforce most need to develop new skills?
- Are there portions of the current workforce that could be redeployed and retrained to fill roles in growing parts of the business?
Second, translate those workforce needs into staffing criteria for different parts of the organization. Avoid the typical selection criteria used to make cuts: seniority (last hired, first fired) and political standing. Even measurable and scalable data, such as data on past performance, can be deceptive. In many organizations, performance management is a check-the-box exercise that does not reliably and consistently differentiate performance.
Instead, assemble a team to rapidly develop explicit criteria based on skills and relevance to the company’s strategy. Include long-standing judgments of performance by experienced managers in each business or functional domain. A reasonably reliable and relatively simple set of criteria can be pulled together in a matter of weeks. With those criteria in place, managers throughout the organization can select employees for separation fairly and quickly based on an assessment of their fit relative to the key competencies and attributes required by the revised business strategy. Conducting an assessment of this sort can be quite effective and is far preferable to conducting none at all.