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Managing Your Workforce is Key to Survival

published  First Published: 01/02/2010
Article written by: Nigel Brookson
Depending on the industry, a businessí workforce is often its major cost, and many employers forget¬†its main asset.
The contribution of people is the largest driver of organisational performance, but when times are tight, cutting staff seems like an obvious way to cut costs to many, and often small business does this first.
However, companies are learning that it can pay to think about the long-term consequences of such measures.
Research shows that companies that downsize by more than 10 per cent typically experience subsequent voluntary turnover rates of 50 per cent or greater of surviving employees in the following year, compared to companies that don't downsize, according to the Australian Psychological Societyís College of Organisational Psychologists (COP).
The cost of staff turnover can be substantial Ė as much as 2.5 to 10 times the salary of the job in question. Many of these costs are indirect and not immediately measurable, but they nonetheless cut into a businessí bottom line.
Retention therefore represents one of the highest returns on investment for any company, and developing a workforce strategy and associated strategic plan to help retain your most valuable asset, your employees, can be a worthwhile exercise.
When the economy slows, often sales slow as well, and many businesses do not look at diversifying their services, or look at different markets and opportunities. generally as one are slows down, another increases, yet businesses look for the ways to cut costs, cutting advertising and marketing, and cutting staff, yet more often than not this just results in even less revenue, and places more stress on those that remain, including business owners and Managers.
The foundations for future growth and prosperity are laid in tougher times, and the businesses that focus on new markets and sales opportunities are the ones that not only come out in better shape, able to take advantage of the better times, but also see fewer and less dramatic peaks and troughs to their bottom line.
The experience and knowledge of your staff, if adequately trained and encouraged to perform and develop outside of their job description is invaluable when it comes to diversifying.
How long does it take to get a new employee up to speed with the internal systems and processes, and performance goals? and at what cost?
Small business often stays small because they employee people with a short term mentality, instead of utilising their skills for the future growth of the business.
Often business owners feel threatened by their staffs ability, and in the words of the Late media mogul Kerry Packer "I am never the smartest guy in the room on any given topic, but I make sure I employ the man that is", and instead of nutering their resource, stiffle it, out of jeaolesy.
Middle Management, the are often cut first is seen as important in times of growth, and for growth, yet in tougher times it's the area that's seen as an indulgance, as business owners think they can do the role themselves, ignoring the talent pool of knowledge and experience that gave them the growth in the first place.
While it is important to measure the staffs cost to a business, and identify weaknesses in performance, what also should be considered is the contribution that can not be immediately measured, but is invaluable for the future growth of the business.
The business owner needs to look at themselves objectively and realise their shortfalls in the day to day success of their business, focusing on the direction of the business as they either multi-task, or re-train their staff to take advantage of new sales opportunities.
Four key steps to developing a workforce strategy
According to the COP, these are the key steps to ensure you maintain and retain an effective workforce:
1. Identify the critical and core capabilities of your organisation.
2. Assess the importance of various roles to business outcomes, including the possible outsourcing of some roles.
3. Determine HR policies and practices according to role importance, including employment value propositions and levels of investment in those roles.
4. Link these HR policies to the three key ways that organisations can enhance human capital: acquisition (recruitment and selection), utilisation/engagement and retention (including remuneration and benefits, performance management, etc), and development.

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