SaaS Platforms Will Empower the Workforce in the Digital Age

SaaS Platforms Will Empower the Workforce in the Digital Age

As entrepreneurial CEOs who fund our ventures or executives who grow into being CEOs of more mature companies, we produce annual budgets and financial plans. We estimate our future revenue and given available capital we fashion budgets we believe will deliver our revenue objectives. Hard capital and non-labor expenses are generally predictable. Workforce planning is more of an art and boils typically down to headcount planning. The amounts and types of headcount needed are often based on proforma financial modeling and estimates from primary functions such as engineering, sales, marketing, etc.

Traditional headcount planning falls short. We continue to rely on a traditional headcount model even though it’s crude and includes built in biases such as incremental benchmark planning from last year, organizational and process complexity that hides waste, and the talent of managers negotiating beyond real needs. Market forces and technology advances are increasingly exposing the weaknesses of headcount planning and staffing. For example, employees now only amount to about 65% of the workforce down from 90% twenty years ago. The remaining contingent workforce (QuartZ) is expected to exceed 40% by 2022. While HR is responsible for acquisition of employees, the contingent workforce is frequently managed directly by managers or procurement.

How do you leverage the available talent to perform the most important work? The answer is not more complex management approaches that don’t scale. Better job descriptions or skills matching won’t do it unless the work and its value is clearly understood.

Bots are coming — where do they belong? In addition to the complexity of managing and estimating the needs for people, bots are becoming an important and integral part of workforce management. Billions of dollars are being invested in AI (bot) solutions that are designed to replace some or all of the work traditionally allocated to people in jobs that include repetitive tasks that can be automated. (Deloitte). The forecast for bots as a percent of the workforce vary wildly from 10% to beyond 30% (Singularity)  by 2022. A major startup, Automation Anywhere now has more than 15 million bots implemented in 700 major corporations.

As CEOs we need to wake up to this new reality. We are in a digital world where defining jobs and allocating heads will no longer yield a competitive human capital operating model. For example, does our current staffing process clearly define the optimal mix of employee, contingent, and bot labor for our 2020 “digital” workforce plan? Who and how can our team provide a clear reliable answer? If our workforce represents 50% of our total expense and our workforce includes a 10% inflated headcount – we are leaving 5% operating profit on the table. This is huge! Getting to the optimal answers will not come from doubling down on the headcount planning process. Worse, competitors who learn to optimize their digital workforce composition can use their margin advantage to improve market share, etc.

Talent related SaaS software vendors are stepping up. The good news is that SaaS solutions are evolving to make it easier to manage both employees and contingent labor. Modern HR tools such as Workday, SAP’s Success Factor, and a host of startups are offering to support contingent labor with much of the employee talent management functions such as staffing and reviews.

While an improvement, these platforms will not address optimizing the work content among employees and contingent labor nor do they include bots.

The core of digital workforce planning is the work and its value. In order to get at wasted use of talent, planning biases, and the increased complexity of available sources of talent it is essential to start with the value the workforce renders in achieving business outcomes – namely, the work. In addition to work, the second necessary information for digital workforce planning is the use of talent. For example, how much top talent work is your top talent doing? Neither the work quantified by FTE per service or use of talent is achievable with current headcount planning and management tools.

Current methods of measuring the work are not effective. We can track tasks such as monitoring locations and network devices as often done by large software development organizations. Or, we use surveys of time tracking such as activity-based planning implementations. These methods are time-consuming, prone to errors, difficult to value, and hated by workers.

Introducing a management framework SaaS solution (CollabWorks)However, technology has now evolved to allow management to focus on delivering the most valuable work with the best available talent. The first step is to capture data that clarifies what is the work, the amount of FTEs spent doing the work and by whom at what level of talent. In addition, to optimize both the work and the use of talent, a metric is needed to value both.

All work can be described as services.  What we can learn from the rise of SaaS work platforms such as Upwork or Gigster demonstrate is that work can be described in the form of services instead of tasks. A service describes work delivered by a supplier to one or more customers (internal or external). While tasks may vary and come and go, services describe a supplier-customer relationship where tasks flow across the service. For example, we use software developers via Upwork who continuously perform tasks as part of services where the value of the work is established. These platforms are now being used to align service needs with both contingent and employee workers.

Customers need to drive the flow of work. Another positive reason for describing all forms of work as services is recognition that the value of work (services) depends on the customer receiving the benefit of the work. Rather than distributing the work via a typical management top down structure, work as services can be distributed based on customer needs. This keeps the

focus on value where it belongs – the customer.  And this relieves line management from gathering, reporting, and communicating activities. Organizations are now able to clearly understand the services within a workforce consisting of employees, contingent workers and bots.  And more importantly, for each service the organizations are able to measure the relative contribution to operating profit.

Summary. These new SaaS management frameworks (CollabWorks)will integrate with existing SaaS talent and work platforms to enable both workers and the organizations to optimize their respective needs to their mutual benefit.

About the Author

Michael Grove is the Founder and CEO of CollabWorks, a technology company that provides a powerful management framework (FrameWork™) in the form of software and professional services. His core belief is that if individuals are empowered to manage their own engagement they will thrive to the benefit of themselves and the organization. The FrameWork technology sits at the center of the Digital Workforce of humans and automation (AI). Michael’s vision is that work will evolve from jobs to a marketplace of services by 2025.

Michael currently co-hosts CEO workshops and sponsors the CollabWorks Thought Leadership Team (TLT), DisruptHR (Bay Area), and Disrupt.Work.  He has been a successful CEO for over 25 years of venture and self-funded companies including Open Country, Micromodule Systems, Introplus, and the Pathway Group. Michael has produced several breakthrough patents and led businesses in aerospace, renewable energy, semiconductor, information, social networking, and workforce management. Michael holds Bachelor and advanced degrees from California Polytechnic, UCLA, USC, and Wharton.

Rabbit Holes and Elephants are Pointing to Changes in HR

Rabbit Holes and Elephants are Pointing to Changes in HR

For years now, we have talked about the HR function and speculated how it may change going forward. Talent acquisition (TA) is a good example of an area of HR that will likely change a lot going forward because it has several tedious and repeatable (automate-able) work steps. If the primary role of TA is to meet headcount objectives, then the time-consuming aspects of TA could be automated or outsourced. Our research indicates that about 25% of HR’s existing functions could be performed by automation (machine learning, etc.) by 2023. (TA represents about 40% of the automation opportunity.)

The Elephant in the room is that change is coming to HR and the function must reinvent itself to stay relevant.

The good news that HR is fully capable of transforming into a strategic business function. The rabbit hole is also in the room. HR can be the function that delivers increase business performance from the organization’s use of talent. Instead of just being a service to the BU’s, HR can also be responsible for optimizing the talent to achieve the revenue forecast. Why HR? Like Finance, HR is cross functional and is the only function where the hiring, developing, and retaining talent are core responsibilities.

In order to own the business performance from use of talent, HR needs new capabilities that are relatively easy to develop. First is understanding and managing the use of talent. To do so, HR needs to know (with data) what the talent is doing (the work) and how the work aligns with workers’ talent capabilities. For example, our research shows that top talent on average is only doing 30% top talent work. So, the first step for HR should be to help the BUs increase top talent work per top talent worker from 30% to 50%. The result is an increase in value creation and most likely a reduction is new headcount needed.

Secondly, HR needs to be able to establish and support value-based objectives inside the BUs. Like Finance uses budgets to control costs and minimize waste of financial resources, HR could use new tools and data to create talent “budgets” to ensure that talent is used efficiently. Current HR tools such as assessments, pulse-surveys, OKRs, and performance reviews focus on individual employees and their engagement. While important, there is no hard correlation between actual value produced and worker engagement. In order to drive workforce margin contribution, HR needs to establish objectives and provide services to the BUs that measure and correlate the use of talent with margin contribution to the company.

CollabWorks provides important capabilities needed to HR to become a strategic business function.

Our focus at DisruptHR SF is to present new ideas, innovation, and thought leadership that will help HR leaders transform HR into a strategic business function. We need your support and talent as executives, thought leaders, and innovators! Please apply to be a speaker. And please join our DisruptHR SF community and participate at our  October 15 event.

Why CEOs Should Pay Attention to Talent Use

Why CEOs Should Pay Attention to Talent Use

As CEOs we often worry about talent. Can we achieve our objectives? Why are employees turning over? How competitive are we? Yes, talent is critical. But, the use of talent is what delivers value.

Why does talent use matter? Low Hanging Fruit to Improve Margins.

Talent is what delivers value and talent use is the efficiency of delivering that value. Wasting or misusing talent directly affects business value. We depend on managers to identify and allocate talent. We don’t do a great job of talent use because our headcount planning and allocation methods are crude, and we don’t have a reliable way of measuring talent use. Net profit (and cash flow) is directly correlated to talent use. The less talent needed to achieve the same revenue then greater the profit margin. As indicated, just a two percent improvement in revenue/labor will improve margin contribution (EBITDA) by 1-2%. If the planning process continues to improve talent use over current methods, then the margin contribution is cumulative! For example, 3 years of 2% revenue/labor improvement will produce a 5% gain in EBITDA. In addition to the financial benefits, effective talent use produces improved talent motivation and engagement.

 What is the use of talent why alignment matters? Headcount Planning is Wastes Talent.

We define talent use as talent performing work. We relate talent value to the value of the work produced. For example, we pay more for an airline pilot than a stewardess because pilots require more talent and produces more value. Airlines optimize their whole routing system to optimize talent use. The problem with the headcount-based financial model is that there is no clear quantifiable data regarding the use of talent. Job titles, roles, and compensation are not connected to talent use unless the work is highly defined, and the talent use is highly structured. Assembly lines for example. For nearly all knowledge workers, it is the alignment of the right talent to the right work that optimizes talent use and margin contribution. 

Use case: An engineering group increased top talent use. 15% gain in margin contribution.

A very high-performance technology group was experiencing frustration and turnover from their top talent. Why? They were required to perform work that lower level talent could perform, and they were required to interrupt their development to attend useless meetings.

As shown, the group using the CollabWorks management FrameWork identified their current use of talent and then executed on several management sponsored improvements that yielded a 15% increase in top talent use after 15 months. Since top talent work is considered high margin contribution per employee, then the management estimated an improvement in margin contribution of 55%. 

Does size matter? No. The earlier you develop best practices the bigger and quicker the pay off.

Return of Human Capital Correlates to Valuation

When organizations are small it is easier to correlate the use of talent with achieving financial outcomes. As organizations scale we depend more on financial modeling and budgets to allocate talent and the effectiveness of talent use becomes opaque and talent waste and misuse grow. Even early round venture funded startups can yield poor talent use as intense demands on management leaves little time to focus on talent use. Developing early talent use best practices will pay off in business performance for both management and the investors. As shown, a D round investment can improve investor return by 19% by adding just 85% of the planned labor to achieve the same revenue.

The Impact of 5% in improved profit margin is strategic. Early adopters win, laggards lose. Times change, and we evolve. Most of us had not heard of Design Thinking 10 years ago. Now it is the new normal. The ability to manage and measure talent use is now available and will become standard management practices. The benefits over time are huge, yielding an unfair advantage for early adopters.

You Have a Lot More Talent than you Think

You Have a Lot More Talent than you Think

CollabWorks began with a simple concept: Optimizing talent value works best when both the individual and the organization benefit. Since then we have sponsored workforce innovation as thought leaders, sponsors of events, and developers of technology that will allow organizations to shift from managing labor cost to managing labor value.

We are all familiar with the outside-in management models practiced for decades where the organization functions from top-down.  The workforce is defined by job descriptions and headcount. And, managers set objectives and manage individuals (you). The whole point of management is to keep the workforce focused on doing the most valuable work needed to meet the organization’s objectives. 

Results: Talent Misuse  

Outside-in organizations don’t scale well.  Outside-in is the root cause of inefficiency, waste, and inertia that ultimately dooms many organizations as they become too slow and inefficient to adapt. The outside-in model assumes that a “job” performed produces value when in reality there may be little correlation between the job and value. It is the actual work that produces value that drives business performance. Those doing the work are the sources of the value. This is obvious and yet while organizations are spending billions to manage talent better, the waste, disengagement, and turnover continue, while talent shortages are rising.   

Shift to Inside-Out Management  

After three years of research, executive interviews, and many workshops, CollabWorks has concluded that the answer to workforce inefficiency is to start with a focus on the source of value creation and work backwards. If it is the work that produces value, then create a management model that begins with the individual and optimizes their ability to create value. We call this approach an inside-out management model. The inside-out model works well co-existing with traditional outside-in management. Instead of the “job” being the means of allocating work, the work and its value become the basis for deciding what individuals do. Inside-out means that each individual at all levels of the organization clarifies and manages their own work to the mutual benefit of themselves and the organization. To enable this shift, CollabWorks has created a technology and SaaS process that starts with the individual and provides a simple yet very effective means of clarifying and improving the value of the work performed. This revolutionary inside-out management model is called the FrameWork™.

Managing from the Inside-Out  

The FrameWork starts with each individual (you) regardless of organizational structure, job, or type of worker. You set your objectives, priorities, and measure your outcomes. You identify improvements and initiate actions to improve your capabilities, use of talent, and address your desires and needs. The key metric is value creation, and the FrameWork provides you quantitative data to assist you in optimizing the use of your talent.

How do we know work has value? If we think of simple market mechanisms, let’s say of a farmer selling tomatoes to customers in a market. Depending on the quality of the tomatoes and the customer needs a transaction occurs when both parties agree on a value exchange.  A premise of the FrameWork is that this kind of market value exchange applies to all forms of work. Value is attributed to the work when customer(s) (internal or external to the organization) confirm the work’s value. Another premise of the FrameWork is that all work can be described as services where each service is serving customer(s). The FrameWork provides you a simple means of defining your work as services and then to clarify the customers who attribute value to each service. Instead of your manager managing you, you manage your customer’s experience with your service. Your “job” is to ensure your work is addressing your customer’s current needs and to consider improvements to address future needs. 

All Services to Customers = Talent Use  

In most cases, you serve several customers such as a your team, other functions, lab partners, managers, or the entire organization. The FrameWork makes it easy to identify your entire service profile. The sum of your services represents the use of your talent. The value received by your customers represents collectively the value of your services.

Agile Process of Managing  

Managers continue to play an important role moderating outside-in strategy and direction with inside-out empowerment and coaching of individuals (you) to better serve customers. Individuals own their service profiles and the creation of valuable work on behalf of their customers. By continuing to adapt to changing customer needs, individuals at all levels of the organization are using lean-like management processes. Managers set direction and focus priorities on business strategy. However, managers no longer need to distribute and manage tasks, then provide reports to their superiors as frequently occurs when work flows through a job structure. The management of the work is 80% owned by those doing the work. This liberates both the manager and their team members to focus on optimizing their own value. The FrameWork provides a simple consistent process with clearly defined roles. Managers can be traditional line managers, team or project leaders, or temporary. The result is a lean and agile focus on best means of serving customers.

Agility Requires Ongoing Improvements  

Continuous improvement of services is built into the CollabWorks management FrameWork thus producing a more agile and resilient organization. As ideas are captured, those most aligned with objectives and needs are selected as potential projects. Gamification and voting are used to promote and select opportunities. Those individuals with the most passion and commitment to creating an improvement form teams who in turn create clears ROI plans and seek approval. The projects can be strategic or simply changes to eliminate low-value work, waste, or address business/worker needs. 

Ongoing Improvement Transformation  

The FrameWork maintains past, current, and future service profiles (work) for each individual and then rolls up the data for any team, group, function, and organization. Past profiles represent a history of services and changes which can demonstrate reduced talent waste, improved talent alignment, and capability growth (or not). Future profiles represent opportunities to better address customers, the organization, and the needs of the individual. The gaps between future and present are clearly identified and often include desired objectives, changes in services, and actions defined to satisfy the transformation. Trends and correlations can be seen providing insights and lessons to further optimize individual and team talent use and ultimately the whole workforce. The FrameWork supports all forms of change management such as design thinking, lean, and agile processes.  

Improvements By Teams/Groups  

The service profile changes at the group level are the sum of those service profile changes of the participants in the group. The FrameWork process is entirely transparent to the type of worker, group, or management structure. Thus, the FrameWork will blend into any existing organization and culture while providing an agile market-like process of responding to rapid changes in work demands and talent use.

Measure the Increase in Talent Value  

Behind the FrameWork is a powerful mathematical model which produces customizable algorithms, metrics, and data to guide your decision making and to predict outcomes. The data model is rich with insights, benchmarking, and correlations – addressing issues such as service value versus compensation, the alignment of talent to services, relationship between personal growth and job satisfaction, applications for bots, and eliminating bias. 

You Have More Talent Than the You Think  

The inside-out FrameWork allows you, your teams, and the whole organization to clarify and improve the use of talent and the value provided customers. Financial modeling of the organization can now include a correlation of top-down financial performance with the value of the services driven bubble up by sum of individual, group, and functions. The cumulative margin contribution of the workforce can now be analyzed, predicted, and benchmarked to aid management decision making in optimizing the workforce. Current outside-in models waste talent. Inside-out models compliment outside-in models and provide the insight, motivation, and data to leverage the most valuable use of talent. Automation and bots are not the enemies of talent, rather they are the opportunity for you to achieve more including your compensation.

When “You win, then we all win™” is a natural outcome.

Try IT: Increase Your Talent Value  

Experiencing the FrameWork is easy. In less than an hour, you can create your first services profile. You will clarify the services (work) you perform and for whom (your customers). You will assess the relative value of your work. Once clear on your current services, you can consider changes that would increase your value. You then can set objectives and identify improvements you want to achieve on behalf of yourself and your organization.  The FrameWork makes it easy to quantify and track current and future service profiles and your outcomes of addressing objectives and improvement projects. Reviewing your progress takes minutes and is typically done monthly. The use of your talent is your biggest and most important asset. Spending 1-2 hours per month managing your talent will cause you to realize you a lot more talent then you think!

Getting Started: Just Ask for a Log in  

CollabWorks is working with individuals who want to self-manage and corporations who want to grow rapidly and scale efficiently. Anyone can discover ways to increase their services value – including CEOs who frequently discover unproductivity habits and within hours are able to shift their time and focus to higher value work. Engineers appreciate the quantification and correlations FrameWork provides and the ability to clarify and address wasted work. HR managers see the inside-out model and an effective way to motivate employees while providing them data to help them optimize the use of talent.

The Framework is free for individuals and your success is our primary goal. As you improve yourself you will earn points and our plan is to reward you a share of our profits. At CollabWorks we live our motto – You Win, then We All Win. We are looking for passionate early adopters who want to reinvent the outside-in model of running corporations. Help us build an inside-out community of awesome self-managing achievers and let’s create a movement!