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.

Is your company’s Culture a Performance Oriented Culture

Is your company’s Culture a Performance Oriented Culture

Fred Wilson is an iconic venture capitalist at New York City-based Union Square Ventures (https://www.usv.com/about/fred-wilson). Union Square’s investments include Coinbase, Etsy, Flurry, Indeed, LendingClub, MongoDB, Tacoda, Tumblr, Twilio, Twitter, Zynga, and the list goes on.

In a recent post Fred exhorts companies “to have performance oriented cultures where there are frequent checkins between managers and team members, with feedback going both ways, and where non-performance results in changes. These changes could be restructuring of teams, changes in management, or departures of employees. Companies that do not actively manage performance are likely to have lower morale and toxic issues like resting and vesting” (1). Though Fred’s post was responding to a question about “golden handcuffs”, his response addresses the more significant topic of culture and accountability.

FrameWork is a simple-to-use tool that algorithmically determines the most valuable work performed by your team members. For instance, FrameWork identifies tasks that may have been relevant when your product was first released but are irrelevant now. FrameWork’s elegant mathematics are industry agnostic and work as well for the CEO and line worker of a Fortune 200 semiconductor manufacturer as the CEO and line worker of an SMB plating company.

As your team updates FrameWork, the tool continually identifies the work of greatest value encouraging the next cycle of innovative initiatives with a concomitant increase of discussions between manager and the team. Inherently, engagement increases within the team and throughout the layers of the enterprise. The value of FrameWork is observed in this virtuous cycle of employee engagement, productivity, and personal achievement.

High performance/high valuation Silicon Valley companies such as Google and Pinterest have internally and independently developed dashboards similar to FrameWork. FrameWork is the commercially-available tool that facilitates performance oriented cultures.

  1. https://avc.com/2019/03/golden-handcuffs/
How do you Justify Your Hiring Plan?

How do you Justify Your Hiring Plan?

The Harvard Business Review published, “What to Do if Your Team is Too Busy to Take On New Work” (1), an article written by Pinterest’s Global Head of Customer Operations, Dutta Satadip. Dutta laments the annual business planning cycle where every manager pleads for additional resources without analytical justification. Dutta proposes a data-driven three-step process where each person describes their key activities, the amount of weekly time allocated to these activities, and other activities that are outside the sphere of core job functions. The resulting activity allocation map presents opportunities for management to reduce/eliminate less productive workload, thus increasing productivity.

Dutta’s article describes how his teams discovered legacy processes that were now redundant and customer-protocols that required significant employee interaction when easily implemented automation tools would have reduced if not eliminated employee contact. This exercise allowed Dutta’s team to do more with less and achieve the scale necessary to meet customer needs and investor expectations.

What Dutta internally did at Pinterest and Google emulates one of the tools in CollabWork’s FrameWork Application. FrameWork’s patented algorithms objectively rank an employee’s tasks by value while Dutta’s managers utilized both objective and subjective assessments. FrameWork’s determination of the most valuable work gives employees a head-start in meeting their goals and increases their engagement, satisfaction, and professional growth.

  1. https://hbr.org/2018/10/what-to-do-if-your-team-is-too-busy-to-take-on-new-work
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.

What is Work?

What is Work?

Gartner is questioning current management models and wondering if they are still useful. This is great and well overdue. An example is “what is work?” We believe more than ever that the what, why, and how we work either is or has changed, or wants to change and is being held back by traditional thinking.

Seven years ago, we observed “the cloud” and ask ourselves how this will impact the way we work. We started with a clean “napkin” and with a lot of help and support we have reinvented the way we think about work. We started by observing people working and asked, “what is the value of the work?”. To clarify what is work, we boiled it down to a simple model. We considered a provider and consumer of work. We call this work a service. Dentists provide a service. On-demand software developers provide a service. In fact, we believe all work from the CEO to the janitor can be described as a service. Thus, a so-called job produces no work or value. The human “in the job” represents one full-time equivalent (FTE) and typically provides several services. The value of each service is attributed by the customer/consumer. The service provider (worker) manages his or her customer’s experience.

Managing is no longer about distributing work to workers in jobs. Managing is about setting priorities and desired outcomes of their service providers such that their customers attribute the most value.