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.
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!
Over the
last 6 months we quietly investigated the nature of work (which is rapidly
changing) and how to better manage it. We have done this in a very logical way,
by collecting assessment data from HR groups in 4 different companies (most
from different industries), and analyzing that data
What we
found was quite interesting, in that most companies are not managing work, but
rather managing workers. To ensure that the staff can produce the expected results, most firms are actively working on making the entire process as seamless and as easy as possible. With health screenings (dig this information here), paid leaves, hybrid models, and work flexibility, employees are at an added advantage to bring their best talents to their organization. Considering the coming wave of automation, we also investigated how bots (find out what is a bot) could be integrated into HR in the least disruptive way possible.
The same is true in the case of the healthcare industry as well. They tend to hire external parties to manage claim issues and underpayment patterns in hospital claims in order to effectively manage their revenue cycle. These vendors typically employ cutting-edge METIS software to benefit their hospital partners and the patients they serve. Every year, healthcare providers lose millions due to denied and underpaid claims. Unfortunately, most providers lack the time, staff, or ability to follow up, resolve issues, and receive proper payouts in order to keep the books balanced and revenue streams intact. This could be one of the reasons why hospitals require the assistance of these vendors who use automated technology to do Revenue Cycle Management intelligently. So, whether directly or indirectly, it can be concluded that automation is now a part of almost every industry.
The
methodology of analyzing the data and keeping a track of revenue was to do both primary and secondary research on bot vendors and users, and start to correlate that with the HR assessments. What emerged was some startling revelations about the nature of work, how and where to automate with the lowest level of disruption, and how bots will be needed to help deal with the gender bias issue that is plaguing management of many companies worldwide.
Managing Work
If you are
an executive today, you are managing headcount. In many cases, managers are not
clear about what those that report to them do on a daily basis? Our initial assessments, which we think are similar to those at Tilt 365, and we keep
refining, show exactly what tasks people do, and what % of their time it takes
to do them.
Some of
these results were surprising, even to those completing the assessment. For
simplicity, let’s divide the tasks into three types. “X” level work: tasks that
are repetitive, doesn’t require much thought or creativity, and are not helping
to build an employees skills or growth at the company. “Y” level work: which
may be somewhat repetitive, but do require some thought and creativity, and can
help build new skills for the employee. “Z” level work: which is challenging,
creative, and often stretches the employee in terms of both skills and collaboration.
The goal in
managing work effectively, is to have Z level workers (who get paid Z level
salary), do mostly Z level work (tasks).
When I asked the CEO of a small collaboration software company “How much
time each day do you spend in meetings?” He replied “about 2/3 of my time each day.” I
then asked, how much of that time in meetings are you doing Z-level work? His
answer was about 5%. The next time we
talked, he had eliminated half of his meetings and was doing more work with the
product and sales teams in interacting with large accounts.
Our Research
Others,
doing research similar to ours have found that:
“While 72% of respondents see AI as
important, only 31% are ready to deal with it.”
Josh Bersin, AI, Robotics and automation – Deloitte Insights.
A VCV bot was able to cut the total
time to recruit from 250 CVs to 3 meetings with the hiring manager. From 21
hours, to 45 minutes.
We found
that:
By automating specific processes with
bots will save 11% FTE by 2020 and 24% FTE by 2022.
The primary services subject to bot
improvement (in HR) are: recruiting, employee experience, and talent management
Repetitive communications around
processes and data can be automated, thus reducing FTE, cycle time, while
improving quality
By relieving repetitive tasks, the HR
talent can shift to providing a more personalized service
Bot implementation requires clarity
about the service and customer needs, and a clear process for implementation
While others
had predicted bot savings, we are the only ones to have actual data analysis to
back up our findings. Our analysis methodology was to:
Three data sets used: 3 HR departments assessed (almost 200 people)
Created a complete activities list
Matched specific tasks with vendors and bot case studies to estimate bot ability to do those tasks
Matched activities to bot solutions, estimated what % of activity could be done by bots, looked at today, 2 years out, 4 years out
Aggregated the results across each organization (looking at potential leverage by bots in each organization, and each time frame)
Examined benefits from bots in specific case studies
Based on our
analysis, bots will slowly, (but steadily) become part of normal HR processes,
We also did
an estimate of bot revenues in the Forbes
2000 based on our 2021 estimate of 7% bot penetration.
Our Report
The report,
written from this research, goes into much greater detail, than the few results
we have briefly discussed in this executive summary. We believe the benefits of
this report to client companies will include:
The ability to better manage work, and use employees more effectively
Understanding when and where to apply bots or contingent workers to maximize revenue
How to use CollabWorks to better morale and engagement, support better self management, and increase employee effectiveness.
To get a better handle on what each employee does for their job, and provide a growth path for them with the company.
Increase employee engagement and retention
Help to eliminate “hiring bias.”
Determining how much can I expect to save by deploying bots?
What I will need to spend to deploy bots over the next 3 years?
Which bot vendors to work with to get started successfully?
What internal expertise do I need to get started deploying bots?
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