In recent years, many energy-intensive companies have sought to “cut costs at all cost.” Frequently, the decision is made to arbitrarily reduce staffing levels as a primary vehicle for re- ducing costs. Rather than viewing facility staff as a key asset that leads to higher performance and profitability, these organiza- tions focus on reducing the cost of staffing by decreasing cost per staff member, the number of staff, or both.
Organizations utilizing this approach also tend to use chang- es in organizational structure to solve business problems, only to find that another structural change is required two to three years later. Through this approach, organizational health and competency are given little consideration and, in most instanc- es, unintended consequences can include reduced productivity, poor organizational health, undermined safety and lower profit- ability. In the end, these organizations end up paying a price that far exceeds the apparent cost savings, and business problems continue to go unresolved.
There are alternatives for implementing successful and sus- tainable staffing changes. Staffing changes for the purpose of improving profitability should be viewed as an optimization process rather than a reduction process.
Workforce optimization consulting. Workforce optimiza- tion consulting (WOC) moves beyond the simple quantita- tive formulas and across-the-board cuts that many companies employ in an attempt to reduce costs. The data-supported staffing assessment approach (FIG. 1) consists of proprietary
methodology and tools, as well as seasoned consultants focused on helping operators determine and implement the optimum workforces for their facilities and companies within the con- text of the business process. Truly optimum staffing results in sustainable benefits of improved profitability, safety, regulatory compliance, a highly competent workforce, and a healthy and effective organization.
Successful workforce optimization methodologies are grounded in industry best practices and require a thorough analysis of a facility’s total workforce that embraces both quan- titative and qualitative criteria. Comparing work practices at a particular site to top performers will yield staffing recommen- dations that are both realistic and sustainable. Onsite interac- tion with the facility’s workforce is key to measuring workforce morale, competency and organizational effectiveness.
From a practical viewpoint, workforce competency compris- es a number of factors:
• Achievement of targeted business safety, environmental and financial objectives
• Visible and strong leadership at all organization levels— management, supervision and staff
• Clearly defined and consistently understood accountability and responsibility for each person participating in the work processes and practices that make up each business • Leadership that is viewed as consistent, fair and
competent by a facility’s employees and executive management
• Efficient work processes that are consistently implemented across the business
• Utilization of best practices to carry out key business- related activities
• Individual employee competencies—knowledge, training, qualifications and experience
• Employee utilization.
These factors must be considered when modifying existing organization structures and staffing levels, and when develop- ing organizational and staffing plans for new facilities. Correctly analyzing them and developing effective recommendations to
0 0 2 4 6 8 10 12 14 16 500 1,000 1,500 2,000
Direct full-time equivalent employees
Dir
ect staff r
atio
2,500 3.000 3,500 4,000
FIG. 1. Non-salaried to salaried employee ratio vs. total staffing level. Better performers generally have higher ratios in the 6–8 range.
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help achieve them requires consultants who have extensive ex- perience and a successful track record.
Implementing a WOC solution considers the time required to achieve organizational maximum competency when defin- ing recommended organizational structure and staffing levels. Actual individual employee competency must be measured when determining the number of employees required to per- form identified workloads within reasonable timeframes and at sustainable work rates.
Organizational health. A competent and valued workforce is the foundation for good organizational health, which essentially translates to employee motivation:
• How happy are the people that come to work each day? • Are working relationships adversarial or cooperative? • Does communication occur freely and effectively? • Is there mutual respect between all components of the
workforce?
• Is the workforce a team rather than a collection of many individual franchises?
• Is there a clearly defined and balanced value relationship between management and employees?
• Do employees feel a sense of pride regarding their jobs and the company for which they work?
A quality WOC methodology should utilize an employee per- ception survey to help measure employee perception of organi- zational health and performance. The methodology should also evaluate employee experience levels from both a department and company perspective. The methodology should consider quali- fications, education and training, preferably for everyone in the organization. This information is valuable when looking to either qualitatively or quantitatively measure the key elements compris- ing workforce competency (i.e., knowledge, training, qualifica- tions and experience) and how well these elements are utilized. Extensive data request. WOC begins with a request for de- mographic data, such as the age groupings of personnel and their experience levels. The data should include listings of qualifica- tions; length and type of education; training programs that em-
ployees attended; and positions that employees have held in the company and in previous employment.
Employing a comprehensive methodology requires gather- ing a significant amount of operational and business informa- tion. For example, process flow diagrams and written proce- dures should be requested. If work processes have already been mapped, copies of those maps will be needed. If the facility has any documented practices to accompany the procedures, those should also be gathered. This information is used to identify key work processes for mapping to develop an understanding of how work is actually conducted across the business. Additionally, a targeted interview list and schedule, along with a work sampling plan, should be developed to determine employee utilization. These information and data reviews are aimed at developing an overall project work plan that will achieve maximum benefit for the organization with minimal disruption of its work.
The onsite portion of a WOC effort should begin with work- process mapping and a best-practices assessment, followed by a detailed work sampling and data analysis (FIG. 2). Multiple tech-
niques can be employed to develop an accurate understanding of current work practices and procedures that impact workload and manpower.
Employee consideration. All too often, companies consider only direct employees, but, throughout this process, the roles of contract employees should be evaluated. Many companies re- duce the number of direct employees only to replace them with an equal or greater number of contract employees.
The concept of optimization does not always mean a simple re- duction in staff: the solution may involve adding staff members to certain department areas. For example, most leading-performance facilities have higher levels of technical staffing than their poorer- performing peers. The optimization process helps operators de- termine the staffing levels and organizational structures that will sustainably maximize workforce efficiency and effectiveness.
The methodology evaluates the organization and staffing lev- els in the context of the business model. The success of the busi- ness model (FIG. 3) is proportional to workforce competency and
organizational health.
The business objective defines how profit will be generated (e.g., converting crude oil into light, premium products). High- level work processes, such as operations and maintenance, are a series of repetitive actions that must take place to accomplish the business objective. The organizational structure defines how employees will accomplish the work process. The roles and re- sponsibilities within this structure must be well-defined, with clear performance expectations for each position within the organization. Practices and procedures tell what and how the actions in the work process will be accomplished. How much time it takes to perform the practices and procedures, and the ef- ficiency with which they are performed, establish employee uti- lization and, ultimately, the number of employees and employee skills and knowledge required. Training is also an important ele- ment in the business model because improvement in employee knowledge and skills is heavily dependent upon instruction.
Results must also be routinely measured and evaluated so that performance is continually improved. The measured results are used to develop future business plans, including performance improvement strategies, and to manage and maximize ongo-
53 18 29 49 14 37 22 58 20 44 52 4 28 41 31 31 48 21 0 Efficienc y, % of time Maintenance engineer Maintenance planner Non-value added Necessary Value added Craftspersons Operations engineer Project manager Inspectors 20 40 60 80 100
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ing business. A thorough understanding of each element is necessary for effective and sustainable workforce optimization. WOC investigates and analyzes each of the business model elements, along with workforce competency and organizational health, before developing recommenda- tions and an overall staffing plan.
Phased staffing level changes. To reach set goals and objectives, companies must determine what drives their business and develop an optimized business struc- ture. Accomplishing this task requires time and discipline, using a documented sched- ule and plan. By adopting a methodology that measures current work processes and workloads, and considers future work- loads, facilities can optimize both staffing levels and work processes over time. The
phased changes in staffing levels are adjusted to meet the busi- ness environment and requirements of each company and its fa- cilities, rather than applying a “cookie-cutter” approach.
Typical time periods (tiers) for making staffing level changes include short-range staffing targets with associated business pro- cesses and practice changes that are within the authority level of a facility’s management. These targets should be achievable in one year or less. Mid-range staffing-level targets requiring minor changes to the overall business model typically require one to three years and are often within the facility’s management au- thority level. Longer-range targets demand staffing levels requir- ing major changes to the company’s existing business model and possibly its organizational structure. The business changes to reach this level of staffing may require three to five years to fully achieve. Such changes to the organization’s business model may include streamlining existing corporate procedures to which each site or division is required to adhere, or delegating higher levels of authority to managers and/or supervisors.
Staffing targets for each customized time period are tabulated for each functional area. In addition to staffing targets and overall recommendations, an estimation of the total annual savings or fi- nancial impact in connection with the recommendations for each set of staffing targets can be provided using WOC methodology.
WOC can help companies that are both understaffed and overstaffed. Most often, the results are able to significantly mod- ify staffing levels in the range of 10%–15%. However, reducing employees and changing organizational structure is not always the answer. WOC utilizes proprietary information and data from large and mature industry performance databases as a valuable tool in the identification of potential staffing optimization op- portunities. Specifically, the databases allow comparisons using key performance indicators and actual staffing levels for peer facilities in relation to the client facility. As a result, this unique analysis capability enables development of proven, achievable and sustainable recommendations for a facility.
Equally important as data access capabilities is that the work- force analysis and development of improvement recommenda- tions are performed by personnel with an average experience level greater than 30 years. These consultants have experienced
and lived most of the recommendations and changes that they recommend. As a result, their analysis goes far beyond numeri- cal analysis and the basic tenets of a high-quality Master of Busi- ness Administration (MBA) degree.
High-performance benchmarks are always changing, so downstream operators must constantly observe these changes and work to adopt new philosophies and optimize work pro- cesses to stay competitive.
A new way of thinking. Going beyond simple, quantitative formulas and across-the-board cuts, the data-driven and experi- ence-based approach takes all critical factors into account. The result is custom recommendations for reaching optimal staffing levels and organizational structure (which can mean staff reduc- tions and/or staff additions) based on specified goals, objec- tives and social standards for the business.
Management is tasked with identifying and closing the gaps in operational performance, and an expert consultant can provide:
• Performance benchmarking to compare the company’s personnel efficiency relative to peers
• Process mapping to evaluate actual work processes, such as operator maintenance, routine maintenance, shift operations and procurement to identify opportunities for streamlining
• Assessment of the facility’s current key work practices and identification of inefficiencies
• Work sampling analysis to assess how employees in various work streams expend their efforts on necessary tasks, which assists in identifying obstructions to improving efficiency
• Application of best professional judgment of seasoned industry professionals.
There is no single, perfect organizational structure: many models are successful. WOC can be the key to achieving greater efficiencies, enhanced reliability, improved margins and sus- tainable performance.
BILL GLASSCOCK is vice president of consulting at Solomon Associates, which provides benchmarking and performance improvement consulting services to energy-intensive industries. Business objectives Work processes Organization structure Practices/ procedures (best practices) Workload and utilization
Continuous improvement cycle
Roles and responsibilities Tools, equipment and software Staffing level Training Roles and responsibilities Workforce
competency Organizationalhealth
Activity analyses work sampling Process mapping Work process evaluation Performance monitoring and metrics Improvement plan and implementation
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