Fluctuations in performance
Staff changes lead to noticeable performance fluctuations in resource planning
The shortage of skilled workers has now affected all companies. No industry is exempt. And this trend will continue in the coming years, at least according to the Federal Ministry for Economic Affairs and Climate Protection. The main cause is demographic change. According to the Institute for Employment Research (IAB), the German labour market could lose around seven million workers by 2035. Politicians and companies will certainly work to mitigate these figures, but it is inevitable that companies will also have to adapt their processes to deal with scarce (human) resources.
The challenge of resource planning
How project portfolios and specialist departments work together to ensure the ability to act
In continuous processes, such as production, resource shortages can be identified quickly. In the best case scenario, they can even be calculated in advance, as the output of the process depends on performance variables that can be clearly identified. This is usually based on the work plan, which defines the timing of work steps in combination with people and machines. In projects, this is basically no different, but it is usually only practised to a limited extent.
Probably the most commonly used method is to communicate the need for product development projects (= projects) to the implementing departments in advance. If necessary, this project portfolio is supplemented by technology projects. The specialist departments then use this information to estimate how much resources are required for their area in order to implement this portfolio. If there is a shortfall, discussions are held to clarify whether it is possible to recruit new specialists and, if not, what impact this will have on current and upcoming projects. Since a company rarely develops disruptively, this approach based on continuous development was sufficient to ensure a balance between resource requirements and business success.
Planning approaches with weaknesses
How overload in day-to-day business can undermine entire project plans
However, this approach also had weaknesses, as in many cases only the sum of resources over a planning period - usually one year - was considered. The specific time requirements for a month or even a week were not determined. However, this often became a stumbling block when implementing the projects, as requirements for certain specialists accumulated over periods. The result: a bottleneck arose, which led to delays for individual projects.
We know from our consulting projects that the accumulation of such cases can lead to considerable delays in individual or almost all projects. The effect is often underestimated and rarely measured correctly. However, if you talk to those affected at working level, it is precisely the daily displacement processes that lead to deadlines being missed.
Another effect that leads to problems in the processing of projects: newly recruited employees - even if they are fully qualified - do not immediately deliver their full performance. The familiarisation and introduction to the special company-specific subject matter takes time, which is often not taken into account when calculating resource requirements.
Shortage of skilled labour leads to non-linear effects
In future, the previous planning approaches will no longer be sufficient to complete a portfolio of projects on time. There are several reasons for this:
Departures of key experienced employees
Planned departures meet lack of room for experience transfer
Overload due to overtime
Knowledge carrier departures overburden teams and reduce motivation
Recruitment and familiarisation takes longer
Longer and more expensive familiarisation makes it more difficult to forecast future performance
Knowledge management as a key strategic issue
Boomer retirement causes knowledge to dwindle - knowledge management becomes central
HR competition requires innovative approaches
Securing skilled labour means staying innovative - otherwise there is a risk of losing competitiveness
Simply carrying on as before is not a solution
Act strategically instead of failing in series
This leads to a worst-case scenario. Projects get so out of hand in all three target dimensions (cost, quality and time) that the company's goals are seriously jeopardised. Most companies therefore know that simply continuing as before is not an option!
There are three levers that can be used to counteract the shortage of skilled workers:
- Consideration in corporate strategy
- Long-term personnel planning
- Structured project portfolio planning
Consider the shortage of skilled labour in the corporate strategy
Focus instead of scatter loss in the portfolio
Focus is the key word of the future. Companies must concentrate on the business areas or products that are key to the company's success. Far too often, "nice to have" positions are included in the portfolio. Apart from the fact that these items also require management attention, they also divert resources away from core projects. This competitive situation should be avoided from the outset.
Long-term and strategic personnel planning
A shortage of skilled labour is a personnel issue. As this shortage can seriously jeopardise a company's growth, personnel planning must become more important. Starting with the question of how the company can make itself more attractive to skilled workers, through dialogue with people who are of retirement age, to the economic consideration of longer double staffing in positions where there are experienced employees who will soon be leaving the company. It is strongly recommended that company management make personnel planning a strategic issue and play an active role in shaping it.
Making structured decisions and working through the project portfolio
In our previous CO Improve newsletter, we presented our approach to efficient project portfolio management. The bottom line is that both the decision as to which project should be implemented and the operational management of projects must be more structured. This structure requires more managerial effort, but it pays off later. With management at a deeper level of detail, many effects, such as the experience gap for new employees, can be taken into account much better. It is worth investing in this process. In the end, it ensures that the projects that are important to the company are completed on time, on budget and to the required quality.
Preventing the shortage of skilled labour in good time
The shortage of skilled labour will affect all companies. There are many possible solutions. But the idea that everything will stay the same in the end is an illusion. The time to prepare adequately has long since begun. Our experienced consultants can support you if you want to plan and implement the right measures for your company.