"Industry Perspectives: Strategic Workforce Management in the Automotive Industry"

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Industry Perspectives: Strategic Workforce Management in the Automotive Industry

Executive Summary

The North American automotive industry faces unprecedented change, creating perhaps one of the most challenging chapters in its 100-year history. Increased competition, globalization, consumer demand, regulations, and labor market complexities are key issues automotive companies must grapple with as they steer into the future.

This challenging environment is forcing the automotive industry, particularly in North America, to look for new ways to improve operational performance, and at the same time drive innovation and creativity into their products. Clearly, the workforce not only is an area of opportunity for these companies but also presents the single most signiicant challenge. Creating short-term inancial improvement and long-term sustainable advantage requires forward thinking as it relates to managing the workforce.

Workforce management and optimization is the ability to proactively get the right people to perform the right job at the right time. The end result is improved worker productivity, lower costs, and a more nimble or agile workforce. To achieve this, companies must gain better visibility into both the composition of the workforce and the enterprise-wide decision and transition process that supports the hiring, redeployment, and separation processes. This visibility enables stafing coordinators and hiring managers to make better, more consistent decisions around talent quality and competency needs. It can also drive a new level of analytics that represents the operational nature of the companies' single largest expense while creating better alignment to business objectives. Companies that don't adopt workforce management strategies will miss the opportunity to drive better business results and run the risk of losing shareholder interest.

Many automotive companies are set in their ways and culturally not adept at change. Old-school hiring and separation techniques, antiquated systems and processes, and layers of management and bureaucracy remain the challenge. A corporate mind shift must take place-and it has to start with senior management. Company leaders must drive a new corporate mandate that forces their organization, for the irst time, to link human capital investments and employee performance to business strategy and objectives.

Thus, workforce management is not the function of HR. Rather, it's the responsibility of business leaders throughout the organization-individually and collectively-to champion this initiative for enterprise success. Those that do will help their companies overcome the automotive industry's complex challenges and prosper in the years ahead. The HR department must partner with the CEO, CFO, CEO, and COO to drive this change. It must think strategically on behalf of the business and proactively put forth a strategy that embraces innovation, process improvement, transparency, and speed. HR can no longer play the role of administrator in a downsizing or restructuring; it must step up to the plate and demonstrate how pro-active workforce management can create shareholder value.

Produced in conjunction with Knowledge Infusion, a strategic Human Capital Management consulting irm, this paper is targeted at HR and business leaders in the automotive industry seeking to transform their businesses through comprehensive workforce management strategies and technologies. It discusses today's industry and workforce-speciic challenges, the concept of workforce management and associated business metrics, and how to begin implementing an effective strategy. Furthermore, it demonstrates how two companies have leveraged People Business Network's leading Workforce Information Platform.

To date, most automotive companies have not invested in making sure the right individuals are in the right jobs, for optimal business results. But that's starting to change with strategic workforce management.

Today's Automotive Industry

The automotive industry is highly complex-and has been since the days of Henry Ford and the irst assembly line. But the industry is in such lux today that this complexity is reaching levels never met before. Bumps in the road caused by changing economical, cultural, and market conditions are now much larger potholes for automotive companies navigating the road ahead.

To its credit, the automotive industry has embraced changed and reinvented itself against the shifting business landscape. Yet, as it enters its second century, the industry faces perhaps the most demanding phase of its evolution-one of serious cost-cutting, globalization, consolidation, and business process improvement along with heightened consumer demand.

Those that can successfully overcome today's industry challenges, and thereby drive up market share and stakeholder value, will be the ones still standing 10 years from now.

• Increased Global Competition-Since the market is increasingly international in scope, major industry players must have a global footprint to compete.
• Growing Consumer Demand-A strong relationship and positive "customer experience" is essential in earning consumers' satisfaction and loyalty over the competition, thus creating sustainability.
• New Industry Regulations-New regulations that impact the entire automotive value chain increase the costs and disruptions associated with compliance, yet they also yield new opportunities.
• Shared Innovation-Companies must leverage best practices and shared knowledge across the enterprise, pulling innovation through the network faster. Not to mention optimizing their existing investments in technology, training, and other resources.

Leveraging the Workforce to Drive New Opportunities

In addition to the general industry challenges, automotive companies face the tough task of managing a complex workforce. Building an exceptional automotive workforce requires choosing talented, motivated people. But it also hinges on administering this human capital in the most cost-effective, eficient, and productive manner.

In addition to the general industry challenges, automotive companies face the tough task of managing a complex workforce. Building an exceptional automotive workforce requires choosing talented, motivated people. But it also hinges on administering this human capital in the most cost-effective, eficient, and productive manner.

Most automotive companies, however, have not invested in appropriate processes to ensure that they place the right individuals in the right jobs. This lack of proactive workforce management can quickly translate into losses in sales, productivity, turnover, and poor customer service.

Complex employee contracts, rising healthcare and beneit costs, and growing retiree populations are forcing automotive companies to closely evaluate the impact of its workforce on the overall business.

And rightfully so. Strategic workforce management represents the greatest area of growth and opportunity for companies seeking to improve their overall performance against industry challenges.

By gaining better information and insight around the impact that enterprise workforce decisions and transitions-from individual placement to departmental reorganizations to hefty mergers and acquisitions-have on organizational objectives, automotive companies can more effectively leverage their people for greater business success and ensure that a consistent pool of talent is available to meet business demand.

Automotive companies that can successfully leverage their human capital to overcome today's industry challenges and drive greater business value will be the ones still standing 10 years from now.

Strategic Workforce Management: Creating Competitive Advantage

In response to both industry and workforce-speciic challenges, leading automotive companies are seeking innovative ways to position and, more importantly, distinguish themselves in the global marketplace. In years past, these companies have focused on streamlining many parts of the enterprise in an effort to reduce costs, speed time-to-market, and increase customer satisfaction.

Corporate emphasis has centered on areas such as inancial, manufacturing, supply chain, and customer relationship management, with signiicant technology investments applied accordingly. As a result, very few companies have addressed their human capital-the organization's largest area of investment-as a way to create competitive advantage.

The Changing Role of HR

In part, that's because HR traditionally has been viewed as a tactical function, managing transactions associated with payroll and beneits, for example. HR has not been tapped as a strategic enabler for achieving broader corporate goals. Human capital has also remained one of the least measured and analyzed investments, drawing less attention from executives and investors.

Yet surveys indicate that, on average, more than 60-70 percent of a company's costs are labor-related. Moreover, business leaders are recognizing that returns on all other investments are driven by the quality and strength of their workforce. To that end, companies are beginning to realize the value of capitalizing on people-their "greatest asset."

Today, many HR leaders have emerged from the lines of business rather than climbing the functional rank, bringing a big picture view to the organization in terms of driving enterprise-wide business value versus mere cost savings.

Workforce management truly represents the next competitive weapon for business success and an ideal opportunity for HR to increase and demonstrate it strategic contributions.

Deining Strategic Workforce Management

Changing business dynamics and strategies that affect the workforce are creating the need for strategic workforce management. Companies are executing workforce events on a daily basis across the enterprise to deliver business results, such as including mergers and acquisitions, outsourcing, reductions in force, and reorganizations. Proactive workforce management is no longer a "nice to have." Rather, it is emerging as the next new corporate mandate. The four key business drivers include:

• Financial Management-Business leaders see an opportunity to optimize the single biggest line-item cost in their company's inancial statement
• Operations Management-Investors require intellectual and human capital statements as leading indicators to the performance of other assets.
• Compliance Management-Corporate and federal regulatory policies mandate adequate tracking and monitoring of human capital process controls.
• Talent Management-Organizations must ensure that adequate talent is available to meet overall business objectives.

This shift in mindset has spawned new energy and excitement around strategic workforce management-getting the right people to perform the right job at the right time in order to drive greater business results. An effective strategic workforce management strategy helps companies:

• Proactively manage, monitor, and measure enterprise workforce decisions and transitions (e.g. hiring, redeployments, and separations) that have inancial, talent, and compliance impacts. This capability provides true real-time visibility into key operational metrics necessary for tracking progress of workforce- related events (e.g. mergers and acquisitions, downsizing, and restructuring) and can be used as input into business strategy (e.g. outsourcing scenario planning).
• Automate workforce transition processes to improve eficiency, lower HR administrative expenses, improve on- and off-payroll cycle times, and eliminate error-prone manual processing.
• Reduce liability costs and risks by ensuring corporate, federal, and state regulatory compliance as it pertains to EEO, Adverse Impact, WARN, Union Contracts, and Sarbanes Oxley 404.

Typical users are business managers responsible for enterprise talent management, workforce strategy and planning, who require real-time visibility into workforce compliance and performance metrics and who are active decision-makers in regards to workforce deployments.

Evolving Performance Indicators

Strategic workforce management requires a new set of key performance indicators, or KPIs, to capture and analyze the right information around productivity and proitability. Beyond traditional reporting associated with HR transactions (such as headcount, turnover, diversity, etc.), strategic workforce management is intended to measure employee performance tied to business goals.

It's important to identify KPIs that are relevant to support the company's strategic workforce priorities and that can be applied across the organization as "best practice" measures. For automotive companies, this new set of metrics and measures centers around key areas such as stafing, competency, performance, career development, succession, and compensation/beneits.

This additional business insight is what drives organizational improvement by quantifying how those key HR areas impact corporate results and effectiveness.

Below is just a sampling of the new types of information needed to optimize the workforce, drive performance, and increase strategic decision-making. For a more comprehensive list of strategic workforce management metrics, please contact a PBN representative at (908) 604-2282.

Strategic workforce management is the process of getting the right people to perform the right job at the right time, in order to driver better business results.

A Business Imperative

This new set of KPIs facilitates strategic analysis and decisionmaking across the entire enterprise. It's not longer simply the reporting function of HR, but rather the responsibility of business leaders throughout the organization.

It's critical that executives, including the CEO, start paying close attention to this workforce information, as it directly ties to the performance of other key areas-inance (CFO), operations (COO), technology (CIO/CTO), marketing (CMO), and so on. In fact, additional metrics outside of HR are essential for successful implementation of workforce management strategies.

Today's HR agenda directly relects industry change and challenge. Strategic workforce management is an initiative that management and colleagues must take to heart as part of continuous business improvement. It's a business imperative for any company hoping to lourish in the 21st Century. Those that do it right will emerge as leaders in the automotive industry.

Implementing an Effective Strategy

Implementing a strategic workforce management strategy offers tremendous beneit for automotive companies, but many are unsure where to start. When it comes to maximizing human capital, it's not just about process automation and the associated time/cost-savings. It's about transforming corporate mindset, evolving the business culture, and facilitating rapid adoption.

To get there, automotive companies must conduct a thorough analysis of its existing business and formulate a strategic plan that includes the following key elements:

• Realtime Visibility. Ensuring visibility at all levels of the organization is critical to gain traction for creating a consistent enterprise workforce strategy. Real-time visibility into talent, inancial, compliance, and operational metrics can lead to better decision making and new insight into the true operational nature and function of the single largest expense.
• Central Enterprise Polices and Controls. Too often, automotive companies are saddled with fragmented, disparate systems that create inconsistencies across internal and external processes. The ability to centralize corporate and federal labor polices and controls to reduce liability costs and align workforce strategies to business goals is critical.
• Distributed Employee Transition Worklow. A key aspect of strategic workforce management is leveraging tools and technology to speed up the sluggish, often manual processes that exist to support today's employee decision and transition processes. For many companies, it can take 8-12 weeks to decide if an employee should be separated or redeployed from the business and then execute the transition processing. This process is expensive, especially when large workforce events, such as a downsizing, occur.
• Seamless Integration. Connectivity to internal systems is critical to ensure that, as workforce decisions and transitions occur, the appropriate "systems" are notiied and the transaction is timely and accurate. For example, turning off payroll when an employee is separated from the company may seem like a simple concept. However, many times, especially during mass employee events beneits, payroll and other transactional systems receive the wrong schedule or are never notiied-leading to tremendous inancial "leakage" and reconciliation that has to occur.

Companies such as People Business Network and Knowledge Infusion have built their businesses around helping companies strategically optimize their workforces through process improvement, best practices, and technology deployments- driving competitive advantage and true business results. (In the following section, we highlight just two of many customers that have beneited from successful workforce management initiatives.)

To learn how PBN can help your company develop and implement effective workforce management strategies, please contact a PBN representative at (908) 604-2282.

A robust workforce information platform built on proven technology is required for connecting people, processes, and systems across the complex global automotive enterprise.

Sample Success Stories

Below are two examples of how leading companies in other industries are leveraging PBN's Workforce Information Platform (WIP) to optimize their "people" for competitive advantage.

Telecommunications Customer: Workforce Reduction

In response to economic and market pressures, a leading telecommunications company needed to reduce its workforce to meet operating expense goals. The company chose to offer a voluntary, early retirement program to 14,000 eligible managers-expecting that 6,000 would accept.

Challenge
The company had completed several acquisitions, workforce reductions, and divestitures in the past, but this time the process needed to be completed within a month in order to capture more than $1 billion on the upcoming quarterly report. In addition, the existing process required the distribution, management, and storage of tens of thousands of forms, documents, and other material.

Solution
PBN's Workforce Information Platform enabled the company to automate its existing workforce reduction process and consolidate previously fragmented processes into a single, integrated system. The company was able to quickly distribute details of the early retirement program, and then track employee acceptance and rejection. The platform also coordinated all payroll and HRIS transactions (payout options, unused vacation, etc.), thereby eliminating time-consuming manual data entry.

Results
The workforce reduction was completed within four weeks, meeting the end-of-quarter target. In addition to salary savings, the company realized a signiicant reduction in administrative costs. Moreover, the company has since leveraged its new platform for additional voluntary incentive programs and involuntary reductions. Through it all, the end result is better overall enterprise capability to manage costs, ensure compliance at all levels, and retain the very best talent across the organization.

Aviation Customer: Workforce Adjustment and Redeployment

Due to the cyclical-and often volatile-nature of its business, a leading aviation company sought a better way to coordinate, control, and execute its workforce stafing requirements. The company established a team of HR professionals dedicated to track and administer staff adjustments and realignments.

Challenge
Due to the complexity and variability across all supported employee groups-including negotiated contracts-the workforce adjustment process requires signiicant knowledgebased administration. Forced to make big changes following 9/11, the company hired more than 100 temporary staff to manage the process. After evaluating the cost, complexity, and productivity losses resulting from this approach, the company realized it needed a more eficient, effective way to support ongoing workforce adjustments.

Solution
PBN's Workforce Information Platform helped the company eliminate manual steps and shorten completion timeframes while complying with contracts, corporate policy, and federal labor laws. Workforce adjustment requests are now handled within hours, rather than days. In addition, the sophisticated redeployment module enables the company to offer alternative employment opportunities to its workers, as mandated by contract agreement.

Results
The company has managed hundreds of events and thousands of decisions since its initial implementation more than three years ago. It has reduced administrative staff by more than 6 FTEs and cut more than two weeks of process time off each staff reduction, resulting in signiicant savings in payroll and beneits costs. Furthermore, use of the platform has elevated HR in the eyes of the corporation by directly impacting the bottom line and improving the organization's ability to respond to changing market needs.

For complete case studies of these and other customers, please contact a PBN representative at (908) 604-2282.

Conclusion

Changing market dynamics are compelling automotive companies to rethink the way they do business. In today's highly competitive environment, increased globalization, growing consumer demand, new regulations, and complex labor issues are transforming the business landscape, forcing the automotive industry to develop innovative ways to increase performance and proitability while decreasing costs.

Increasingly, leading automotive companies are turning to their single greatest asset-their people-to create additional enterprise value and competitive differentiation. Thus, there's an industry buzz around the concept of "strategic workforce management"-getting the right people to perform the right job at the right time to deliver better overall business results-and a new set of corporate measures.

Strategic workforce management spans beyond the traditional role of HR. In fact, it's a strategic initiative and competitive weapon to help today's automotive companies drive corporate goals and objectives. It's essential that all business leaders, from C-level executives to functional managers, embrace workforce management strategies and technologies in order to survive and thrive in the complex automotive industry-today and for years to come.

About People Business Network

People Business Network, Inc.(PBN), headquartered in Somerville, NJ operates in the workforce management space, specializing in Web-based Workforce Alignment solutions helping companies make the right decisions on whom to retain, whom to re-deploy and whom to separate. These solutions replace existing manual processes resulting in increased decision quality and assurance of regulatory compliance while signiicantly reducing administration, errors and decision time representing substantial return on investment. For more information, visit www.peoplebusinessnetwork.com or call (908) 604-2282.

About Knowledge Infusion

Knowledge Infusion is a strategic consulting organization dedicated to helping human resource and learning organizations realize the true strategic value of Human Capital Management (HCM) and Learning technologies. Knowledge Infusion works with clients to map HCM technology strategies based on their unique business needs, optimize existing strategic HCM applications, and tie strategic HCM initiatives to speciic, measurable business results. For more information, visit www.knowledge-infusion.com or call (877) 821-2244.

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Table of Contents:

• Executive Summary
• Today's Automotive Industry
• Strategic Workforce Management:
  Creating Competitive Advantage
• Implementing an Effective Strategy
• Sample Success Stories
• Conclusion