From Replaceable to Renewable: Building a Future-Proof Workforce

The economics of traditional restructuring no longer make sense. Hiring and firing workers simultaneously is expensive, wasteful, destroys engagement and morale, and inflicts fatal wounds to the employer brand.

Alan Wild
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The more some things change in the business world, the more other things seem to stay the same. Take layoffs for example.

Scan the front pages of most major business publications or the business updates on cable news channels, and you’ll see the same old story played out over and over again: Company X to restructure; thousands of jobs to be shed. It’s an age-old narrative, a reflection of the way the business world has confronted—and continues to confront—the need to change.

The basic premise behind these stories is not necessarily off base. Business leaders view workforce management as the process by which a surplus of workers with skills that do not match future needs are dismissed, and new workers with new skillsets are hired. In this traditional view, we see restructuring as an external problem, which is fine as long as we’re dealing with a capacity challenge. Consolidating, closing divisions or operations, or moving manufacturing to off-shore jurisdictions will almost always trigger reductions in head count.

Capacity, however, is not the major driving force behind restructuring today. Now, it’s the need to bring in new skills to help businesses transform how they do things or even what they do. That is a fundamentally different challenge that requires profoundly different solutions. Unfortunately, many of the world’s biggest and most successful companies remain trapped in an endless cycle of firing and hiring. 

Simply put, the economics of traditional restructuring don’t work today. Hiring and firing workers simultaneously destroys engagement and morale, and inflicts fatal wounds to the employer brand. It’s expensive, wasteful and doesn’t guarantee that you’re going to get the new skills you need.

HR professionals can read the writing on the wall. We understand that traditional workforce management strategies are out of date. And yet, we are often complicit in this scenario. We’ve become the proverbial carpenter swinging a hammer, for which every challenge appears to be a nail. 

We build in budget lines for paid separations and career transition support as if it’s an inevitable cost of doing business or some sort of investment in future cost savings. We view training and career management—the real keys to agile, sustainable workforce transformation—as cost items that can be sacrificed on the altar of austerity.

More worrisome, we stay silent when line managers obstruct efforts to deliver extended retraining. Why take someone off the frontline to train for a job that no one can define? It’s better to keep them working until they are no longer needed, then fire them and hire externally.

The consequences of clinging to these old strategies in an age of transformation can be devastating. There are, right now, companies who are firing workers and providing severance and transition support, only to re-hire the same people again in some other area of the same organization. Think about that for a minute—otherwise successful companies are firing the wrong people at the wrong time and for the wrong price.

Escaping this wasteful fire-and-hire trap isn’t easy. Somehow, we have to eliminate the concept of the replaceable workforce and instead learn how to build a renewable workforce. Or, as more HR professionals have come to say, we need to build a genuinely future-proof workforce.

The term future-proof may suggest to many HR professionals the need to become a labor market soothsayer, someone who can magically predict future workforce needs. But most of us know that predicting the future is a notoriously imprecise exercise. That is particularly so in an age when technology and innovation have turned labor trends upside down. 

Who, for example, would have predicted that Uber and Lyft would have created an entirely new generation of professional drivers? Or that Amazon’s success would breathe life into the corrugated box industry? As it turns out, someone has to drive those ride-share vehicles, and you have to pack all of those online purchases into something to get them to customers. 

The key to workforce transformation now is adaptability. When Darwin hypothesized about “the survival of the fittest,” he was actually describing the survival of the most adaptable, not the smartest or most reliable. We need to look at workers as more than a collection of current skills. The future-proofed worker will be the one who has a capacity to learn and apply new skills, embrace new mindsets and assist in the creation of new cultures.

What we’re talking about is the creation of an entirely new talent ecosystem built from three distinct HR disciplines—hiring, learning and restructuring—on a foundation of workforce analytics. The path to this new ecosystem will involve a number of distinct stages of planning:

Think. Consider not only organizational design, but also future skill needs. To execute on future business plans and strategies, what kinds of people do you need, and where are you going to find them?

Analyze. Before looking outside your organization, you need to take a long, hard look inside. This will involve assessing skills and adaptability of current employees. You need to know who is fit for the future and who is too far off-track to contribute to the future state of the organization.

Share. A workforce transformation needs support from leaders and employees if it is to be successful. It is important to share the details of the future-proofing strategy to earn trust and combat the “hold-on-to-what-I-have” mentality that many employees demonstrate in the face of profound change. Ensure that workers understand that a future-proof workforce is one in which there is a lot of choice. The watchword is transparency.

Act. When it comes to implementing the future-proofing strategy, ensure that continuous learning, reskilling and creative exit options are prominently featured. An internal labor economy, where employees can apply and train for different jobs in different parts of the same company, is essential. We need to introduce new approaches to reskilling to produce rapid results. However, it’s essential that poor performers are not allowed to contaminate a high-performing culture; workers who cannot adapt may still need to be separated.

Re-think. No organization is going to get future-proofing right the first time. It will be necessary to review and analyze all aspects of future-proofing to ensure that you are getting the correct outcomes. Be prepared to enhance efforts to promote internal movement with proactive job matching and intensive skill intervention. An objective review of existing policies and practices will help you find gaps and chinks that need to be filled and repaired.

Properly designed and deployed, this process will establish a future-proof social contract between employer and employee. At a time when offering someone a career for life is really no longer an option, employers need to demonstrate that they care about their employees’ lifetime careers. That’s not only good for the individual; it builds future employability that supports a long-term workforce strategy, which is ultimately good for business.

In this age of workforce transformation, business organizations will be separated into two major categories: those that are engaged in future-proofing their workforces and those that will struggle with the concept and remain trapped in the fire-and-hire loop. 

Which one do you want to work for?
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