After several years of emphasizing product quality and productivity, insightful managers realize now that their greatest concern is identifying and managing talent to fill the skills-gap. If you cannot leverage the talent in your organization you may be choking your supply chain, slowing the pace of process improvements, blocking defect prevention, and failing to reduce of variation and waste.
Did your organization reduce workforce by 20% during the economic down turn? Did you witness your organization fail to retain tribal knowledge, initiating a Law of Diminishing Returns effect? That economics principle holds that if one factor of production increases, while other factors are held constant, the output per unit of the variable factor eventually will diminish. Your organization may have reduced its tribal knowledge by 80% because 20% of the workforce owned the knowledge. If workforce analytics were not used to identify the 20% who owned the 80%, the Law of Diminishing Returns explains the outcome.
The 80% of tribal knowledge is always embodied in the workforce; carried out, created by and passed on by the workforce. The data of workforce analytics would have given your organization crucial information about how to keep the 80% tribal knowledge for lean correction, overproduction, motion, material handling, waiting, inventory, processing, and leveraging talent. The workforce analytic data can give you monetary costs in terms of loss or gain to your organization, showing you the full human potential/talent capacity of your workforce.
Go back to the basics. Contact your human resource team today and ask for the workforce analytics describing workforce competencies, expertise, education, and experience so you can identify where human potential/talent should be used to greatest effect for the organization.
Has your focus been on correction, overproduction, motion, material handling, waiting, inventory, and processing? Quit sabotaging your organization by being fashionably lean and ignoring the “eighth waste,” human potential/talent. Your organization will struggle to fill the skills gap, to grow market share, production, revenue, and income stream.
Here are three solutions to fill the skills gap by leveraging your human potential/talent:
1. Marginal Benefit Principle. A marginal benefit is an increase in an activity’s overall benefit that is caused by a unit increase (all other factors remaining constant.) Your human potential/talent is capable of one more activity without additional cost to your organization.
• “What is the marginal opportunity cost of hiring human potential/talent?” (A compensation package, i.e., $30,000)
• “What is the marginal opportunity cost of leveraging human potential/talent?” (ROI, $30,000)
• “What valuation is human potential/talent?” (A net gain greater than the marginal opportunity cost of $30,000)
What does marginal benefit mean to you? First, you must consider your human potential/talent a balance sheet asset, not a liability. Calculate the valuation of your human potential/talent in earnings and financial asset returns without the discounted factors of poor performance or quitting.
Ask two questions: “What future earnings can (employee or employees) bring to the organization? And, “How can you leverage (employee or employees) for one more activity without additional cost to the organization?” Your answers will help you to achieve marginal benefit, net gain greater than marginal opportunity cost.
The Marginal Benefit Principle is about leveraging the 80% tribal knowledge from your 20% tribal workforce; training them, upgrading their skills, utilizing their knowledge to the fullest to benefit your organization.
“Has your gap analysis identified areas where your human potential/talent is performing below the standards expected by your customers, industry metrics and management that could be compromising the competitiveness of your organization?” Wasting human potential/talent is most damaging to your organization. Successful 2015 lean/quality professionals will find the best ways to leverage human potential/talent more effectively in their organizations.
Champion Marginal Benefits
In business, financial statements reflect tangible value for the organization. An organization’s balance sheet does not reflect human potential/talent as an asset. I’ve read that Lebron James makes $45 million a year because of his superior athletic talent. A basketball team does not win championships by wearing the most expensive uniforms or tennis shoes. It wins because the players possess the greatest ability over their opponents.
You will need to champion Marginal Benefit Principle return above marginal opportunity cost.
2. Capacity Utilization. This is a metric used to measure the rate at which potential output levels are being met or used. Displayed as a percentage, capacity utilization levels give insight into the overall “slack” in the organization at a given time. If your organization is running at 70% capacity utilization, it has room to increase production up to 100% without increasing costs.
What is Standard Work? It is the safest, highest quality, and most efficient way known to perform a particular process or task. It is the only acceptable way to do the process. It is expected to improve continually; in fact, it is the foundation of continuous improvement. Standard work focuses on employees, not equipment or materials (the human element).
What does capacity utilization mean to you? You can use capacity utilization to maximize human potential/talent. You can use it for greater human potential/talent impact on your operations, and to determine where to place your human potential/talent to achieve marginal benefits.
Human potential/talent may be your organization’s trainers and/or Subject-Matter-Experts (SMEs.) They can be your tool to reduce the seven wastes: correction, overproduction, motion, material handling, waiting, inventory and processing.
3. Training System. A formal training system includes training objectives, a document that outlines the coursework, applications to be taught and specific teaching methods for different learning styles. The different teaching methods to be used depend on the coursework and applications being taught; and the aptitude and skills of the learners.
You should use a three-stage training system — Preliminary Stage, Delivery Stage and Follow-Up Stage — and your trainers/SMEs should use a four-step training methodology within each stage of training: Preparation step, Presentation step, Practice step and Evaluation step.
A successful training system should be "live,” with trainees operating real or simulated equipment in the classroom and on-the-job for consistency, sustainability and return-on-investment.
Here’s what you need to do:
• Identify your trainers/SMEs.
• Put your trainers /SMEs in the right training positions.
• Certify your trainers /SMEs on a training system.
You cannot go at it alone anymore. You must forge partnerships with your human potential/talent to fill the skills gap for effective supply chain and pace for process improvements, defect prevention, reduction of variation and waste.
The HR department is no longer solely responsible for leveraging human potential/talent. You must formulate lean/quality strategies that capitalize on and maximize your human potential/ talent assets to build products and services that customers demand.
Carrie Van Daele is the CEO/President of Van Daele & Associates, and the author of “50 One-Minute Tips for Trainers”. Published by: Logical Operations. ISBN 1-56052-352-2-Library of Congress Catalog Card Number 95-68289. A version of her column, “Stop Sabotaging Your Company,” has appeared in QualityDigest.com