Manpower audits can help organizations map their human resources appropriately for optimal utilization and enhanced productivity.
By Tony Lavender
People are our most valuable resources and often the most expensive ones. Like any other resource, or perhaps more so, human resources if rightly deployed or placed to do the right job at the right time can do wonders for an organization. Similarly, an organization needs to ensure that human resources are correctly organized and deployed to deliver the desired outcomes.
Consider the changing global market dynamics constantly being challenged by technologies that are disrupting business models and changing the ways organizations work. This has made managing human resources, training them, and redeploying them for effective outcomes a more challenging task. It is expected to become even more daunting with the fast-emerging Industry 4.0 driven by artificial intelligence and robotics.
The solution lies in manpower audits (MAs) that can help map existing human resources against the organization’s strategic objectives. This is vital to use employees effectively and ensure that they only undertake necessary tasks. It also helps the organization identify mismatches of staffing versus tasks.
MA = rightsizing
The success of an organization is directly proportionate to the level of efficiency with which it uses resources, including human ones. This is the definition of productivity in simple terms. MAs can assist in rightsizing organizations to ensure that human resources are concentrated on their strategic objectives, thereby improving productivity significantly. MAs can also help auditors see issues or problems unknown to top managers and act as a useful early warning system showing where remedial action is needed.
It is important to note that MAs are about rightsizing, not downsizing, and refer to examination and evaluation of organizational policies, procedures, and practices to determine how efficiently human resources are utilized. In other words, MAs are overall quality control checks of manpower activities. They are known by several names, including human resources auditing, manpower budgeting, and staff inspection. MAs review the jobs, not the effectiveness of the people doing the jobs. Management and human resources departments remain responsible for personal job-related issues.
If done effectively, MAs can be a relatively simple process that can be modified to meet local needs and often lead to savings of 5–10%. Overall, the MA methodology looks at four aspects of “NONG” in an organization.
It is important for an organization to understand what it needs to do, and the first N of NONG in MAs stands for the need for the work. In other words, the MA should first determine whether all tasks assigned or performed in an organization are relevant and related to its strategic objectives. The O is related to organizational structure, including the number of management levels and scope of managers and supervisors. This is an important aspect of the audits, since an objective of MAs is creating flatter organizations. Restructuring organizational hierarchies is beneficial, since flatter organizations with fewer levels of management enable faster decision making and proper flows of information. It also brings operational levels closer to top management.
The number of staff is represented by the second N. Relevant work measurement techniques are used to ensure that organizations have the right number of people to do the required work. Finally, the G means the grading or ranking of staff, and job evaluation techniques are used to ensure that staff are given the right grades. Often staff undertake work not appropriate to their level, which is uneconomical and not good for the individuals concerned.
While NONG represents critical aspects reviewed during MAs, experts also use multiple steps in conducting the audits. For MAs to be successful, fair human resources policies must be in place. This is important to deal with any redundancies. For larger organizations with more than 250 employees, management may appoint or train auditors and select areas to be audited. Smaller organizations, however, might find it more cost-effective to use external MA consultants, possibly from their national productivity organizations (NPOs).
Once an auditor is appointed or existing resources are trained in conducting MAs, the process is usually kicked off by informing staff of the upcoming audit. The MA team then seeks information about the different tasks and activities handled at all levels through a detailed job description and analysis (JDA) form. The JDA forms are studied by the auditors, along with organizational charts and other details, to give them a comprehensive helicopter view of overall work.
During the same period, the MA team is briefed by senior managers on functions, tasks, outputs, current challenges, and future plans. The MA team conducts employee interviews at all levels, from the lowest upward, and maps the results against the JDA and organizational goals to produce a draft of the findings for discussion with managers. Finally, senior management determines which recommendations to adopt.
The proof of the pudding is in the eating, and the same holds for any management or development program including MAs. Recognizing the potential benefits of MAs, the Thailand Productivity Institute (FTPI) led by former Executive Director Dr. Santhi Kanoktanaporn invited Consultancy and Development International (CDI) to conduct a program on MAs in Bangkok in June 2016. It included a four-day training course and a two-day pilot trial in the factory of a local company, Carpets International (CI), to put the theory into practice and validate the relevance of the methodology.
CI is the largest contract carpet manufacturer in Asia for the hospitality, cruise liner, aviation, and automotive industries with factories in Thailand and PR China. It has a modern factory located about 50 km north of Bangkok, with a staff of about 1,450. Its management is forward looking, dynamic, and very environmentally conscious. It also has strong links with the FTPI and turned out to have been an excellent choice for an MA.
For the FTPI, the project was an opportunity to test another methodology and tool to assist SMEs in Thailand, since MAs support new strategies in response to industry trends. One of the big concerns of the FTPI was to prepare Thai SMEs to face such problems as difficulties in accessing financing and insufficient IT use. Those problems affected the ability of SMEs to attract high-quality staff, meaning that staff use had to be maximized. FTPI client organizations also needed more help in improving productivity and rightsizing.
CI, on the other hand, took a staff-centered attitude toward participation. The company was then facing a lack of skilled labor and needed to understand the competition, especially from PR China. Hence CI management saw MAs as a means of changing staff attitudes by showing the need to do things differently to enable a “step change” rather than just incremental change.
The other important reason for adopting the MA approach was the changing dynamics of the Thai labor force. Partly due to the aging society and because the new generation wants to be more entrepreneurial, labor was in shorter supply. Government policy also encouraged working in hometowns. What also mattered was the younger generation’s aspiration to better work environments, especially in the service sector. An MA provided a way to review processes and reenergize the workforce.
The MA project started with an intensive four-day training course for FTPI and CI staff, since the concept was new to all. The course included setting the scene and explaining the rationale behind the MA. It also included training on the MA/consultancy cycle/model, details on the NONG elements, tools and techniques for planning MAs, interview practices, evaluation of the data obtained, negotiation skills, and report writing. The human resources manager of the FTPI and CI counterpart both attended and gave presentations on their job evaluation methodologies.
The course was interactive, with practice interviews and role-playing to simulate an actual audit. A senior manager from CI acted as the CEO/client and was interviewed by two staff members to illustrate the methodology. He also discussed the final reports and draft recommendations after interview completion.
After the training, a two-day pilot trial was conducted at the CI factory during which the FTPI performed a sample audit of CI staff at different levels to test the methodology on the ground. Meetings with line managers of staff involved were held before and after their interviews. The training course and pilot project at CI were followed by a public seminar that was attended by 70 participants from industry and the public sector to spread the word about MAs and the success of the pilot program.
Senior CI staff also proved very persuasive in promoting MAs among others. The seminar covered the concept of MA, pilot trial, and views of FTPI and CI staff on the methodology. A key result was that a large Thai seafood company became the FTPI’s first MA client.
For the FTPI, the specific outcomes were the development of an MA program for use in private-sector consulting clients. It produced MA documentation and a manual, which included extra interview questions and checklists. The FTPI also received funding from the Ministry of Industry to implement MA model projects in 10 organizations from five industrial sectors. The projects covered providing consultancy advice and training client staff as auditors. After the FTPI held another seminar to explain this funding arrangement, an additional 150 SMEs registered to participate in similar MA efforts.
CI benefited from the application of the MA methodology in its factory, which led to cost savings of about USD75,000 in a single year. It was interesting that CI called subsequent audits “job analyses” instead of MAs. It also used its own JDA form for factory operatives. Both changes are entirely acceptable because MA is a flexible, adaptable methodology.
The pilot trial was followed by training of CI staff in auditing. After auditing some 40 employees in two areas over a 15-day period, one job was eliminated and another seven were reduced to four. In addition, staff in seven other jobs had their grade levels changed. CI planned to audit two other areas. The company now understands the advantages of putting the right person in the right position, with proper job grading and fair remuneration. It ultimately expects that cost savings will be in the region of USD75,000 annually.
The FTPI experience is a model that can be replicated as a structured MA program by the Asian Productivity Organization (APO) for other member countries. MA guidance documents for individual sectors like textiles, IT, automotive, engineering, logistics, and the service sector can be created depending upon the requirements of each NPO. The documents could include model organizational structures, suggested grades (with grade descriptions), job evaluation methods, grading guidance, work measurement criteria, and suggested pay scales tailored to local situations. A set of benchmarks for each industry and sector would also serve well if prepared by the APO, which already has accumulated a wealth of relevant data in these areas.
Lavender is an international management consultant and the Director of Consultancy and Development International, a consultant firm providing services in over 20 countries. He has previously served as a Director in the UK Ministry of Defence and Cabinet Office.