October 14, 2011
The stakes are high. For many companies, labor is their largest cost component. Consequently, increased workforce efficiency will lead to a meaningful increase in profits. Most companies analyze their workforce data, but few if any apply the analytical tools of labor economics.
To take another business process that has received much analytical attention in the past several decades, consider how the science of operations research has been applied to “supply chain” optimization. For businesses dependent on a supply of input materials or trying to manage their inventories, optimizing input materials and inventory flows through the application of operations research and industrial engineering principles has had a big impact on profits. A similar focus on the workforce, utilizing the science of labor economics, will improve efficiencies in hiring, promoting, pay, and turnover, with a consequent increase in labor productivity and efficiency, and a positive impact on profits.
Optimizing your workforce is a crucial, proactive measure. Companies periodically undertake assessments of employment outcomes as a reactive and retrospective measure – often in response to a lawsuit or to assess compliance with labor regulations. Instead, engaging in workforce optimization provides management with the tools to best manage their employees going forward in order to enhance productivity. For example, it is often easy to distinguish “good” decisions from “bad” decisions after the fact. It is much more difficult to understand why they happen and to create a system for improved decision making in the future. This is where we come in. We use our expertise to apply the science of labor economics to your workforce, providing you with powerful prospective business decision-making tools.