Chaos Theory focuses on the premise that even in apparently random events there are patterns. It is the idea that small changes can have significant and far reaching ripples with significant impact, often popularly known as the Butterfly Effect.
Linking Chaos Theory to managing workforce changes may seem like a stretch. There are, however, practical lessons in it that can be applied to gaining foresight into workforce planning.
The four pillars of workforce optimisation
Before the Covid-19 pandemic, understanding the options available when evaluating people spending was a problem for any future of work agenda. This was because the guide rails were broad and the timelines, for all practical purposes, infinite. When it comes to the practicalities of execution, the future of work is about workforce optimisation based on four pillars:
- Evaluation and optimisation of people spend — understanding ROI on people spend and quantifying the outcomes.
- Managing people risk — analysing risks related to proximity, innovation, failure to change, reputation, pivotal talent, and diversity and inclusion to name a few. These risks are hard to avoid altogether and need mitigation measures.
- Ensuring agility and resilience — when attempting to accurately foresee some of the issues the future may present, the answer lies in the ability to adapt and evolve towards long-term flexibility, regardless of the catalyst.
- Building stakeholder value — focusing on the three above and balancing employees, customers, shareholders, regulators and community should lead to a future of work agenda.
The problem of accelerating change
The Covid-19 pandemic has provided excellent hindsight on why workforce optimisation is essential for all organisations. It has accelerated the need for change. Even more importantly, it has given employers a sense of the opportunity presented by a future of work agenda and assess their ability to deliver on all four of the pillars above.
However, making changes means making decisions that are often aligned to an individual pillar and the questions asked can be somewhat binary. For example, “How do we cut costs?” or “How do we improve our diversity?”
No one can argue these questions are not relevant in the current environment. However, thinking about them in isolation leads to “chaos” because the ripples of cutting costs have the potential to impact long-term resilience.
By focusing on one issue in a silo, businesses can end up creating new problems that are sure to surface long after the immediate issue has been solved.
Focusing on the ‘and’ is the solution
It is crucial to take certain immediate actions, backed by well-informed decisions and balanced with a clear understanding of the impact of those decisions. But thinking beyond the immediate impact of decisions and outside of data silos will lead us to ask more onerous questions. For example, “How do we cut costs, and ensure that we don’t cut into muscle and compound a diversity issue in order to develop future skills?” The “and” is imperative to recognising the correlations between cause and effect.
The visible arc of change
Most decision making these days is informed by some form of data and analytics. It is also usually limited to a data silo. For instance, expense management looks at cost drivers; talent looks at capability while workforce planning looks at demand and supply balancing.
But the future of work is about digitalisation, breaking down silos, collaboration and democratisation. The volume of data analytics done is not important. To solve the “and” questions, joining up the available data is more important. How then, can businesses identify each lever that needs to be pulled and understand the full impact that it might have elsewhere? By accessing analysis that is extended to include data which identifies risk (and its variants), cognitive diversity, skills and capabilities.
This process is also inclusive. Employees help to capture information on how the workforce is changing and they do so because they get insights returned to them — not only on their personality profiles, but also suggested roles and potential training intervention to drive mobility and development. In combination, businesses start to see the ROI and potential savings, through build or mobility strategies. The future of work becomes much more meaningful than hiring data scientists or developers. A visible arc of how this changes workforce demographics over time, begins to appear.
Building the central intelligence of workforce analytics
By building a central intelligence of workforce data, layering in market intelligence, and engaging employees in the process, businesses gain transparency on the complexity and interconnected nature of the workforce. This allows them to balance customers, shareholders, regulators, community and employees while designing a tailored working environment that drives productivity.
In the end, that is what the future of work is about: building a workplace that enables people to be the best version of themselves and drive better business outcomes.
Peter Bentley is Aon’s chief commercial officer and future of work lead, global, human capital solutions