Workforce Numbers and Cost

Description

• Estimate of the number and cost of employees required to carry out the tasks of the “To-Be” environment.  This deliverable builds upon the work undertaken in developing organisation Structure and the Delineation of Roles and Responsibilities.

Business Value

• Estimating the ideal number and mix of employees is essential to develop reliable cost/benefit figures associated with the proposed process, policy and technology changes. (In any major change program, certain units within the “To-Be” structure and processes risk being understaffed—and their employees overburdened—while other units are, in fact, underutilized.)
• Accurate allocation of employees to each organisation component also facilitates the acceptance of the “To-Be” solutions.  The difference between the “current” and “required” staff complement provides an early indicator of the degree to which change management, outplacement, retraining and other activities will be necessary.

Approach

Wherever possible, estimates of workload (or “work volume”) and level of effort associated with each process/sub-process are based on “multiple lines of evidence”.  In general, the approaches taken depend on the quality, reliability and availability of data and may be drawn from a number of sources, such as:

• An analysis of historical trends:  This approach assumes that historical data are available for many of the services and products supported by the “To-Be” Process Model.  (However, this is not always the case because we are dealing with new processes.)  When available, an average of the historical workload over a given number of years (usually three to five) can be determined and adjusted to reflect any expected significant deviations from that historical average.
• An identification of the workload drivers:  This approach calls for the identification of external factors that lead to specific requests for services.  The use of external factors (e.g. population level) increases the credibility of the estimations, since they are derived from sources not controlled by the organisation.  On the other hand, the key disadvantage of using workload drivers is the difficulty in establishing the precise relationship between “cause and effect”.  While it is clear that some link may exist between a factor and requests for services, the quantification of that link may be difficult to establish.
• Benchmarks, industry standards, client expectations and Stretch Targets:  The following can serve as a basis to estimate the volume and level of effort (time applied associated with each process step):
• Metrics based on competitors’ performance
• Best Practice Comparisons
• Projected overall performance levels (sales, market share, etc.)
• Estimated performance levels of the “To-Be” process
• Results of Activity Based Costing analysis.

1. Build a spreadsheet to link the “To-Be” Process Model steps, the projected volumes and the estimated level of effort.  The spreadsheet can be set up by category of personnel or organisational unit.
1. To facilitate the analysis of information, the project team may choose to develop a “Human Resource Planning Model” a spreadsheet that integrates all the information/assumptions on the workload volumes and levels of effort associated with each work process.
2. Determine the volume of product/services expected for each of the new processes.
3. Determine the “applied time” or level of effort required per unit of volume per process (or subprocess) for each category of personnel or organisational unit (as defined in the Delineation of Roles and Responsibilities).
4. Translate the estimated level of effort (expressed in days) into estimates of the number of resources required, by determining the number of productive days (i.e., days dedicated to the “To-Be” process) per staff member (or full-time equivalent resource—FTE) per year.
5. Apply an average salary cost (plus benefits, if appropriate) to the total complement of staff required in each category of personnel or organisational component to calculate the total salary cost.
6. Integrate estimates of the number of FTEs required into final versions of the organisation Structure.

Guidelines

Tactics/Helpful Hints

• One way to determine staff numbers required is to simulate the “To-Be” processes through role-play exercises or simulation software (to assess volumes, durations, etc.).
• If Activity Based Costing was used as a diagnostic and cost measurement tool in previous phases, the models may be useful for estimating staff requirements under different scenarios (e.g., by changing driver quantities).
• The “Human Resource Planning Model” can also serve as a useful tool for future planning purposes.  As the organisation proceeds with the implementation of the new business solution, it should monitor the workload volumes and levels of effort expended, and use the Model to revise and refine its human resources estimates.