In recent years, many energy companies have sought to “cut costs at any cost,” leading in some cases to arbitrary staff reductions with unintended consequences, including reduced productivity, undermined safety, and lower profitability. These companies frequently end up paying a price that exceeds the apparent cost savings. To move beyond simple quantitative formulas and across-the-board cuts, a growing number of energy operations are employing a highly data-driven staffing assessment approach within the context of the business process.
The Workforce Optimization Consulting approach consists of a proprietary methodology, tools, and seasoned consultants focused on helping operators determine and implement the optimum workforces for their facilities. The methodology is grounded in industry best practices and requires a thorough analysis of the total workforce that embraces both quantitative and qualitative criteria. It uses databases of actual, validated oil and gas facility performance. Comparing work practices at a particular site with the top performers in the world yields staffing recommendations that are both realistic and sustainable.
Two key drivers of this smarter, more nuanced approach to managing staffing levels are workforce competency and organizational health. These two different but related criteria directly drive required staffing levels.
From a practical viewpoint, workforce competency comprises a number of factors:
- Achieving targeted business objectives: safety, environmental, and financial
- Visible and strong leadership at all organizational levels: management, supervision, and workers
- Consistent and efficient use of leading performance work processes
- Continuous and sustained use of best practices supporting the work process implementation
- Individual employee competency: knowledge, training, qualifications, and experience
- Employee utilization
These factors must be considered when modifying existing organization structures and staffing levels, and when developing organization and staffing plans for new facilities. Achieving maximum performance for each of these factors takes time. Implementing a Workforce Optimization Consulting solution considers the time required to achieve both individual and organizational maximum competency when determining recommended organization structure and staffing levels. Actual individual employee competency must be considered when determining the number of employees required to perform identified workloads within reasonable time frames and at sustainable work rates.
A competent and valued workforce is the foundation for good organizational health, which essentially translates to employee motivation. How happy are people who come to work each day and do what they are doing? Are working relationships adversarial or cooperative? Does communication occur freely and effectively? Is there mutual respect between all components of the workforce? Is the workforce a team rather than the collection of many individual franchises? Positive answers to these questions combined with consistent organizational high performance indicate good organizational health. Workforce competency and pride are drivers of positive answers to the questions.
The Workforce Optimization Consulting methodology should utilize an employee perception survey to help measure employee perception of organizational health and performance as the survey results will contribute to the development of recommendations and overall organization and staffing strategy. The methodology should also include a review of the demographics, essentially the age groupings of all employees. This review can be used to evaluate employee experience level from both a department and company perspective.
Along with demographics, the methodology should consider qualifications, education, and training, preferably for everyone in the organization. This information is valuable when looking to either qualitatively or quantitatively measure the key elements comprising workforce competency (i.e., knowledge, training, qualifications, and experience) and how well these elements are utilized. These factors are examined at several different levels (facility, department, and individual) whenever possible.
Process Begins
The optimization begins with a request for demographic data such as the age groupings of personnel and their experience levels. This data includes totals with the company, totals in an employee’s particular job, and totals in different skill areas in which they might be working or in which they have worked. The data should also include listings of qualifications, education, years of education, and the type of education. What training programs have these employees attended? What positions have they held in the company? What positions have they held in previous employment?
Employing a comprehensive methodology also requires gathering a significant amount of additional information. For example, if the facility is a process facility, process flow diagrams and written procedures should be requested. If work processes have already been mapped, copies of those maps will be needed. If the facility has any documented practices to go along with the procedures, those should also be gathered. This information is used to develop selected work processes for mapping and implementation confirmation, a targeted interview list and schedule, and a work sampling plan to determine employee utilization. These information and data reviews are aimed at developing an overall project work plan that will achieve maximum benefit for the organization with minimum disruption of its work. It also helps to develop an understanding of the organization’s business and behavior.
The on-site portion of the optimization part begins with work-process mapping and best practices assessment, followed by a detailed work sampling and data analysis. Multiple techniques are employed to develop an accurate understanding of current work practices and procedures that impact workload and manpower.
All too often, companies consider only direct employees. But throughout this process, the roles of both direct company employees and contract employees are evaluated. Workforce optimization is generally not accomplished without considering direct and contract employees, as many companies reduce the number of direct employees only to replace them with an equal or greater number of contract employees.
Also, it is important to note that the concept of optimization does not always mean a simple reduction in staff; the solution may involve adding staff members to certain department areas. The optimization process helps operators determine the staffing level and organizational structure that will sustainably maximize workforce efficiency and effectiveness.
The methodology evaluates the organization and staffing levels in the context of the business model. Workforce competency and organizational health are the engines that drive the business model, so the success of the business model is proportional to workforce competency and organizational health. Fig. 1 illustrates how the business model is essential to effective and sustainable workforce optimization.
The business objective defines how profit will be generated (e.g., convert crude oil into light, premium products). High-level work processes such as operations, maintenance, and technical are a series of repetitive actions that must take place to accomplish the business objective. The organization structure defines how employees will accomplish the work process. The roles and responsibilities for the positions in the organization structure must be well defined with clear performance expectations based on each position’s roles and responsibilities. Practices and procedures tell what and how the actions in the work process will be accomplished. How much time it takes to perform the practices and procedures, and the efficiency with which they are performed, establish employee utilization and, ultimately, the number of employees and employee skills and knowledge required.
Training is also an important element in the business model, because improvement in employee knowledge and skills is heavily dependent upon instruction. To effectively manage the business, results must be routinely measured and evaluated so that performance is continually improved. Key performance indicators are important tools for performance monitoring. The measured results are used to develop future business plans, including performance improvement strategies, and to manage and maximize ongoing business. A thorough understanding of each element is necessary for effective and sustainable workforce optimization. Workforce optimization consulting investigates and analyzes each of the business model elements along with workforce competency and organizational health before developing recommendations and an overall staffing plan.
Three Tiers of Targets
To reach set goals and objectives, companies must determine what drives their business and develop an optimized business structure. Accomplishing this task requires time and discipline using a documented schedule and plan. Optimization consulting offers a time-tiered schedule that drives successful implementation of the changes. The tiered schedule is adjusted to meet the business environment. Typical time tiers involve the following:
- Tier 1—Short-range targets that require no structural or work process changes. For these, staffing levels can be achieved without major changes to the company’s current business model. These targets should be achievable in 1 year or less.
- Tier 2—Mid-range targets for which staffing levels can be achieved with minor changes to the business model. Some work may be eliminated or altered and minor changes in reporting relationships or authorizations may be required. It might take 1 to 3 years to implement required changes to achieve this level of staffing. These targets are often within the facility manager’s authority to modify.
- Tier 3—Longer-range targets that demand staffing levels requiring major changes to the company’s existing business model and possibly its organizational structure. The business changes to reach this level of staffing may require 3 to 5 years to fully achieve. Such changes to the company’s business model may include streamlining existing corporate procedures to which each site or division is required to adhere, or delegating higher levels of authority to managers and/or supervisors.
These staffing targets are tabulated for each functional area, including operations, maintenance, technical support, business support, and general/administrative. In addition to staffing targets and overall recommendations, an estimation of the total annual savings or financial impact in connection with the recommendations for each set of staffing targets can be provided using the methodology.
This method can help companies that are both understaffed and overstaffed. Most often, the results are able to significantly modify staffing levels in the range of 10 to 15%. However, reducing the number of employees and changing organization structure are not always the answer. Using information and data from large and mature industry performance databases should be a part of recommendations and plan development. The databases allow comparisons using key performance indicators and actual staffing levels for peer facilities vs. the client facility.
A New Way of Thinking
Going beyond simple quantitative formulas and across-the-board cuts, the data-driven and experience-based approach takes all critical factors, including workforce competency and organizational health, into account and results in a custom recommendation for reaching optimal staffing levels and organization structure—which can mean staff reductions and/or staff additions—based on specified goals, objectives, and social standards.
Management is tasked with identifying and closing the gaps in operational performance, and an expert consultant can provide
- Performance benchmarking to compare the company’s personnel efficiency relative to peers
- Process mapping to compare process maps to actual work processes
- Assessments to document the facility’s current work practices and identify any inefficiencies
- Work sampling analysis to assess how employees in various work streams expend their effort on necessary tasks, which assists in identifying obstructions to improved efficiency
- Application of best professional judgment of seasoned industry professionals
There is no single, perfect organization structure; many models are successful. Workforce Optimization Consulting can help achieve greater efficiencies, enhanced reliability, improved margins, and sustainable performance. Integral to that evaluation are questions of workforce competency and organizational health.
Bill Glasscock is a senior consultant at Solomon Associates, a company that provides benchmarking and performance improvement consulting services to the energy industry.