The human resources function is critical to optimize workforce performance and connect learning with organizational goals and objectives in the manufacturing industry, according to a new PeopleSoft customer survey on human capital management (HCM).
Some 75 percent of the 300 manufacturing line managers, executives and PeopleSoft HCM customers polled for the survey were unsatisfied with the tools they currently have in place to track and manage employee productivity. “In the old world of manufacturing, we looked at people as a cost, and what we measured was efficiency,” said Carol Ptak, vice president of manufacturing strategy, PeopleSoft. “We measured the number of parts per output. The problem is, today we need to have the measurements from our people be specific to what’s going to benefit the company. As an individual’s performance ranking improves, for example, they have learned more skills, and that gives me more flexibility in the company. If I have more flexibility in the company, then I can produce a higher variety of goods at a lower cost, which means that I can drive my revenues up. HR professionals today are looking for more than those simplistic measures. They’re not just looking for the metrics, but the context for them.”
“As we take a look at the concept of supply chain, having the right part to the right manufacturing line at the right time, more and more of these manufacturers are saying, ‘I want to make sure I have the right person on the floor at the right time as well,’” said Jason Averbook, director HCM product marketing. “This leads to workforce optimization tools, which also leads into training tools. How am I going to train these people, and how am I going to monitor their performance? Manufacturers used to be focused on monitoring the performance of their machines; now they’re looking at tools to monitor the performance of their people, the people chain.”
Contrary to popular thought, Averbook said that manufacturers do not care more about their supply-chain systems than their HR systems. This statement was confirmed by survey results, which state that 60 percent of manufacturing executives think that they lack the ability to tie specific employee goals to productivity. “That statement about the 60 percent of executives who think they lack the ability—they do,” said Averbook. “That’s where we’re helping HR implement systems and learn to help tie employees directly to those productivity goals. An example: If I go ahead and train people that make cell phones, and that training ties directly on a just-in-time basis to the output and quality goals of my manufacturing clients, I can immediately see an impact of my training on my output. That’s where HR and learning can really make a difference.”
Often, manufacturing executives have goals and objectives that never get pushed down to the plant level, said Averbook. A performance management system encourages alignment of goals that cascade from the top of the organization down to the plant level and then back up. “That’s really what we see as the number-one driving force why manufacturing executives are looking at these systems; it’s a way to make sure that the goals and objectives of not just a plant, but the entire organization, are aligned from top to bottom,” said Averbook.
“Even though labor has declined over the last 10 years significantly as a percentage of the cost to produce the product, labor has become more of a strategic resource that really needs to be managed and optimized,” said Ptak. “How many times have you sat in meetings where you have departments reporting on their performance metrics, and they’re showing all these great accomplishments but the company’s not benefiting? How is it that I can tie what I’m doing to something that really matters?”
Part of the answer rests in human resources. “In the past, HR departments in manufacturing companies have said, ‘Let’s see how fast we can hire or fire people. Let’s see how many performance reviews we can do, or let’s make sure we keep track of our health and safety.’ And while all of those things are very, very important, the thing that’s been lacking and really hurts HR’s credibility in the eyes of manufacturers is that they haven’t been able to tie their people directly to those business results or those outcomes, such as increasing quality,” said Averbook. “Because of that, there’s this big trend in human resources where HR has been outsourced. The reason HR is getting outsourced is because they haven’t been strategic—they’ve been tactical.”
Averbook and Ptak agree that HR must take a more proactive role to ensure that the performance management systems they have in place help embed workforce performance in organizational goals and objectives. “We understand it’s not just about the technology,” said Ptak. “It’s about aligning the technology with the business rules in context of what the overall vision is. It’s bringing that holistic solution out of, ‘I’m not just measuring activity; I’m really measuring relevance and value.’”
“We really need to help HR and learning organizations realize that their impact in the organization is not just in their own little silo,” said Averbook. “They can have, and are being asked by their manufacturing counterparts, to play an impact.”
“That alignment of HR to what’s going on in the plant is so critical because of the skill set,” said Ptak. “For example, in a factory you find out that the new machine operators have never been educated in lean manufacturing techniques. Their thought is that they can batch together all the setups and produce as fast as they can because they’re still in this efficiency model. Having that assessment of skills so that they understand what is really important—that’s where HR becomes a critical part of the overall process. Manufacturing organizations have to be learning organizations to be successful. Therefore, what is it that they need to learn to be able to change and adapt to what’s going on in their market? It goes back to every person on the floor; this is really all about learning.”