What is workforce agility and where are companies now?
Workforce agility allows an organisation to establish the optimal workforce to support an organisation’s objectives. We define agile working practices along four dimensions:
• Time: when do they work? (e.g. part-time working; staged retirement)
• Location: where do they work? (e.g. people working across multiple sites)
• Role: what do they do? (e.g. multi-skilling)
• Source: who is employed? (e.g. using contractors or temps)
Workplace flexibility has traditionally been defined somewhat narrowly: usually as a benefit for employees and a cost to employers. We believe that agile practices can be configured to generate value for both the employer and the employee.
Please can you amend that to “According to the CBI’s 2015 Employment Trends Survey 95% of UK companies believe that an agile workforce is important to the competitiveness of the UK’s labour market and the prospects for business investment and job creation. However very few organisations offer a wide range of agile working practices to all employees. The survey showed that businesses stated the main barriers to creating a more agile workforce are the mindset of the workforce and management and the internal infrastructure needed to support agile working.
It is rare for companies to take a business-focused approach, assessing the potential business value of an agile workforce – and using that to define an agile working approach which works for the business as well as for employees.
With little available research into how businesses themselves can benefit from agile working, the perception of it as a cost and threat has remained largely unchallenged until now. In response, the AFF set out to identify the business benefits of agile working practices.
Value & Opportunity
What did the AFF do to identify current and potential value?
The AFF has developed an approach to help understand the business benefits of agile working. We have started to test the approach within our AFF member organisations, covering a variety of workplaces, industries, and company sizes, to give an indication of the broader relevance of the findings to UK PLC.
The research included:
- Collating examples from AFF members of agile working practices and the business benefits that have resulted, some of which are described in this brochure
[See diagram 2 below]
- Developing a methodology to identify the benefits of agile working, building on interviews with global experts, reviews of existing literature and a gathering of international examples of agile working
- Deploying that methodology in depth by reviewing current and potential agile working practices at different types of workplaces – a banking corporate head office, a retail store, an automotive manufacturing plant and a telecoms call centre
- Running lighter-touch workshops to test the applicability of the methodology to SMEs, a set of professional services firms and the public sector
- Running seminars to help other AFF members to apply the methodology with minimal external help, including developing a toolkit for AFF members
How do agile workforces generate value? What is the opportunity?
The research found that agile workforces can drive business benefits in a variety of ways. Common examples include:
- Better matching the workforce to fluctuations in demand – the most substantial source of value (e.g. optimising the workforce so that customers are always well-served while avoiding unproductive capacity during low demand)
- Increasing quality of outputs e.g. a retail store’s customer service team multi-skilling their staff, resulting in better product knowledge and therefore better service to customers
- Attracting and retaining high quality talent (e.g. a professional service company allowing staff the choice of flexible hours which increased motivation, engagement and retention). Other types of value include increasing productivity, driving innovation and minimising cost
Value was found across different sectors, workplaces and company sizes.
Our in-depth research pilots covered a range of workplaces (e.g. manufacturing plant, call centres, grocery retail store, corporate head offices) and represented approximately 58% of industries including automobile, telecommunications, food retail, professional services, banks). Aside from large corporations, we also ran a workshop with SMEs, who make up 48% of the labour force, and are also able to gain value from agile working, although the opportunities and challenges differ (e.g. an ability to create tailored solutions that do not set large-scale precedents). Lastly, our work with HM Treasury demonstrated the value of current practices (in particular around flexible teams and work times) and identified further opportunities (e.g. better use of former employees). While identifying value is intrinsically harder in the public sector context, the workshop confirmed that the methodology is as valuable in that environment and that there is clear potential for more agile workforces across policy and public service delivery areas.
Significant value is already being realised in the UK. In our in-depth studies agile working practices currently generate value equivalent to 3-13% of workforce costs 1
- A Tesco superstore currently uses part-time working and multi-skilling practices to meet customer demand more effectively, thereby generating value equivalent to about 13% of total workforce costs
- A head office function of Lloyds Banking Group currently generates value equivalent to 7% of total workforce costs through using freelancers to meet seasonal demand and locating staff across multiple sites to lower premise costs
- A Ford Motor Company Ltd manufacturing plant saves the equivalent of about 3% of total plant costs by using outsourcing, flexible absence cover and alternative maintenance shifts to achieve cover in line with plant needs
Companies found the push to quantify benefits new and helpful. We also identified organisational benefits in non-commercial areas. For example, at HM Treasury an agile pool of experts allows a fast response to emergencies. Up to 40 internal staff belong to a financial crisis contingency reserve, which the Treasury can immediately draw on for relevant skills and expertise to bolster the standing teams in the event of a banking crisis (for example to cover recent European banking priority demands)
Most of the current practices could be extended – and more could be implemented – to capture further business benefit. Our research pilots suggested that more extensive or innovative agile working practices could generate further value of 3-7% of workforce cost and sales uplift of up to 11%
- Eversheds, the legal firm, allowed employees the freedom to choose their own working model, and saw 28% of staff reporting increased productivity and 14% of staff seeing an increase in chargeable hours.
- A head office function of Lloyds Banking Group identified further opportunity to reduce premises costs by about 23% through multi-site practices.
Workforce agility can offer a competitive advantage for companies and for the UK economy
For example, BT was able to insource call centre work and move it back from India to the UK because agile working practices enabled it to improve customer service at more competitive terms. This is expected to bring more than 500 jobs back to the UK and generate business benefits of ~£30m for the company over three years. Additionally, at Ford, the most recent engine bid from one of the engine plants made use of agile working arrangements to improve competitiveness against competing international plants.
1The value quoted was not always drawn from cost savings, but has been expressed as a percentage of costs to demonstrate their significance
How best to capture the value of agile working?
AFF members found that most implementation challenges were internal to the organisation and could be overcome. The most significant barriers were issues of culture or mindset – particularly at the more senior levels of companies – as well as systems or processes that are not yet configured to manage a more agile workforce. In some contexts, changing workforce arrangements would have to take particular account of industrial relations implications. SMEs face additional challenges around regulation and bureaucracy (e.g. when hiring new people).We have identified five golden rules to successfully capture the value of an agile workforce:
- Be business-led – don’t leave it all to HR
In-depth, joint working between operational and HR leaders can identify and configure portfolios of practices that suit business and employee needs. AFF pilot and seminar participants recognised the benefits of working closely together to create a new planning dialogue. These dialogues can help the joint team understand the business’s operational needs – and identify creative ways to meet them using a more agile workforce.
- Deeply understand the needs of the business and your workforce – and create a portfolio of practices that bridges the two
Begin with a clear definition of business objectives, a view of the “ideal workforce” and how workforce agility contributes to value. Understand what employees value and engage with them to develop agile practices. Different workforce segments often have different preferences. For example, at one of our pilots, an expectation that financial incentives would encourage take-up of less attractive shifts proved to be incorrect: the young demographic valued time at home more than financial incentives offered. Truly understanding value to employer and employee allows the creation of a balanced portfolio of agile practices that will ensure sustainable success. [Refer to diagram 3].
- Develop the agile working model bottom-up
The optimal agile working model depends on specific business requirements and workforce characteristics. When considering your agile business model, make sure you approach it at the right level – i.e. usually a single operation or business unit at a time, rather than across a whole company with different kinds of operations. Where multiple operations are similar (e.g. branches) then the agile working model may be similar, though specific requirements will need to be understood.
- Consider big, strategic changes
In some cases, small changes to agile working can have a big effect on the workplace – for example introducing a new shift pattern to meet increasing demand. In many cases, though, gaining the full benefits of a more agile workforce will require a larger change – a shift in planning philosophy, change in operating model or new employee value proposition. Being more ambitious can create bigger benefits – for example, applying home working across a company rather than in just one division maximises benefits by freeing enough desks to enable relocation to a smaller premises. Sometimes, it is beneficial to change multiple working practices together, since some agility practices work best in combination. At one pilot, for example, implementing a portfolio of outsourcing, temps and overtime effectively balances cost and risk by flexibly providing more cost-effective labour, with scope for additional overtime from the core workforce to cover high-skill, short-term needs. It is also important to avoid implementing a set of “agility practices” as a one-off change programme. As the needs of both business and employees evolve, so will the agile working “ideal”. Be ready to keep innovating around agility.
- Prepare leadership first – and put in place sufficient management capacity
The attitudes of management are one of the barriers to agile working: getting senior business leaders on board is critical. Managing a more agile workforce can be more difficult – for example, in areas such as performance management and resource planning. It can be a real challenge to ensure managers have the requisite mindsets, capacity and skill – e.g. to manage a more dynamic resourcing model or assess outcomes instead of activity. More agile work forces often require more management time to drive the benefit; planning for and resourcing this is a crucial element of getting it right. Implementing new agile working practices is not easy – and of course competes with many other priorities. Delivering the full value of a more agile workforce often involves changing mindsets, contracts, management roles and structures. But the benefits – more agile and competitive organisations delivering better performance and a more engaged workforce – make it a compelling proposition.
The AFF members believe that there is a great opportunity for companies and employees to develop a more sophisticated approach to agile working. This has the potential to align the needs of employers and employees around a newly agile workforce which offers sustainable business performance and engaged employees. Every time we have applied our new approach we have identified potential areas to improve agile working and create economic benefits to our businesses. We would encourage executives to consider the potential value to them of creating a more agile workforce.
Questions for executives:
- Is there a business unit within your company which could serve customers better by having a more agile workforce? Or an asset that could be better utilised?
- Are there areas in your company where resource constraints are holding back performance?
- Are there agile practices you have been considering but have not been able to build a business case for?
- Do you have a coherent, co-ordinated portfolio of agile working practices? Are you sure of the business value of your current agile working practices?
- Are business leaders involved in shaping agile working practices?
- Are there areas where lack of agile working means you are losing talent?
If you are interested in learning more about agile working and the business value assessment approach, please take a look at the Taking Action menu item for more information on Conferences and other events alternatively you can contact the Agile Future Forum using the contact us page.