Your people may be your greatest asset, yet they can also be the greatest risk to success. It takes people to drive projects forward and maintain efficient and resilient operations, and without capable and motivated people, projects and operations fail.
Here’s how leading organizations are using Operational Readiness (OR) strategies to avoid resource shortages and deliver on their objectives.
‘People risk’ or resourcing, broadly falls into three buckets—quantity, quality and continuity. Not having the right quantity of people at the right time leads to project and operational delays, overtime costs, increased hiring costs, etc. Not having the right quality of people at the right time can result in critical safety events, asset damage, poor product quality, lack of business and information continuity, and failure to achieve asset nameplates.
Continuity is a silent but deadly risk. In some industrial businesses, annual churn rates are as high as 35% for certain roles. Not only is this an issue for HR and recruiting, but it also means that important knowledge and capabilities are lost. Costs for hiring and training new employees to fill the gaps are rising and project progress and site operations slow down as key job roles sit vacant.
A workforce disrupted
If these were ‘normal times’, owners and managers could perhaps just wait for the market to correct itself. But these are not normal times in most markets. Indeed, we are experiencing a period of unprecedented workforce disruption that suggests long-term challenges for industrial companies.
On the one hand, we are seeing shifts in demographic pressures and worker expectations. Millennials aren’t as interested in spending weeks on rotation at a remote mine site or deep in the bowels of an infrastructure asset. And, at the same time, older generations of workers are starting to speed up their retirement plans. Replacement rates have become unsustainable.
The shape of the workforce is also changing. The introduction of a slew of new technologies into the project development process has created demand for a range of new skills and capabilities. Automation and digitization have changed individual roles and responsibilities. Competition for specific skill sets and capabilities has forced organizations to think more broadly about how they recruit and retain new employees.
Surprisingly, few major project planners treat people risks the same way they treat other key risks (like environmental, permitting, construction and so on). Everyone has a strategy to minimize construction risk, however, strategies to minimize people risks are few and far between. And the strategies that do exist often don’t address the fundamental root causes of high turnover and poor retention and don’t result in long-term solutions that benefit future operations.
As specialists in Operational Readiness, our experience and observations suggest that project leaders and owners need to be thinking much more strategically, proactively and broadly about their people risks. We’d suggest looking at this through two lenses—prevention and mitigation.
Prevention means taking smart steps early in the process to ensure that both project and operational and maintenance requirements are met throughout the asset’s lifecycle. OR is about identifying this risk early and taking steps to avoid the need for corrective actions later. For example, implementing strategies to become an employer of choice to increase attraction and retention of people at your site. For example, show how you respect the diverse communities and environments where you work by creating strong and meaningful relationships with the surrounding communities. Another strategy would be to develop an impactful training program to aid in the professional development and competency of your employees.
Mitigation on the other hand, is about continuously planning for, and managing, the trends that influence your workforce strategies. For example, our OR team looks at the resource loading for a project and would help you plan your recruitment at the right times so that necessary resources are hired at the right time. We also work with you to plan corrective actions —for example, by partnering with a service provider with a deep bench of qualified professionals that can quickly step in to fill gaps when and where required.
Both prevention and mitigation help organizations proactively manage their people risks early in the process—at a time when real change can be made at reasonable costs.
5 tips to prioritizing people
Our Operational Readiness professionals have years of experience working closely with project managers and owners helping them proactively and continuously manage their people risks. Here are five key strategies we recommend:
1. Start early. The sooner you start thinking about your people risks, the more opportunities you have to be proactive and deal with them. Early engagement on this issue often means less time and effort is needed down the road. The most successful projects and operations are those where managers start thinking about their people strategy right from the feasibility stage when decisions are made that have the greatest impact on workforce strategy (for example, electing to automate certain processes or activities).
What can you do at this early stage? Identifying future operational risks that can be addressed now. Develop a sound onboarding plan that targets getting the right people at the right time to contribute to the organization’s development. To increase buy-in, make sure the recruitment plan is developed in accordance with realistic lead times. Other activities our OR team works on at this stage include developing high-quality role descriptions and a skills matrix to facilitate a solid training program and identifying core and non-core businesses to the operation. This way you can identify the activities that will be outsourced and start working on contracts and framework development.
2. Be data-driven. Get granular on your workforce needs and plans. Leading organizations start by conducting data-driven workforce analyses to accurately determine when certain job roles will be needed, what skillsets will be required when, and how resources can be optimized to maximize value. If you know the environment and market, you are in a much better position to become an employer of choice and can adapt more easily to market needs. This, in turn, allows executives to develop more accurate feasibility and cost estimates with a clear understanding of the Owners Cost Budget including what capital investment will be required at what point in the project.
3. Differentiate. Be clear about why people want to work with you. Each company will be different. Some may play to their corporate purpose, social value or reputation. Others may use compensation strategies to attract and retain skilled workers. Leaders understand that the fight for talent is a global competition that spans all sectors, and they are looking at industries outside of their sector for ideas and best practices. Remember that your differentiation will influence (and be influenced by) your culture.
4. Prioritize. Focus on influencing the issues that matter most. Leading organizations take the time to understand which activities and job roles are core to the business and which are not. Then they subcontract, outsource or delegate the things that are deemed non-core. That allows them to focus on developing and executing strategies focused on key job roles and functions of the organization that drive the most value and carry the greatest criticality risks. We can help you prioritize the risk tasks and deliverables that are critical to your project or operations through our operational readiness program. Our program is based on project management best practices and is tied to the project schedule, with resources allocated to deliverables and workload.
5. Execute. Every now and then, we come across companies that have fairly robust people strategies but have never executed them. All too often, people risks are de-prioritized against other execution priorities and, eventually, are watered down or lost. The leading organizations are those that build a roadmap that takes them from strategy through to execution and monitoring, with a clear understanding of the key milestones, expectations and dependencies at every step.
Put people first
Executives are fond of telling their employees that ‘our people are our greatest asset’. Yet they can also be a project’s greatest risk. We think that project managers and owners could be doing more to proactively mitigate and manage their greatest asset.
Our team can help you address workforce risk through:
- Creating an OR risk register (from FEED).
- Providing a clear and structured activities plan and timeline to the proper level of detail to define the right onboarding plan for the workforce and contribute to the organization’s build-up.
- Defining core and non-core business areas (from the feasibility study stage). This will clarify where you require "internal manpower" and where the organization will outsource the job. Proper efforts are allocated to develop an adapted training plan and to develop a contractual framework for third-party support.
- Establishing a clear vision for future operations from the beginning—this may translate into building relationships with the surrounding communities early to facilitate future operations resilience and sustainability.