Use Business Disruption Lulls to Develop Unused Worker Capacity: Build Organizational Value and Off-set Unexpected Costs

by Dean Prigelmeier, President of Proactive Technologies, Inc.

For those of us who remember the shear terror of recent disruptive events, we remember the deep sense of doom they instilled in employers, workers and their families, and government leaders. We knew that these were not the “business cycles” of college textbooks, these were man-made catastrophes that spared no-one in the disruption…though sometimes enriching the architects. Nevertheless, they came and went – varying only in severity and duration.

Recent horrific business disruptions like the Savings & Loan Crash of 1986, the Black Monday Stock Market Crash of 1987, the Dot.com Crash of 2000, the Crash of 2008 (with scandals like the Penny Stock Market, SBA and HUD and recessions woven in between), made lives harder and transformed businesses for better or worse. If seemed that if a business survived these types of  disruptors, it was often because they focused on using the downward part of the a busy cycle to adjust and perfect their operations, build capacity and sharpen focus in preparation of the upward part of the cycle to come. Maintaining as much forward momentum  through adversity as possible is critical in determining the quality of the survival, especially when the time between disruptions continues to grow shorter. Lead times, whether for new product introduction, entering a new market or just resuming normal operations is incredibly important if one considers the next disruption as a “backstop.” 

The current Covid-19 virus pandemic and the economic disruption that it is causing will, once again, test a company’s strategy, planning, focus, infrastructure and sense of clarity. Did the company plan for disruption? Was there a plan in place to constructively make use of this disruption (that spares no company) to emerge, at a minimum, ready to adapt, resume growth and be competitive again? Or did the company succumb to the disruption through erosion or by whittling away at what worked – giving little time or thought to “what is next when this passes” and “how best to prepare for the new normal?”

One important business asset is often overlooked in this adaptation and preparation. Historically, the CFO has a significant say in the response to a disruption, and unfortunately their education typically lacks an understanding of the asset value of a worker, instead considering a worker merely as a cost to be contained. If a CFO does understand this concept they might be reluctant to make this case to upper management who, themselves, might feel it futile to explain this to shareholders. The “common wisdom” of the sources of funding has been relentless that 10%, 20%…30% cuts to labor costs mean increased earnings per share…if only short-term. However, a company will need its workers when the crisis dissipates. Given the difficulty and cost most employers encounter in finding suitable candidates with the requisite core skills, it should be better understood now that workers are truly assets worthy of development and, once developed, worthy of retention and protection.  

Much can be done to build and increase worker capacity (during a period when workers are paid to perform at less than capacity) so that they, too, are ready for a sustainable recovery on the upward swing. If an employer is paying labor costs for a worker it retains through the slump, then a choice is made to A) bear the costs until no longer possible; B) deliberately train the worker to recover/improve asset value from what would otherwise be costs. One approach is unresponsive and the other proactive. Why not strategically utilize every labor dollar spent in a downturn to make its value worth more on the upturn?

Most employers who retain personnel during slow markets – usually consolidating work among fewer employees – come to the realization that instead of paying employees to operate at minimum capacity and at normal wage rates, using this time to prepare for the recovery and shorten the time to ramp back up to full operational capacity is a wise business move. Completing each worker’s training to full job mastery and, therefore, full capacity, and providing cross-training to broaden the range of each worker maximizes the human asset’s value and potential to adapt, work in more areas, react quickly to fill department gaps and to train others.

With structured on-the-job training programs in place, designed to the best practices of every critical task of each job classification, it is easy to take an inventory of each worker and find out which tasks have been mastered and which tasks need to be trained. Every incumbent can then be driven to full job mastery. In addition, with a structured on-the-job training infrastructure in place, new hires can be quickly driven to full job mastery as well. This is accomplished through the accelerated transfer of expertise^TM. This approach is a proven, cost-effective, efficient way for a scaled-down group to train each other for increased capacity during the downturn. During the upturn, employers can quickly and accurately identify areas where the added capacity is needed and add just the  needed staff. 

Business survivors know a business cycle or disruption lull is a good time to modernize equipment and technology, implement LEAN and develop/improve processes in preparation for the expected upturn. Modernizing at the same time the incumbent worker skills and their ability to utilize the new equipment, technology and processes makes perfect sense. Companies can also use this time to set-up for ISO/AS/IATF quality certification, for which proof of work processes, a task-based training system and associated records will be required – all a component of a comprehensive structured on-the-job training approach.

Disruptions can sometimes idle related technical instruction providers such as community colleges, career centers and private specialty-training vendors. Establishing a structured on-the-job training infrastructure survives any disruption, only needing updating to resume task-based training.  

It seems unpredictable business disruptions have become a component of the American economy. They will come and go. It will always take its toll, but more so for companies that fail to envision a path to mitigating its impact.

If you would like to know how this approach might work at your firm, and how a pilot project may be the best way to introduce this approach to your organization, contact a Proactive Technologies representative  today to schedule a GoToMeeting videoconference briefing to your computer. This can followed up with an onsite presentation for you and your colleagues. A 13-minute promo briefing is available at the Proactive Technologies website and provides an overview to get you started and to help you explain it to your staff.