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Workforce Potential
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The Workforce Equation
Workforce Potential
SM
The Workforce Equation depicts the different pieces of an excellent workforce strategy and how an organization should invest to attract and retain the most individuals. You do not need to understand the math details to be successful, but you do need to understand the basic concepts for each piece of the Workforce Vector process. Skipping a piece will likely reduce your success at attracting and retaining new employees.
The workforce equation is written as:
Hover over a term to see a definition.
The potential to pull more individuals from each pool into the local labor force. The potential is based on how other U.S. counties are performing.
The difference in your Workforce Vision, from how you are doing today to how you want to be doing in the future to attract and retain talent.
Your talent competition analysis. If your competitors are pursuing the same individuals as you, you will need to invest more to reach your goals.
Your decisions on which groups of individuals (workforce elements) you believe you can successfully recruit and retain.
Current investments in the 25 different root causes. These could be your investments or community investments that help you hire and retain staff.
The new investments that you and/or your community need to make for you to succeed at reaching your workforce hiring and retention goals.
The number of individuals in each of the 40 different Workforce Element 'pools' (e.g., Veterans not in the local labor force).
Operational Excellence is how well your organization develops workforce strategies and designs, implements, and sustains the associated processes.
The Root Cause Matrix, which ties Workforce Elements (e.g., Individuals with a Disability) to Workforce Root Causes (e.g., Transportation).
The right-hand side of the equation, delta I, depicts the new investments you may need to make in each of the 25 different root causes limiting your success at attraction and retention of the talent you need to reach your workforce vision.
Delta I is a vector, meaning there are different 'directions' you may need to look at - the 25 root causes. Each root cause has a distinct 'magnitude' - the new investments you may need for each root cause.
The investments needed do not necessarily mean new finances from your organization. It may involve redirecting some of your resources from one root cause to another. New resources may also come from partnerships.
EXAMPLE: A company wanted to improve the attraction and retention of individuals with unreliable transportation, one of the 25 root causes limiting the success of attracting individuals not in the labor force. The company invested in a van to pick up employees from their homes and drop them off at the end of the workday. The company subsidized the cost of the van but also charged participating employees $5.00 per day, deducting it from their paychecks.
[Note: You can also say you are not changing your investments (e.g., delta I = 0). The workforce equation will then tell you which types of individuals you should consider recruiting because they want the kinds of things your organization invests in.]
The first term on the left side of the equation, Delta V, is one of the most important pieces of the workforce equation. It is the difference between how you are doing now and your vision for the future for how well you want to attract and retain top talent. The bigger your workforce vision, and the more different it is from what you are experiencing today, the more you will need to invest to reach your goals.
EXAMPLES: A small, low-margin business found it difficult to increase wages post-pandemic. They purposefully decided to become a smaller company instead of making the changes needed to compete for workers. This is an example of no change in vision, essentially multiplying the left side of the equation by zero. No new investments were needed since they were not changing how they wanted to attract and retain employees in the future.
Another company stated its future-state vision was: "Our talent pipelines are full of qualified individuals, and we compete and win at hiring and retaining new team members." This type of vision requires the development of great strategies and organization-wide operational excellence. New and/or redirected investments are likely needed to achieve big visions like this.
We now skip one term to the right and define the four adjacent vectors, P, Pi, C, and D.
P is the Population Vector for your county. It is the number of individuals in each of the 40 different workforce pools. These groups of individuals with similar traits are referred to as Workforce Elements. For example,
- How many robots are being used to assist people?
- How many people are quitting each month that you must replace?
- How many veterans are not in the labor force?
- How many individuals are commuting to work in your county?
- How many new apprenticeships were completed this year?
EXAMPLE: A manufacturer had a non-uniform production demand, with an increase in orders occurring in the summer months. They targeted their summer hiring efforts to a large population of potential employees with significant work experience but who were not employed in the summer. The pool was local elementary and high school teachers who had the summer off, a large share of which were female.
Pi is the Workforce Potential Vector, which is the odds of success in your county of hiring from each workforce element group. The potential vector Pi is different for each of the 40 workforce elements. You can have a large pool of prospective employees (e.g., Individuals 14-15 years old), but the potential to get more of those individuals to enter the workforce may be small. Likewise, you can have a small pool with a large potential.
EXAMPLE: The pool size of females not in the labor force is greater than the number of males not in the labor force. However, the potential to pull more females into the labor force is smaller than the potential to pull more males into the workforce. The female potential is smaller because of social issues in some populations (e.g., women should not work), community issues (e.g., the lack of affordable day care), and company policies and behaviors that constrain their ability to attract female employees (e.g., lack of flexible scheduling, not hiring part-time employees, requiring prior experience, etc.).
The Competition Vector, C, is your analysis of your competition for each of the 40 workforce types. This analysis affects which workforce elements you may decide to target. If a potential pool of individuals is large, but everyone in your community is targeting the same individuals, your 'piece of the pie' may be small. In contrast, the size of a potential pool for another workforce type may be small, but you may have little competition if no one is pursuing those individuals.
EXAMPLES: A small company decided to target a recently incarcerated individual. They had little competition for the individual in their small rural town. The company also used some innovative tactics to retain the individual. They co-signed an apartment lease to counter credit restrictions, provided a gift card so the new employee could purchase necessities before their first paycheck, and drove the individual to their parole meetings for a period of time. All efforts to help the individual succeed.
Another company in a mid-sized city with significant labor competition targeted similar individuals. The difference was they targeted individuals who were still incarcerated. They opened a production line for one of their products within a state prison. They paid similar wages to what they would have paid in their community, but they had little competition for this group of individuals. The incarcerated individuals took orders from the company, produced the products, and shipped them out. The individuals learned new skills and interviewed at the company for open positions when they were ready to be released.
DB is your Decision Vector. It is your shortlist of the types of individuals you are going to target. Best practices suggest you focus on a subset of the 40 different workforce elements, maybe 3 to 5, so that the number of new strategies and root causes being worked on is manageable.
The Decision Vector components are binary, 0 or 1. Essentially, you don't go part-way in when deciding who to pursue.
Focusing on a subset of the workforce elements does not mean you will not be successful at hiring from the other elements. The key root causes you enhance to compete in your targeted pools cross over into other workforce elements, which can also help you recruit from those groups.
EXAMPLE: A group home provider for individuals with a disability chose the following three workforce elements to recruit after learning about the Workforce Vector - Individuals with no degree beyond high school, Males 18-30, and Outreach to middle school students. Their selections vary slightly from what is proposed in this work (e.g., Males 20-54 years old) because they align more closely with where they believe they will have the most success. These new elements extend their recruiting beyond where they are already recruiting successfully - Females 20-54 and Foreign Born-Naturalized Citizens.
The Root Cause Matrix, RC, is the system that converts the workforce elements you focus on to the root causes that limit you from attracting and retaining those groups of individuals.
You can think of the matrix as a group of cells in Excel consisting of 40 columns and 25 rows. When you select a focus group 'column' (e.g., Remote Workers), that column connects to a subset of the root cause 'rows'. This conversion shows you where you may need to direct your resources to hire from the group successfully.
The matrix also shows which workforce elements have similar root causes, which is useful when minimizing the number of root causes you invest in.
EXAMPLE: A mid-sized company posted several open job positions and was surprised when they were flooded with applicants. Contrary to what they expected, a majority of the applicants were women. They were also surprised to find that the women were predominantly looking for part-time jobs, yet the company was only looking for individuals who wanted full-time work. Fortunately for the company, an error had been made in the job posting. The advertisement stated the company had part-time and full-time openings. The company seized the opportunity and changed an internal policy (one of the 25 root causes), which stated they only hire full-time employees.
The Greek symbol eta refers to the efficiency and effectiveness of your organization. Essentially, Operational Excellence.
The development of innovative workforce strategies and tactics is an essential first step in the journey to operational excellence. Business processes are then tied to these tactics. If you are not best-in-class at developing, implementing, and sustaining processes, then you will need to spend more money to achieve your workforce goals.
EXAMPLE: A construction company was marketing for new employees through their normal channels, but it was not having much luck. They were advised to print their materials in Spanish and to set up a table at a local soccer field where Latino males played every Saturday. The company was flooded with more applicants than they needed. This is a notable example of defining the target applicant, finding the potential applicants, and developing materials that resonate with the potential applicants.
The Current Investment Vector, Ic, is your organization's and community's investments in the various facets of a great workplace. It includes obvious items like pay, but also could include over 20 other items. The list of items is diverse because individuals have different wants and needs from a prospective employer and the community in which they work.
It is important to analyze your current investments and whether they affect attraction and retention as much as you think they do. This will help you decide whether to redirect existing resources to new workforce attraction efforts or build on some of your current investments. Understanding why you are successful with some groups is important to prevent potential unintended consequences if you redirect resources away from current efforts and toward new groups of individuals.
The investment categories are also referred to as workforce root causes since what works to attract and retain new employees can also be thought of as constraints that prevent people from working for you.
EXAMPLE: It is common for some construction companies in the Midwest to lay off employees in the winter months as the workload decreases. One company retains its employees by employing several tactics like cleaning and organizing their facilities, completing maintenance activities, prepping for the next season, new training, taking on odd jobs, etc. While important, these activities are not sufficient to keep them busy. Essentially, they are investing in their staff to provide job security, one of the 25 root causes that can be important to prospective employees. This is a wise investment because they know if they laid their staff off to save money, there would be new costs associated with finding, hiring, and training new employees, as well as the additional costs associated with low efficiency and increased warranty costs that can come with new hires.