ROI-Driven Project Management 135

Proposition Three: Develop Value-Added Decision-Support Tools

for Line Managers

Sample Decision-Support Tools

Case Example #2

Automated Workforce-Scenario Model

Description
General Motors North America (a regional operation of automobile manufacturer
General Motors Corporation generating approximately $120 billion in annual revenue
and employing 50,000 salaried workers) identifies insufficient workforce planning as one
important root cause of product delays and cost overruns. At CEO urging, HR develops
automated tool that analyzes gap between line demand for talent and talent supply (both
internal and external), creates cost and availability models under a range of scenarios
(e.g., different project timelines, headcount, skill mixes, costs).
136 Develop Value-Added Decision-Support Tools for Line Managers

Inadequate Workforce Planning

Case Example: General Motors North America
• General Motors North America (GMNA), a regional operation of General Motor
Corporation, generates approximately $120 billion in annual revenues and employs
50,000 salaried employees
• In the early 1990s, corporate analysis reveals significant room for improvement in talent
planning efforts—lack of planning forces functional and operational managers (line
managers) to source talent at a premium on short notice (e.g., contract labor) or to fall
behind production schedules when labor is unavailable
• In mid-1990s, GMNA engineering champions an HR effort to support line managers’
ability to conduct accurate workforce scenario planning in order to use talent more
efficiently and link to key business strategies
• In 1997, GMNA Human Resources Planning undertakes aggressive salaried-employee
productivity initiative to reduce structural costs
• HR develops an automated workforce modeling tool; tool incorporates existing evaluations
of labor demand by engineering and creates a more detailed evaluation of supply than
previous workforce planning

GM overcomes skill constraints rooted

in short-term workforce planning focus…
Problems Associated with Short-Term Workforce Planning Focus

Demand

Supply

$
➤

Expensive Stop-Gap Failure to Leverage Available Unrealistic Demands

Hiring Practices
Failure to anticipate workforce
demand leads to last-minute
hiring of expensive contract
labor or high overtime
payments to existing staff in
order to complete work
Internal Talent
Especially in functionally siloed
organizations, companies may
overlook internal labor pools
available during off-peak times
in their home functions
for Labor
Line may establish project
plans that depend on
sourcing more labor than
is available in a tight labor
market
 Automated Workforce-Scenario Model 137

Replaced by Automated Modeling

…with help of new workforce management software
Overview of GM’s Automated Workforce-Scenario Model

Based on specifications of …HR uses software tool to assist …which provides a thorough gap
projects executives wish to managers with sophisticated analysis and ultimately informs
launch… supply/demand analysis… structure and staffing of projects

Demand
Analysis Based on project
Required Skills specifications, tool
• Skill A
• Skill B
estimates the
• Skill C quantities of several Gap Analysis
types of skilled labor
required throughout
Project Plan the project 0.013945 0.0077396 10.588 1,368.00 1,500.00

Engineering Maximum_
Probability
Defect_
Probability
Sample_Defective_
Items
Items_
Produced
Maximum_IP

Budget $ ___________ ➤
Workload Model ➤ ➤ ➤
➤

➤
➤
Total_ Total_Items_
Produced
Timeframe

➤
Defective

➤
➤ ➤
Minimum_IP
➤ ➤
447.70 ➤ 51,099.00 1,000.00
_________________ Items_ Minimum_
Produced Probability Percentage_
1,368.00 0.013945 Defective

Type of Product 0.87613

_________________ Supply Forecasting Systems Dynamic

Necessary Skills Analysis Internal HRIS data Model Model
_________________
Available Labor regarding available
• Skill A
• Skill B
skills, combined with
• Skill C attrition modeling, Elements of Gap Analysis
provides estimate of • Forecasting Model—Estimates the internal
currently available supply and demand for skilled labor
PRISM Database skilled labor
• Systems Dynamic Model—Based on diagnostic
commonly used in analyzing manufacturing
process; this model analyzes the interactions
in a system where changes in one variable
affect other variables over time
• Scenario Analysis—Supported by systems
dynamic model, this illustrates the impact
of potential staffing strategies
• Informed Project Implementation—Based on
workforce implications, line can decide how
best to staff selected projects

Source: General Motors North America; Corporate

Leadership Council research.
138 Develop Value-Added Decision-Support Tools for Line Managers

Mechanics of the
Automated Workforce-Scenario Model
• To combat short-sighted workforce planning, HR uses dynamic- and forecast-modeling
tools in conjunction with GMNA engineering workload modeling to determine optimal
yield from a given set of inputs
• The tools use comprehensive estimates of demand and supply for specific skill sets based on
project specifications
• The tools generate workforce scenarios to illuminate for line managers the labor
implications of project decisions
• Line can alter selected variables (e.g., staff mix, project timing) to generate optimal scenarios
for given set of business objectives; as a result, the line can make more informed staffing
decisions by considering trade-offs between project timeframes, sourcing arrangements, etc.

Overview of the Workforce

Step #1: Assess Labor Demand

Engineer Skill Set Demand*
1,000

500

0
1996 1997 1998 1999 2000 2001 2002
* Shaded regions represents different skill sets.

Description Engineering workload model estimates the

quantities of all types of skilled labor required
throughout the project (more than 30)

Key Activities • Line managers produce product

specifications, including skill sets
needed over project lifecycle
• Workload model aggregates all project
needs and generates total required
demand over time for each skill set

Key Outcomes Tool produces a graphic display of likely

demand for employees with certain skills at
each point of the total portfolio of projects
 Automated Workforce-Scenario Model 139

Scenario Model
Technology Building Blocks of Scenario-Modeling Tool
Unrequited Performance

6.1

Index
2.4
Benchmark

0.68

Growth
Growth of
of ROE
ROE Versus
Versus Market
Market Cap.
Cap. Versus
Versus
Embedded
Embedded Value
Value Industry
Industry ROE
ROE Sum-of-the-Parts
Sum-of-the-Parts
Evaluation
Evaluation

PRISM™ Excel™ Access™ Powerpoint™ Powersim™

Internal legacy Spreadsheet Database used Program used Business simulation
HRIS data program used to analyze and to generate software to analyze
repository for to analyze cost develop workload presentations results of various
employee variances demand of data scenarios to support
information business decisions

Scenario Modeling Process

Step #2: Assess Labor Supply Step #3: Scenario Analysis

Engineer Skill Set Supply Scenario #1

900

450
Scenario #2

0 Scenario #3
1996 1997 1998 1999 2000 2001 2002

HR conducts comprehensive review of Tool simulates workforce scenarios to

potential internal and external labor sources
possessing critical skills for a proposed project
• HR catalogs internal workforce possessing
critical skills in order to widen labor pool
capable of filling openings at critical points
during projects
• HR determines available skill sets of
current and projected labor pool
• HR monitors skill profiles of upcoming
graduates at target schools to predict
future workforce composition
determine optimal means of sourcing labor
given project constraints
• HR planning tool compares the line
manager’s demand for labor with the
available supply
• Modeling software simulates various
workforce scenarios to illustrate the
trade-offs of different staffing strategies
(e.g., cost versus time, demographics)

Tool produces a graphic display of likely supply Line managers make informed decisions
for employees with certain skills at each point regarding staffing strategies
of the total portfolio of projects

Source: General Motors North America; Corporate

Leadership Council research.
140 Develop Value-Added Decision-Support Tools for Line Managers

Modeling Talent Demand

Step #1—Assess Labor Demand

Labor Demand Analysis

• Line managers determine labor demand by submitting project specifications, including
desired skill sets, timeframe, etc.
• Engineering workload model creates a skill demand graphic showing variations in demand
for specific skills throughout lifecycle of the project

Workload Analysis at GM

Line managers provide project …which analyzes the specifications and uses historical data
specifications, which are entered to generate predictive labor requirements for specific skill
into workload analysis software… sets over the course of the total portfolio of projects

Engineering
Project Content Sheet Workload Model

Project Plan
Representative Assumptions
Budget $ ___________ of Workload Model
Time Frame Assumptions made by the workload
_________________ modeling software include:
Type of product • Person hours required per task
_________________
_________________ • Anticipated delays and disruptions
Necessary skills • Schedule pressure
_________________
_________________ • Labor productivity improvements
 Automated Workforce-Scenario Model 141

More Accurately
Workload Model Predicts Labor Demands for
Specific Skills Over the Lifecycle of a Project
Engineering Workload*
New Sport Utility Vehicle (SUV) Model

Workload model shows

900 when certain skills will be
Skill A in most demand over the
course of a project, allowing
Skill B
managers to hire/develop in
Skill C advance of need
Skill D
Skill E
Skill F
Headcount Skill G
Skill H
Skill I
Skill J
Skill K
Skill L
Skill M
Skill N
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1999 2000

* Illustration of GMNA engineering modeling concept. Source: Hypothetical adapted from General Motors North
America; Corporate Leadership Council research.
142 Develop Value-Added Decision-Support Tools for Line Managers

Expanding the “Effective”

Step #2—Assess Labor Supply

Labor Supply Analysis

• Typical analysis of labor supply includes cursory survey of internal labor availability (often
only within a single function) and general statistics regarding the external labor market;
such analysis may offer a distorted view of labor supply both externally (e.g., does not
analyze subpopulations critical to specific projects or consider alternative methods for
acquiring talent with a specific skill base) and internally (e.g., does not assess availability
of talent across the company with similar skills but slightly different job descriptions)
• GM is increasing the “effective” supply of labor by collecting much better data regarding
pools for sourcing external talent and by expanding internal analysis to include the entire
company, not just specific silos

While supply analysis typically misrepresents talent availability…

Labor Supply Analysis at Typical Company

Typical internal labor analyses do not …and external labor analyses include
identify talent across the organization only general information regarding current
with applicable skills… workforce, without focusing on specific
skills needed

Internal Labor Market External Labor Market

Conventionally Missing
Collected Data Information
• General workforce • Statistics focused on
data (e.g., Bureau of skill sets critical to
SBU #1 SBU #2 SBU #3 SBU #4 Labor Statistics) specific projects
• Skills available in • Predictions
Product Manager,
current contract regarding skills of
Manager Design labor market future workforce
• Average • Focused
compensation benchmarking
Without standardized job titles levels for basic for specific
or skill descriptions, most skills critical skills
companies do not identify and
leverage talent across functions

Labor Supply
…GM gets an accurate read of all possible sources of labor
Line manager needs to
identify internal talent
with design skills
Selected “Beyond the Norm” Elements of GM’s External Labor Supply Analysis
Current Labor
Market
• Identification of current labor market
shortages for each skill set
• Average salary data for contract and
regular workers focused on critical
skill sets
• Evaluation of transferability of similar
skills to fulfill specific need
Automated Workforce-Scenario Model 143
Standardized skill Elements of GM’s
descriptions allow
GM to identify all
Skills Optimization
internal labor with GM’s internal skills optimization
desired skills, process includes the following:
regardless of title
or function • Standardized listing of skills for all
employees across the company
• “Transferability maps” showing
what skills may be applied to similar
tasks in other business units
• Profiles of currently employed
contract workers
• Degree of desired contract leverage
• Assumptions regarding productivity,
promotion rates and turnover rate of
current workforce
Future Workforce
Projections
• Skill profiles of upcoming graduates
at target schools
• Projections of future growth or
decline in critical labor markets
Source: General Motors North America; Corporate
Leadership Council research.
144 Develop Value-Added Decision-Support Tools for Line Managers

Testing Scenarios to Improve

Step #3—Scenario Analysis
Examining Workforce Scenarios
• After determining line demand for labor and availability of supply, the tool can identify
gaps, map scenarios to close them and reveal possible staffing solutions
• Scenarios compare key factors such as cost and availability of labor demanded by the line
• Line can adjust project variables (e.g., timeframe) in order to develop an acceptable
solution

By experimenting with variables that affect project outcomes…

Factors Influencing Range of Scenarios
Variable Aspects Variable Aspects
of Demand Project Characteristics of Supply
Timeframe
• Shortened timeframes increase quantity of labor Staffing
needed at any time Sources
• Longer timeframes allow opportunity to source
Required needed labor from more conventional sources Labor may be sourced
Skill Sets internally or through
Budget contract work
➤

• Relying heavily on contract work usually raises

The specific skills required
costs substantially
are determined by project Skill
specifications ➤ • Exclusive use of limited internal talent sources Availability
may cause project delays
➤

➤
Quality Certain skill sets may be
• Inadequately skilled labor may result in ➤ ➤ scarce and difficult to
➤ inferior quality source; internal shortages
➤

➤ • Understaffing may increase defect rate may necessitate contract

Required work
Features of End Product
Headcounts • Complex projects may require more labor
➤

or scarcer skill sets Labor

The number of required
workers will vary over
the course of a project
• Scaling back project ambitions can reduce labor Costs
costs
The cost of labor will vary
Competitive Advantage
• Relying on transient contract workers in core depending on its scarcity
competency areas may risk proprietary disclosure in the market and its
source
• Building internal resource capability in core
competencies increases competitive position
 Automated Workforce-Scenario Model 145

Corporate Decision Making

…line managers can consider trade-offs among different scenarios

Illustrative Example—Sport Utility Vehicle Development

Line manager considering a shortened timeframe for developing a new sport utility
vehicle (SUV)
• Scenario #1—Standard 36-month timeframe; majority of talent available from regular
workforce
• Scenario #2—Fast-cycle 18-month timeframe; heavy contract work required to meet
increased labor demand
Shortening timeframe greatly increases labor-related cost; contract costs in Scenario #2
are double the contract costs in Scenario #1

Scenario
Projected Requirements*
(Hypothetical)
Year 1: 1999 Year 2: 2000 Year 3: 2001
Skill Regular Contract Total Regular Contract Total Regular Contract Total
Skill A 10 3 13 10 0 10 3 0 3
Skill B 10 5 15 15 5 20 5 0 5
Skill C 30 0 30 30 10 40 30 10 40
Skill D 5 0 5 5 0 5 10 10 20
Skill E 2 2 4 2 2 4 5 5 10
Skill F 7 9 16 10 10 20 10 10 20
Scenario #1
Skill G 10 5 15 20 5 25 16 5 21
Scenario #1 Development of new Skill H 5 0 5 10 0 10 20 20 40
SUV with standard
Skill I 2 2 4 2 0 2 2 0 2
features within
normal timeline of Skill J 20 5 25 20 0 20 25 6 31
three years Skill K 4 0 4 4 0 4 4 0 4
Skill L 5 5 10 5 5 10 10 0 10
Skill M 6 2 8 6 6 12 10 7 17
Skill N 10 10 20 10 5 15 20 13 33
Total Headcount 126 48 174 149 48 197 170 86 256
Projected Labor-Related $9.1 $4.4 $13.5 $10.7 $4.4 $15.0 $12.2 $7.8 $20.0
Costs (in millions)
Total Projected Labor-
Related Cost
$48.5 million

Year 1:1999 Year 2: 2000

Skill Regular Contract Total Regular Contract Total
Skill A 20 37 57 20 50 70
Skill B 17 16 33 30 24 54
Skill C 40 40 80 40 27 67
Skill D
Skill E
10
7
0
20
10
27
14
10
25
5
39
15
Labor costs
Skill F
Skill G
13
20
10
24
23
44
19
27
30
10
49
37
nearly double
Scenario #2
Skill H 20 17 37 35 20 55 when timeframe
Scenario #2 Fast cycle development
of standard SUV within
Skill I
Skill J
7
40
5
30
12
70
7
30
20
17
27
47 decreased
two-year time frame
Skill K
Skill L
8
17
6
13
14
30
9
15
6
0
15
15
by one-half
Skill M 12 16 28 18 9 27
Skill N 18 30 48 34 35 69
Total Headcount 249 264 513 308 278 586
Projected Labor-Related $17.8 $24.0 $41.8 $22.0 $25.3 $47.3
Costs
Total Projected Labor-
Related Cost $89.1 million

* Illustration of GMNA modeling concept. Source: Hypothetical adapted from General Motors North
America; Corporate Leadership Council research.
146 Develop Value-Added Decision-Support Tools for Line Managers

Accurate Modeling Causes Line to

Case Examples of Line–

Original Line ➤ Feedback from Scenario

Manager Plan Modeling Tool

Case Example #1
Line manager would like to develop
a new Sport Utility Vehicle (SUV)
in 18-month timeframe instead of
the standard 36 months
Labor costs double when
➤ timeframe cut by one-half
primarily because of greater
reliance on contract workers

Case Example #2
Line manager in charge of Model provides analysis of
producing a new truck potential costs incurred with
➤ different mixes of contract
model wants to explore
different staffing options and full-time workers

* Disguised examples based on General Motors experience.


Rethink Project Specifications
HR Scenario Analysis*
➤ Alternate Workforce
Scenarios
• Extend project timeline to
➤ 36 months; cut cost in half
• Retain 18-month timeframe;
increase labor budget
• Pay premium for contract workers;
assured of having necessary skills
➤ when needed
• Source labor internally; more lag
time during project when needed
skills unavailable
Automated Workforce-Scenario Model 147
➤ Resolution
Line manager decides to keep
➤ short 18-month timeframe;
budgets accordingly for
increased labor costs
Manager decides that any project
delays due to staffing shortages
➤ would be more damaging than the
extra cost of contract workers
Source: General Motors North America; Corporate
Leadership Council research.
148 Develop Value-Added Decision-Support Tools for Line Managers

Extending the Reach

Assessment of Automated Workforce-Scenario Model
• Although GM declines to share specific cost savings or cycle time improvements that the
scenario modeling tool has generated, the company indicates generally positive line
response to the tool.
• The modeling tool has two key strengths:

Strength #1: Quality of Data Inputs—The quality of supply and demand data is far more
comprehensive than typical workforce planning models; understanding demand within
the context of the timeframe in which it is required improves estimates of how much
talent will be needed, and in-depth analysis of alternative sources of supply (e.g., talent
pipelines coming off of campus, contract labor supply, internal talent with related
skills) expands the effective size of the labor pool.

Strength #2: Teaching Ability—The integrated modeling tools (including the system
dynamics diagnostic model underlying the scenario tool) simplify the complex set of
links between factors of supply and demand, vastly simplifying the analytic burden (and
time requirement) for HR and line managers; as a result, line managers are more likely
to base decisions on the output of the tool. In addition, the graphic display of findings
increases line managers’ conceptual grasp of results of the scenario analysis and makes
them more open to non-intuitive findings.
• As currently conceived, the scenario modeling tool requires substantial support from HR
experts; in the future, creation of simplified tools that line managers can manipulate
themselves is likely to increase usage and behavioral change resulting from the model’s
findings.
• The tool would have to be modified substantially for application to fast-cycle environment;
most firms lack the long product development cycles and lead times that characterize the
automotive environment.

More-Informed Decision Making

“Our ability to produce comparable cost estimates for line managers and the executive team
has changed the way the organization plans. Before, managers tended to approve additional
projects or accelerate existing projects with little knowledge of the associated people costs.
Now managers can evaluate the difference in cost and make a more informed decision about
what they’re willing to spend to get the vehicle to market faster.”
Head of HR Planning Center
GM
 Automated Workforce-Scenario Model 149

of Workforce Planning
Current and Future Applications of Workforce-Scenario Model

First generation of workforce-scenario

model assists individual line managers
with staffing decisions

Business • Budget—Line managers use the tool to understand costs

Line Plans of employing necessary skilled labor for proposed projects
➤
• Staffing—In light of costs of available labor, line managers
can decide on optimal mix of internal and external staff

• Recruiting—With information from scenario planning,

➤ Staffing recruiting for key skills can occur in advance of need
• Temporary staffing—HR can leverage contract resources
during anticipated periods of high demand for certain
skills
Current Application
HR Workforce-
Scenario Modeling Future Plans
Tool
➤ • Training—GM University (GMU) can design appropriate
GM training courses based on anticipated needs seen in roll-up
University of several business plans from scenario modeling process
• Development—GMU can focus specific development
opportunities to fill skill gaps revealed in scenario planning

Future generations of the

tool expected to help the
corporation boost talent
supply through better
development and sourcing

Source: General Motors North America; Corporate

Leadership Council research.