In our previous newsletter, we discussed how to help boost the value of your company by using the Enterprise Value Map™ (EVM) to assist in addressing a very perplexing real-world problem: evaluating a proposed investment in IT. We showed you some ways to help get past the smoke and mirrors, extract the facts needed to perform a cost/benefit analysis, calculate the cash flow implications, and decide whether the proposed investment is worth the money. But, we’re willing to bet that you never quite got around to using what we provided. Why would you? Especially if you have your hands full with more pressing people issues. And not simple people issues either, such as figuring out how to compensate your sales force, as discussed in a previous newsletter. (Volume 8, December 2005: You are what you(r employees) do everyday (If all you measure is compliance, that's all you’ll get.) No, these days you’re likely dealing with scary, “big picture” issues, such as dire shortages of skilled workers. And, really what can you do about that? Grow your own workers? Clone them in a lab? (Even if you could, imagine what that would cost.) The value habits certainly can’t be much help with something like that, right? Wrong. Fact is, the value habits could be just what you need when you’re dealing with messy human resources problems, such as the dearth of skilled workers. The EVM can help you stop wasting time agonizing over the cost and begin thinking of your workforce strategy issues in a fresh light, possibly opening up new opportunities. Getting started Begin by asking yourself: How does this critical workforce issue relate to my overall value strategy? Assume it’s the growing shortage of skilled workers that has you spooked. Don’t try to solve the whole problem at once. Focus on the job categories most relevant to your strategy. If your strategy revolves around innovation, for instance, that may mean concentrating on research scientists. If your value lies in customer service, maybe you need to think about your call center representatives. Once you’ve identified your critical workforce segments, then work your way across the EVM, considering alternatives that could help address each value driver in light of your strategy. What could we do about it that’s consistent with our strategy and that would tend to increase volume or revenue? What might help improve margins or asset efficiency? How about enhancing expectations? Be sure to evaluate each possible alternative against the EVM, working from the bottom up, plotting and weighing all the foreseeable costs, as well as the likely benefits. For a larger view, select the image Enterprise Value Map. 
Getting specific Consider the experience of a large, global information services company. The company needs thousands of skilled workers to synthesize and digitally deliver technical material very cheaply. But in many countries where it does business, the labor pool is spotty, fickle and dwindling. The company’s first step was to figure out which workforce segments are critical to its strategy and to take inventory of the talent it already had. Who holds those jobs? Where are they? What exactly are they doing to support the strategy and enhance the value of the company? What could they do, given the right training, resources and incentives? Going through this exercise, the company discovered that a certain class of middle managers was not merely essential to its day-to-day effectiveness, but also was in a unique position to grasp the needs of customers and anticipate changes in time to do something meaningful. So, the company is now beginning to pay attention to these critical workforce segments. The company is not only trying to keep them happy, but also tracking their skills, experiences and preferences. Seeking ways to help them to do more for the company and to do it better. Keeping an eye on their progress, having senior people scrutinize their annual reviews and decide how to help motivate and deploy them most effectively, rather than leaving it up to their supervisors. Consequently, when a position opens up in Singapore, the company should already know which one of these unsung heroes is eager to relocate. Digging deeper At the same time, the company is figuring out how many of these folks it will need down the road, and where they’re likely to need them. The company is identifying potential sources of potential candidates who might someday fill their shoes. The company is developing ways to attract and groom enough of them to meet its needs, including tapping colleagues in adjacent roles and poaching people in similar roles in adjacent industries. Finding the key The key here is to identify your company’s critical workforce segments. For instance, consider the case of the giant distribution company that serves hundreds of thousands of companies. The company can command top dollar because it’s known for its ability to dish things up fast, from common office items to hard-to-find-quickly items, such as parts for outdated computers. That’s what’s driving the whopping revenues. So for this particular company, the critical workforce segments include inventory managers and location managers who are skilled in figuring out where to hold product so the company can better balance the cost of inventory with availability, thereby helping to keep availability high and costs low. Stepping back Of course, the specifics will vary depending on the problem, the industry, the company, and its value strategy. But, the principle is usually the same. In the next issue we’ll look at how finance can help add value. Order your copy of the Enterprise Value Map™. Related Links The Value Habit Newsletter Archive
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