Lack of strategic workforce planning costs UK thousands, finds PwC

The revenue generated for UK businesses by each of their employees has dropped by nearly a quarter over the last three years, according to a PwC report.

Employers are now recruiting more people externally, at a rate of 12.8 per cent compared to 10.9 per cent in 2011, but recruitment is outstripping revenue growth rates, and productivity levels have dropped as a result.

The report ‘A new vision for growth’ – based on data from 2,600 global organisations, 150 of which are based in the UK – found that during the recession, the average revenue UK companies were gaining per employee was £104,000. This climbed to £139,000 in 2010 due to reductions in headcount.  

But while there are early signs of an economic recovery, the revenue generated by each full time UK employee has dropped back to £108,000.

PwC suggests that a lack of strategic workforce planning, and a “rush to recruit”, is having a dramatic effect on overall productivity levels across the UK.

“Too many organisations are simply following the pack and recruiting because everyone else is, rather than because they need to. This will ultimately stifle workforce productivity levels,” said Anthony Bruce, HR and workforce analytics leader at the firm.

“Businesses should be making full use of the tools and information available to better manage their workforce, whether that is managing performance, offering flexible working, encouraging internal moves and mobility or improving incentives to drive performance. Businesses also need to make better use of analytics to assess and predict what skills they actually need and where, rather than just recruiting.”

The latest figures from the Office for National Statistics show that unemployment has dipped below two million for the first time since 2008. While these figures are encouraging for the labour market, PwC suggests that a failure to recruit more strategically is costing organisations thousands of pounds worth of lost profit, as many companies hire “over and above their needs”.

The firm’s research shows that the difference between efficient recruiting, matching people carefully to their roles, training them more quickly and having a more productive workforce can be as much as a £34,000 marginal profit per employee in the banking sector and up to £67,000 per employee in the utilities sector.

“‘Doing more with the same’ means maintaining the level of cost discipline that began during the downturn, while looking closely at your current and future workforce needs,” the report said.

This includes aligning human capital strategy with business growth strategy, considering how automation technology is changing your business, and your future talent needs and looking outside the usual sources of talent supply.

PwC urged HR professionals to better use big data and predictive analytics to understand their future recruitment needs and how to maximise performance among their existing staff.

“Think predictive – CEOs want help in planning for the future, not a narrative on what’s already happened,” the report said.